Question : The ratios are primarily measures of the earning capacity of the business.
Option 1: Activity
Option 2: Debt
Option 3: Profitability
Option 4: Liquidity
Correct Answer: Profitability
Solution : The ability of an entity to generate profits can be assessed using profitability ratios like net profit ratio, gross profit ratio, return on capital used, etc.
Hence the correct answer is option 3.
Question : The following groups of ratios primarily measure risk:
Option 1: Liquidity, activity and profitability
Option 2: Liquidity, activity and debt
Option 3: Liquidity, debt and profitability
Option 4: Liquidity, activity and common stock
Question : Where is the Debt Equity Ratio covered?
Option 1: Liquidity Ratio
Option 2: Activity Ratio
Option 3: Operating Ratio
Option 4: Solvency Ratios
Question : Which ratios provide information critical to the firm's long-term operation?
Option 1: Profitability
Option 2: Solvency
Option 3: Activity
Question : ---------------------ratios measure how well the facilities at the disposal of the concern are being utilized.
Option 1: Solvency ratio
Option 2: Liquidity ratio
Option 3: Activity ratio
Option 4: Profitability ratio
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