Financial Statements

Ratios

Easy

Financial Statements

The two basic measures of liquidity are:

Inventory turnover and current ratio

Current ratio and liquid ratio

Gross profit margin and operating ratio

Current ratio and average collection period

✅ Correct Option: 2

Liquidity is judged by short-term solvency ratios: the current ratio, comparing current assets with current liabilities, and the liquid or quick ratio, comparing quick assets with current liabilities. Turnover and profitability ratios measure efficiency and earnings instead.

2025: 14 May Shift 1

Which of the following statements are True about ratio analysis-

(A) A ratio reflects quantitative and qualitative aspects of results.

(B) Long-term borrowings are concerned about the ability of a firm to discharge its obligations to pay interest and repay the principal amount

(D) Ratios help in comparisons of a firm's results over a number of accounting periods as well as with other business enterprises.

Choose the correct answer from the options given below:

2022: 8 Aug Shift 2

Debt-equity ratio is a sub-part of:

2022: 8 Aug Shift 2

When the ratio is low, the firm is said to have favourable indication.

2026: 19 May Shift 1

A trader carries an average inventory of Rs. 40,000. His inventory turnover ratio is 8 times. If he sells goods at a profit of 20% on Revenue from operations, find out the gross profit.

2025: 22 May Shift 2

The ideal quick ratio is

2022: 20 July Shift 1

Make the right combination of the ratios that enables to find the short term liquidity.

(a) Return on Equity

(b) Acid Test Ratio

(d) Sacrificing Ratio

(e) Inventory Turnover Ratio

Choose the most appropriate answer from the options given below :

The two basic measures of liquidity are:

Solution

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