Question : The short-term solvency is which of the following?
Option 1: Debtors turnover ratio
Option 2: Liquid ratio
Option 3: Stock turnover ratio
Option 4: Price earning ratio
Correct Answer: Liquid ratio
Solution : Ratios including the current ratio, acid test ratio, inventory turnover ratio, and accounts receivable turnover ratio are used to determine if a company has enough liquid assets to cover short-term obligations when they become due. Hence option 2 is the correct answer.
Question : Which of the following shows the Long term solvency?
Option 1: Debt/Equity Ratio
Option 2: Liquid Ratio
Option 3: Debtor Turnover Ratio
Option 4: Quick Ratio
Question : The liquidity ratio is also called________?
Option 1: Long-term solvency Ratio
Option 2: Medium-term solvency Ratio
Option 3: Short-term solvency Ratio
Option 4: All of the above
Question : Which of the following is the Capital Gearing Ratio?
Option 1: Profitability Ratio
Option 2: Activity Ratio
Option 3: Long-term Solvency Ratio
Option 4: None of the above
Question : If the liquid ratio were 1.2:1, the money obtained from debtors would affect the liquid ratio?
Option 1: Increase gross profit ratio
Option 2: Increasing liquid ratio
Option 3: Have no effect on the liquid ratio
Option 4: Decrease liquid ratio
Question : Which of the following tells long-term solvency?
Option 1: Debt equity ratio
Option 2: Proprietary ratio
Option 3: Fixed assets ratio
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