4. Finance
Ratio Analysis — Quiz
Test your understanding of ratio analysis with 5 practice questions.
Practice Questions
Question 1
A business has a Net Profit of $\text{\pounds}180,000$, Sales Revenue of $\text{\pounds}900,000$, and Capital Employed of $\text{\pounds}720,000$. Calculate its Return on Capital Employed (ROCE).
Question 2
Which of the following actions would most effectively improve a business's Acid Test Ratio (Quick Ratio) without significantly impacting its long-term operational capacity?
Question 3
A business has Sales Revenue of $\text{\pounds}800,000$, Cost of Sales of $\text{\pounds}480,000$, and Operating Expenses of $\text{\pounds}160,000$. Calculate its Profit from Operations Margin.
Question 4
Why is it crucial to compare a business's financial ratios against industry averages and historical trends?
Question 5
A business has an Inventory Turnover of 6 times per year. If its Cost of Sales is $\text{\pounds}600,000$, what is its average inventory value?