CBSE Class 12 Accountancy Ratio Analysis Worksheet Set A

Question. Two basic measures of liquidity are:
(A) Inventory turnover and Current ratio
(B) Current ratio and Quick ratio
(C) Gross Profit ratio and Operating ratio
(D) Current ratio and average Collection period
Answer. B

Question. Current ratio is:
(A) Solvency Ratio
(B) Liquidity ratio
(C) Activity Ratio
(D) Profitability Ratio
Answer. B

Question. Current Ratio is:
(A) Liquid Assets/Current Assets
(B) Fixed Assets/Current Assets
(C) Current Assets/Current Liabilities
(D) Liquid assets/Current Liabilities
Answer. C

Question. Liquid Assets do not include:
(A) Bills Receivable
(B) Debtors
(C) Inventory
(D) Bank Balance
Answer. C

Question. Ideal Current Ratio is:
(A) 1:1
(B) 1:2
(C) 1:3
(D)2:1
Answer. D

Question. Working Capital is the:
(A) Cash and Bank Balance
(B) Capital borrowed from Banks
(C) Difference between Current Assets and Current Liabilities
(D) Difference between Current Assets and Fixed assets
Answer. C

Question. Current assets include only those assets which are expected to be realized within……
(A) 3 months
(B) 6 months
(C) 1 year
(D) 2 years
Answer. C

Question. A Company’s liquid assets are Rs.5, 00,000 and its current liabilities are Rs.3, 00,000. Thereafter, it paid Rs.1, 00,000 to its trade payables. Quick ratio will be:
(A) 1.33:1
(B) 2.5:1
(C) 1.67:1
(D) 2:1
Answer. D

Question. A Company’s Quick Ratio is 1.5:1; Current Liabilities are Rs.2, 00,000 and Inventory is Rs.1, 80,000. Current Ratio will be:
(A) 0.9:1
(B) 1.9:1
(C) 1.4:1
(D) 2.4:1
Answer. D

Question. Fixed Assets Rs.5,00,000; Current Assets Rs.3,00,000; Equity Share Capital Rs.4,00,000; Reserve Rs.2,00,000;Long –term debts Rs.40,000.Proprietary Ratio will be:
(A) 75%
(B) 80%
(C) 125%
(D) 133%
Answer. A

Question. If the Debt equity ratio exceeds .................... , it indicates a risky financial position.
(A) 1:1
(B) 2:1
(C) 1:2
(D) 3:1
Answer. B

Question. Equity Share Capital Rs.20,00,000; Reserves Rs.5,00,000; Debentures Rs.10,00,000; Current Liabilities Rs.8,00,000. Debt-equity ratio will be:
(A) 0.4: 1
(B) 0.32: 1
(C) 0.72: 1
(D) 0.5: 1
Answer. A

Question. On the basis of following data, the Debt-Equity Ratio of a Company will be: Equity Share Capital Rs.5,00,000; General Reserve Rs.3,20,000; Preliminary Expenses Rs.20,000; Debentures Rs.3,20,000; Preliminary Expenses Rs.20,000; Debentures Rs.3,20,000; Current Liabilities Rs.80,000.
(A) 1:2
(B) 0.52:1
(C) 0.4:1
(D) 0.37:1
Answer. C

Question. On the basis of the following information received from a firm, its Proprietary Ratio will be:Fixed Assets Rs.3,30,000; Current Assets Rs.1,90,000; Preliminary Expenses Rs.30,000; Equity share Capital Rs.2,44,000; Preference Share capital Rs.1,70,000;
Reserve Fund Rs.58,000.
(A) 70%
(B) 80%
(C) 85%
(D)90%
Answer. C

Question. On the basis of the following information received from a firm, its Total Assets-Debt ratio will be:
(A) 40%
(B) 60%
(C) 30%
(D) 70%
Answer. A

Question. Opening Inventory Rs.1,00,000; Closing Inventory Rs.1,50,000; Purchases Rs.6,00,000; Carriage Rs.25,000; wages Rs.2,00,000. Inventory Turnover Ratio will be:
(A) 6.6 Times
(B) 7.4 Times
(C) 7 Times
(D) 6.2 Times
Answer. D

Question. Revenue from Operations Rs.2, 00,000; Inventory Turnover ratio 5; Gross Profit 25%. Find out the value of Closing Inventory, if Closing Inventory is Rs.8, 000 more than the Opening Inventory.
(A) Rs.38, 000
(B) Rs.22, 000
(C) Rs.34, 000
(D) Rs.26, 000
Answer. C

Question. Total revenue from operations Rs.9,00,000; Cash revenue from operations Rs.3,00,000; Debtors Rs.1,00,000; Debtors Rs.1,00,000; B/R Rs.20,000. Trade Receivables Turnover Ratio will be:
(A) 5 Times
(B) 6 Times
(C) 7.5 Times
(D) 9 Times
Answer. A

