Financial Statements

Ratios

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Financial Statements

"Ratio analysis is indispensable part of interpretation of results revealed by the financial statements." Which of the following is not an objective of Ratio Analysis?

To know about the potential areas which can be improved with the effort in the desired direction.

To know the areas of the business which need more attention.

To provide information derived from financial statements useful for making projections and estimates for the future.

To forecast consideration of non-financial factors.

✅ Correct Option: 4

Ratio analysis works only on quantitative data drawn from financial statements. Non-financial factors such as management quality or market reputation cannot be captured by ratios; this is in fact a limitation, not an objective.

2026: 11 May Shift 1

ABC Ltd has an average inventory of Rs. 20,000 at cost. If the Inventory Turnover Ratio is 8 times and the firm sells goods at a gross profit of 20% on sales. Calculate the gross profit of ABC Ltd.

2026: 29 May Shift 1

Match List-I with List-II

List-I (Accounting Ratio)	List-II (Objectives/ Use of Accounting Ratio)
(A) Liquidity Ratio	(I) To know the earning capacity of the business
(B) Profitability Ratio	(II) To know the ability to pay long-term obligations
(C) Solvency Ratio	(III) To know the efficiency of business operations
(D) Activity Ratio	(IV) To know the ability to pay short-term obligations

Choose the correct answer from the options given below:

2026: 19 May Shift 1

Which of the following studies the frequency of conversion of inventory of finished goods into revenue from operations.

2022: 20 July Shift 1

Match List - I with List - II

List - I	List - II
(a) Working Capital Turnover Ratio	(i) $\frac{\text{Quick Assets}}{\text{Current liabilities}}$
(b) Acid Test Ratio	(ii) $\frac{\text{Operating Profit}}{\text{Rev. from operations}} \times 100$
(c) Operating Profit Ratio	(iii) $\frac{\text{Revenue from operation}}{\text{Working capital}}$
(d) Trade Payables Turnover Ratio	(iv) $\frac{\text{Net Credit Revenue from operation}}{\text{Average Trade payables}}$

Choose the correct answer from the options given below :

2026: 6 June Shift 1

A trading firm's average inventory is Rs. 40,000. If the inventory turnover ratio is 6 times and the firm sells goods at a gross profit of 25% on sales, ascertain the gross profit of the firm.

2023: 11 June Shift 3

What will be Interest Coverage Ratio, when 20% Long term Debt is Rs. 10,00,000, Tax Rate 40% and Net profit After Tax is Rs. 6,00,000.

"Ratio analysis is indispensable part of interpretation of results revealed by the financial statements." Which of the following is not an objective of Ratio Analysis?

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