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- 1. Multiple Choice
State the following statement is True or False.
Ratios help in comparisons of a firm’s results over a number of accounting periods as well as with other business enterprises.
True
False
- 2. Multiple Choice
The _________ of business firm is measured by its ability to satisfy its short term obligations as they become due:
Activity
Liquidity
profitability
Solvency
- 3. Multiple Choice
The two basic measures of liquidity are:
inventory turnover and current ratio
current ratio and acid test ratio
gross profit Ratio and operating ratio
current ratio and average collection period
- 4. Multiple Choice
The _________ is a measure of liquidity which excludes _______, generally the least liquid asset:
Current ratio, trade receivable
Liquid ratio, trade receivable
Current ratio, inventory
acid test ratio, inventory
- 5. Multiple Choice
A Business Has The Following:
Fixed Assets = £6000
Current Assets = £2000
Inventory = £1000
Current Liabilities = £500
Calculate It's Current Ratio
1 : 4
1 : 5
1 : 2
1 : 3
1 : 6
- 6. Multiple Choice
A Business Has The Following:
Fixed Assets = £6000
Current Assets = £2000
Inventory = £1000
Current Liabilities = £500
Calculate It's Liquid Capital Ratio
1 : 2
1 : 12
1 : 4
1 : 12.5
1 : 8
- 7. Multiple Choice
A Business Has The Following:
Fixed Assets = £20,000
Current Assets = £4,620
Inventory = £3,321
Current Liabilities = £2,000
Calculate It's Liquid Capital Ratio
1 : 0.64
1 : 0.65
1 : 0.63
1 : 0.66
1 : 0.62
- 8. Multiple Choice
A Business Has The Following:
Fixed Assets = £20,000
Current Assets = £4,620
Inventory = £3,321
Current Liabilities = £2,000
Calculate It's Current Ratio
1 : 2.31
1 : 2.32
1 : 2.30
1 : 2.33
1 : 2.34
- 9. Multiple Choice
A Business Has The Following:
Fixed Assets = £12,050
Current Assets = £13,500
Inventory = £6,040
Current Liabilities = £7,000
Calculate It's Current Ratio
1 : 1.93
1 : 1.94
1 : 1.92
1 : 1.91
1 : 1.90
- 10. Multiple Choice
If a business has a current ratio of 0.8 : 1 what does this mean?
They will be able to pay off their current liabilities with their current assets
They will not be able to pay off their current liabilities with their current assets
- 11. Multiple Choice
If a business has a current ratio of 1.3 : 1 what does this mean?
They will be able to pay off their current liabilities.
They will not be able to pay off their current liabilities.
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