Financial Statements

Ratios

Hard

Financial Statements

The current ratio is 2 : 1. Which of the following transactions would improve, reduce or not change the current ratio?

Match List-I with List-II

List-I List-II
(A) Payment of unclaimed dividend (I) Improve
(B) Purchase of Machinery against Issue of Shares (II) Reduce
(C) Sale of goods on credit (III) Will not be recorded
(D) Purchased goods on credit (IV) Does not Change

Choose the correct answer from the options given below:

List-I	List-II
(A) Payment of unclaimed dividend	(I) Improve
(B) Purchase of Machinery against Issue of Shares	(II) Reduce
(C) Sale of goods on credit	(III) Will not be recorded
(D) Purchased goods on credit	(IV) Does not Change

(A) - (II), (B) - (IV), (C) - (I), (D) - (III)

(A) - (I), (B) - (III), (C) - (IV), (D) - (II)

(A) - (I), (B) - (II), (C) - (IV), (D) - (III)

(A) - (IV), (B) - (III), (C) - (II), (D) - (I)

✅ Correct Option: 2

Take current assets $2$ and current liabilities $1$ . Paying unclaimed dividend reduces both by the same amount, and since the ratio exceeds $1$ , it improves, so (A) is (I). Machinery bought against issue of shares touches no current item, so (B) is (III). Credit sale converts stock into debtors at cost, leaving current assets unchanged, so (C) is (IV). Credit purchase raises both equally and pulls the ratio down, so (D) is (II).

Note: Option (III) reads as not recorded; we have used it for the share issue entry since it leaves current items untouched.

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: 24 May Shift 1

X Ltd., has a current ratio of 2:1 and quick ratio of 1.5:1. If excess of current assets over quick assets represented by inventories is Rs. 24,000. Calculate current assets and current liabilities.

2025: 13 May Shift 2

Trade payable turnover ratio is-

2025: 16 May Shift 1

Which of the following is not a profitability ratio?

2026: 21 May Shift 1

Share capital Rs. 4,00,000; Reserves and surplus Rs.1,00,000; Long-term borrowings Rs. 2,00,000; Fixed assets Rs. 4,00,000; Non-current investments Rs. 1,00,000; Current Assets Rs. 2,00,000. From the given information, the Total Assets to Debt Ratio will be:

2025: 3 June Shift 2

Match List-I with List-II

List-I	List-II
(A) Measure of liquidity	(I) Return on capital employed
(B) Measure of earning capacity	(II) Inventory turnover ratio
(C) Measure of activity of firm's inventory	(III) Profitability ratio
(D) Measure of Productive efficiency of funds	(IV) Current ratio

Choose the correct answer from the options given below:

Solution

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