Question. A firm’s credit revenue from operations is Rs.3, 60,000, cash revenue from operations is Rs.70, 000. Cost of revenue from operations is Rs.3, 61,200. Its gross profit ratio will be:
(A) 11%
(B) 15%
(C) 18%
(D) 16%
Answer. D

Question. Revenue from Operations Rs.6,00,000; Gross Profit 20%; Office Expenses Rs.30,000;Selling Expenses Rs.48,000.Calculate operating ratio.
(A) 80%
(B) 85%
(C) 96.33%
(D) 93%
Answer. D

Question. State whether the following statement is True or False:
Solvency refers to the ability of the enterprise to meet its current obligations.
Answer. TRUE

Question. State whether the following statement is True or False: Current ratio improves with increase in sales at profit.
Answer. TRUE

Question. Fill in the blanks with appropriate word: An ideal Quick Ratio is ……………
Answer. 1:1

Question. Fill in the blanks with appropriate word:
……………is the process of determining and interpreting the numerical relationship between figures of the financial statements.
Answer. Ratio Analysis

Question. State whether the following statement is True or False:
Lower the Gross Profit Ratio, higher will be the profitability of a company.
Answer. FALSE

Question. Which of the following does not help to increase Current Ratio?
(A) Issue of Debentures to buy Stock
(B) Issue of Debentures to pay Creditors
(C) Sale of Investment to pay Creditors
(D) Avail Bank Overdraft to buy Machine.
Answer. D

Question. 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
Answer. A

Question. Which ratio is considered a safe margin of short-term solvency?
(A) Liquid ratio
(B) Proprietary ratio
(C) Current ratio
(D) None of the above
Answer. C

Question. Collection of Trade Receivables
(A) Decreases current ratio
(B) Increases current ratio
(C) Has no effect on current ratio
(D) None of the above
Answer. C

Question. The term ‘Current Liabilities’ does not include:
(A) Sundry Creditors
(B) Debentures
(C) Bills Payable
(D) Outstanding Expenses
Answer. B

Question. Which of the following are included in traditional classification of ratios?
(i) Liquidity Ratios.            (ii) Statement of Profit and Loss Ratios.
(iii) Balance Sheet Ratios.  (iv) Profitability Ratios.
(v) Composite Ratios.        (vi) Solvency Ratios.
(A) (ii), (iii) and (v)
(B) (i), (iv) and (vi)
(C) (i), (ii) and (vi)
(D) All (i), (ii), (iii), (iv), (v), (vi)
Answer. A

Question. The following groups of ratios primarily measure risk:
(A) solvency, activity, and profitability
(B) liquidity, efficiency, and solvency
(C) liquidity, activity, and profitability
(D) liquidity, solvency, and profitability
Answer. D

Question. Which one of the following is correct?
(i) A ratio is an arithmetical relationship of one number to another number.
(ii) Liquid ratio is also known as acid test ratio.
(iii) Ideally accepted current ratio is 1: 1.
(iv) Debt equity ratio is the relationship between outsider’s funds and shareholders’  funds. In the context of the above two statements, which of the following options is correct?
(A) All (i), (ii), (iii) and (iv) are correct.
(B) Only (i), (ii) and (iv) are correct.
(C) Only (ii), (iii) and (iv) are correct.
(D) Only (ii) and (iv) are correct.
Answer. B

Question. Which ratio indicates the proportion of assets financed out of shareholders’ funds?
(A) Debt equity ratio.
(B) Fixed assets turnover ratio.
(C) Proprietary ratio.
(D) Total assets to debt ratio.
Answer. C

Question. If Total sales are ₹2, 50,000 and credit sales are 25% of Cash sales. The amount of credit sales is:
(A) ₹50,000
(B) ₹2, 50,000
(C) ₹16,000
(D) ₹3, 00,000
Answer. A

Question. What will be the amount of gross profit of a firm if its average inventory is ₹80,000, Inventory turnover ratio is 6 times, and the Selling price is 25% above cost?
(A) ₹1, 20,000
(B) ₹1, 60,000
(C) ₹2, 00,000
(D) None of the above.
Answer. A

Question. Current ratio of Adaar Ltd. is 2.5:1. Accountant wants to maintain it at 2:1. Following options are available.
(i) He can repay Bills Payable (ii) He can purchase goods on credit
(iii) He can take short term loan Choose the correct option.
(A) Only (i) is correct
(B) Only (ii) is correct
(C) Only (i) and (iii) are correct
(D) Only (ii) and (iii) are correct
Answer. D

Question. Which of the following statements are true about Ratio Analysis?
i) Ratio analysis is useful in financial analysis.
ii) Ratio analysis is helpful in communication and coordination
iii) Ratio Analysis is not helpful in identifying weak spots of the business.
iv) Ratio Analysis is helpful in financial planning and forecasting.
(A) i, ii and iv
(B) i, iii and iv
(C) i, ii and iii
(D) All are true
Answer. A

