Top 50+ Solved Ratio Analysis MCQ Questions Answer
Q. The primary purpose of the liquidity ratios is to determine
a. how much working capital is tied up in inventory?
b. the relative level of short-term debt.
c. how well a firm is able to pay off short-term obligations?
d. more than one of the above.
Q. Which of the following statements about liquidity ratios is true?
a. the higher the current ratio, the more likely a firm is able to pay its short-term obligations.
b. the lower the quick ratios relative to the current ratio, the safer a firm is in terms of liquidity.
c. the ratio of net working capital to total assets always lies between 0 and 1.
d. relatively high current ratios are usually a sign of efficient working capital management.
Q. The ________ ratios help determines the degree of financial risk and earnings volatility present in afirm.
a. profitability
b. asset utilization
c. liquidity
d. none of the above.
Q. Which of the following statements are true?
a. debt to equity and debt to asset ratios measure capital structure and vary widely among industries.
b. debt utilization ratios alone do not measure a firm\s ability to meet its cash obligations.
c. dupont analysis considers the impact of debt on the profitability of the firm.
d. two of the above are true.
Q. Debt-equity ratio is a sub-part of
a. short-term solvency ratio
b. long-term solvency ratio
c. debtors turnover ratio
d. none of the above
Q. The most precise test of liquidity is
a. quick ratio
b. current ratio
c. absolute liquid ratio
d. none of the above
Q. Quick ratio is 1.8:1, current ratio is 2.7:1 and current liabilities are Rs 60,000. Determine value of stock.
a. rs 54,000
b. rs 60,000
c. rs 1, 62,000
d. none of the above