6. Financial Analysis and Interpretation

Introduction To Ratios — Quiz

Test your understanding of introduction to ratios with 5 practice questions.

Practice Questions

Question 1

A company has a current ratio of $ 2.5:1 $ and an acid test ratio of $ 1.8:1 $. If its current liabilities are $$ \$100,000 $$, what is the value of its inventory?

Question 2

A company's Gross Profit Margin is $ 40\% $. If its Cost of Sales is $$ \$180,000 $$, what is its Sales Revenue?

Question 3

If a company's Return on Capital Employed (ROCE) is $ 12\% $ and its Profit Before Interest and Tax (PBIT) is $$ \$60,000 $$, what is its Capital Employed?

Question 4

A company's Debt-to-Equity ratio is $ 0.8:1 $. If its total debt is $$ \$160,000 $$, what is its total equity?

Question 5

Which of the following scenarios would most likely lead to a significant decrease in a company's Inventory Turnover ratio, assuming all other factors remain constant?