CBSE Questions for Class 12 Commerce Accountancy Accounting Ratios Quiz 5 - MCQExams.com

______ ratios are a measure of the speed with which various accounts are converted into sales or cash.
  • Activity
  • Liquidity
  • Debt
  • Profitability
Which of the following are solvency ratios?
a. Debt equity ratio
b. Total fixed assets to debt ratio
c. Debt ratio
d. Interest coverage ratio
  • A, B, and D
  • A, B, and C
  • B, C, and D
  • A, B, C, D
The _____ ratio may indicate the firm is experiencing stock outs and lost sales. 
  • Average payment period
  • Inventory turnover
  • Average collection period
  • Quick
The _________ is useful in evaluating credit and collection policies.
  • Average payment period
  • Current ratio
  • Average collection period
  • Current asset turnover
The ______ of business firms is measured by its ability to satisfy its short-term obligations as they come due.
  • Activity
  • Liquidity
  • Debt
  • Profitability
ABC co. extends credit term of 45 days to its customers. Its credit collection would be considered poor if its average collection period was ____________.
  • 30 days
  • 36 days
  • 47 days
  • 42 days
Calculate debtor turnover ratio from the following information:
Total sales = Rs. 4,00,000
Cash sales = 20% of total sales
Debtor beginning of the year = Rs. 40,000
Debtors end of the year =  Rs. 1,20,000
  • 3 times
  • 4 times
  • 6 times
  • 5 times
The ___________ ratios provide the information critical to the long-run operation of the firm.
  • Liquidity
  • Activity
  • Solvency
  • Profitability
The debt ratio refers to the ratio of long-term debt to total external and _________.
  • Mutual funds
  • Internal funds
  • Personal funds
  • None of the above
When the operating ratio is $$81.5$$ the ratio of operating profit to sales will be ______________.
  • $$191.5\%$$
  • $$18.5\%$$
  • $$181.5\%$$
  • Cannot be known from the given information
Which accounting ratio will be useful in indicating the inability to pay interest?
  • Debt-equity ratio
  • Debt-service coverage ratio
  • Interest coverage ratio
  • None of the above
Calculate proprietary ratio, from the following information:
Total external liabilities = Rs. 5,00,000
Balance sheet total = Rs. 10,10,000
Current liabilities = Rs. 1,00,000
Fictitious assets =  Rs. 10,000
  • 0.556
  • 0.540
  • 0.528
  • 0.518
If total current liabilities are increased but total current assets remain unchanged then the Current Ratio will ___________.
  • Improve
  • Decline
  • No Effect
  • Both (A) and (B)
Which of the following transaction change the current ratio?
  • Purchase of goods for cash
  • Plant acquire on account
  • Sold goods on credit
  • Debentures converted into equity capital
Proprietary ratio express relationship of proprietor's funds to net __________.
  • Liabilities
  • Current assets
  • Assets
  • Current liabilities
Which accounting ratio will be useful in indicating the inability to pay dues to financial institutions?
  • Debt-equity ratio
  • Debt-service coverage ratio
  • Interest coverage ratio
  • Debt-collection period
A shareholder who is examining his portfolio and who is to decide whether he should hold or sell his shares in a particular company. In this case, indicate the important accounting ratio that would be used _______________.
  • Current ratio
  • Debt-equity ratio
  • Earning per share
  • None of the above
When operating profit ratio $$25\%$$ and Capital Turnover ratio $$2\%$$. What is the return on investment?
  • $$75\%$$
  • $$50\%$$
  • $$25\%$$
  • None of the above
Turnover ratios are also known as __________.
  • Profitability ratios
  • Solvency ratios
  • Financial ratios
  • Efficiency ratios
Which among these is not a component of International Liquidity?
  • SDRs
  • Gold held by Central Bank
  • Foreign currencies held by the Central Bank
  • None of the above
Total current assets are increased by Rs.$$50,000$$/- but total current liabilities remain unchanged. In this situation the current ratio will be _____________.
  • Declined
  • Improved
  • Both (A) and (B)
  • No effect
Which of the following is an example of short-term solvency Ratio?
  • Debt-equity ratio
  • Interest coverage ratio
  • Current ratio
  • Fixed assets turnover ratio
Pay out ratio means  ___________________.
  • Ratio of debtors to creditors
  • Ratio of earning that are distributed through dividend
  • Ratio of profit distributed to profit retained
  • None of the above
Which of the following is not a correct statement ?
  • Overhead and indirect expenses are not the same
  • When profit is 20% of total cost, it is equal to 25% of selling price of a product
  • In Halsey Premium Plan, time wages are guaranteed
  • Wages sheet is prepared by payroll department
Current ratio may be increased by ____________.
  • Overstating current assets
  • Overstating Current Liabilities
  • Understating current assets
  • B & C
The most rigorous test of liquidity is ___________.
  • Current ratio
  • Acid ratio test
  • Absolute measure
  • Stock turnover ratio
Leverage implies that _______________.
  • The return on equity share capital exceeds the interest on borrowed capital
  • The return on borrowed capital exceeds the return on equity share capital
  • Both (A) & (B)
  • None of the above
The immediate solvency ratio is ____________.
  • Quick ratio
  • Current ratio
  • Stocks turns ratio
  • Debtors turnover ratio
Current ratio is increased by :-
cash received from debtors
issue of redeemable debentures
3. selling the old machine for cash
4. converting debentures into equity share
  • 1,2,3
  • 2 and 3
  • 1 and 3
  • 3 and 4
Current ratio is chiefly used to assess the                   .
  • effective utilization of capital
  • application of debt
  • liquidity position
  • levels of inventory piled up in different forms.
  • prompt payment of long-term liabilities.
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