Question. Debt to Total Assets Ratio can be improved by:
(A) Borrowing less
(B) Issue of Debentures
(C) Issue of Equity Shares
(D) Redemption of Debt
Answer. B

Question. Which one of the following ratios is most important in determining the long-term solvency of a company?
(A) Profitability Ratio
(B) Debt-Equity Ratio
(C) Stock Turnover Ratio
(D) Current Ratio
Answer. B

Question. Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R):
Assertion (A): Increasing the value of closing inventory increases profit.
Reason (R): Increasing the value of closing inventory reduces the cost of goods sold. In the context of the above two statements, which of the following is correct?
(A) Both (A) and (R) are correct and (R) is the correct reason for (A).
(B) Both (A) and (R) are correct but (R) is not the correct reason for (A).
(C) Only (R) is correct.
(D) Both (A) and (R) are wrong.
Answer. A

Question. Assertion (A): A high operating ratio indicates a favourable position.
Reason (R): A high operating ratio leaves a high margin to meet non-operating expenses.
In the context of the above two statements, which of the following is correct?
(A) Both (A) and (R) are correct and (R) correctly explains (A).
(B) Both (A) and (R) are correct but (R) does not explain (A).
(C) Both (A) and (R) are incorrect.
(D) (A) is correct but (R) is incorrect.
Answer. C

Question. Assertion (A): Total long term debt includes Debentures, long term loans from banks and financial institutions.
Reason (R): Shareholders funds include Equity share capital, Preference share capital, Reserves and surplus.
(A) Both (A) and (R) are correct and (R) is the correct explanation of (A)
(B) Both (A) and (R) are correct and (R) is not the correct explanation of (A)
(C) (A) is correct, but (R) is incorrect
(D) (A) is incorrect, but (R) is correct
Answer. B

Question. Assertion (A): Liquid ratio reveals strength of liquidity of a business unit.
Reason (R): Liquid ratio analyses liquid assets and liquid liabilities of a business unit in order to assess the extent of liquidity.
(A) Both (A) and (R) are correct and (R) is the correct explanation of (A)
(B) Both (A) and (R) are correct and (R) is not the correct explanation of (A)
(C) (A) is correct, but (R) is incorrect
(D) (A) is incorrect, but (R) is correct
Answer. A

Question. Assertion (A): Prepaid Expenses are not considered as liquid assets.
Reason (R): Prepaid Expenses cannot be converted into cash.
(A) Both (A) and (R) are correct and (R) is the correct explanation of (A)
(B) Both (A) and (R) are correct and (R) is not the correct explanation of (A)
(C) (A) is correct, but (R) is incorrect
(D) (A) is incorrect, but (R) is correct
Answer. A

Question. Assertion (A): Current ratio establishes relationship between Current Assets & Current liabilities.
Reason (R): Current Ratio is a part of Activity Ratios
(A) Both (A) and (R) are correct and (R) is the correct explanation of (A)
(B) Both (A) and (R) are correct and (R) is not the correct explanation of (A)
(C) (A) is correct, but (R) is incorrect
(D) (A) is incorrect, but (R) is correct
Answer. C

Question. Assertion (A): Personal bias can be reflected in ratio analysis.
Reason (R): Different people may interpret the same ratio in different ways, which affects its trust ability.
(A) Both (A) and (R) are correct and (R) is the correct explanation of (A)
(B) Both (A) and (R) are correct and (R) is not the correct explanation of (A)
(C) (A) is correct, but (R) is incorrect
(D) (A) is incorrect, but (R) is correct
Answer. A

Question. Assertion (A): Inventories and prepaid expenses are not considered as quick assets.
Reason (R): Inventories take some time before it is converted into cash while prepaid expenses can be converted into cash.
(A) Both (A) and (R) are correct and (R) is the correct explanation of (A)
(B) Both (A) and (R) are correct and (R) is not the correct explanation of (A)
(C) (A) is correct, but (R) is incorrect
(D) (A) is incorrect, but (R) is correct
Answer. C

Question. Assertion (A): The debt to equity ratio will increase at the time of issue of equity shares for cash.
Reason (R): Issue of equity shares will increase the shareholders’ funds but the long-term debts will remain the same.
(A) Both (A) and (R) are correct and (R) is the correct explanation of (A)
(B) Both (A) and (R) are correct and (R) is not the correct explanation of (A)
(C) (A) is correct, but (R) is incorrect
(D) (A) is incorrect, but (R) is correct
Answer. D

Question. Assertion (A): Current ratio is computed to assess the short-term financial position of the enterprise.
Reason (R): Current ratio explains the relation between long term assets and current liabilities of a business.
(A) Both (A) and (R) are correct and (R) is the correct explanation of (A)
(B) Both (A) and (R) are correct and (R) is not the correct explanation of (A)
(C) (A) is correct, but (R) is incorrect
(D) (A) is incorrect, but (R) is correct
Answer. C

 

Please click on below link to download CBSE Class 12 Accountancy Ratio Analysis Worksheet Set A