Q1: 1. What does the current ratio measure?

• A) Liquidity
• B) Profitability
• C) Efficiency
• D) Solvency

Q2: 2. Which ratio measures a company's ability to meet its short-term obligations with its most liquid assets?

• A) Quick Ratio
• B) Debt to Equity Ratio
• C) Return on Assets Ratio
• D) Inventory Turnover Ratio

Q3: 3. The debt to equity ratio is used to assess

• A) Profitability
• B) Liquidity
• C) Solvency
• D) Efficiency

Q4: 4. Which ratio measures how efficiently a company is using its assets to generate revenue?

• A) Asset Turnover Ratio
• B) Gross Profit Margin
• C) Return on Investment
• D) Operating Profit Margin

Q5: 5. Gross profit margin is calculated by dividing gross profit by

• A) Net Sales
• B) Cost of Goods Sold
• C) Operating Expenses
• D) Total Assets

Q6: 6. Which ratio measures the proportion of a company's earnings before interest and taxes to its total revenue?

• A) Operating Profit Margin
• B) Return on Equity
• C) Earnings Per Share
• D) Price to Earnings Ratio

Q7: 7. The return on equity ratio is used to evaluate

• A) Liquidity
• B) Profitability
• C) Efficiency
• D) Solvency

Q8: 8. Which ratio measures the relationship between a company's net income and its total assets?

• A) Return on Assets
• B) Price Earnings Ratio
• C) Current Ratio
• D) Debt Ratio

Q9: 9. A high inventory turnover ratio indicates

• A) Slow-moving inventory
• B) Efficient inventory management
• C) Low sales volume
• D) Excessive inventory levels

Q10: 10. The quick ratio excludes which of the following from current assets?

• A) Inventory
• B) Accounts Receivable
• C) Prepaid Expenses
• D) Cash and Cash Equivalents

Q11: 11. The acid-test ratio is another name for

• A) Quick Ratio
• B) Debt to Equity Ratio
• C) Return on Investment
• D) Asset Turnover Ratio

Q12: 12. Which ratio measures the relationship between a company's net income and its shareholders' equity?

• A) Return on Equity
• B) Gross Profit Margin
• C) Debt Ratio
• D) Price to Earnings Ratio

Q13: 13. A low debt ratio indicates

• A) High financial leverage
• B) Financial stability
• C) Liquidity issues
• D) Inefficient use of debt

Q14: 14. Which ratio measures the company's ability to cover its interest expenses from its operating earnings?

• A) Interest Coverage Ratio
• B) Return on Investment
• C) Inventory Turnover Ratio
• D) Price to Earnings Ratio

Q15: 15. The price-earnings ratio is used to

• A) Assess liquidity
• B) Evaluate profitability
• C) Measure investor sentiment
• D) Determine asset efficiency

Q16: 16. Which ratio measures the proportion of net income available to common shareholders relative to the market price per share?

• A) Earnings Per Share
• B) Asset Turnover Ratio
• C) Return on Equity
• D) Debt to Equity Ratio

Q17: 17. Return on investment is calculated by dividing net profit by

• A) Total Assets
• B) Shareholders' Equity
• C) Net Sales
• D) Cost of Goods Sold

Q18: 18. Which ratio measures the relationship between a company's stock price and its earnings per share?

• A) Price to Earnings Ratio
• B) Operating Profit Margin
• C) Debt Ratio
• D) Gross Profit Margin

Q19: 19. The inventory turnover ratio is calculated by dividing cost of goods sold by

• A) Beginning Inventory
• B) Ending Inventory
• C) Average Inventory
• D) Sales Revenue

Q20: 20. Which ratio measures the relationship between a company's operating income and its total revenue?

• A) Operating Profit Margin
• B) Return on Equity
• C) Earnings Per Share
• D) Price to Earnings Ratio

Q21: 21. The debt ratio is calculated by dividing total liabilities by

• A) Total Assets
• B) Shareholders' Equity
• C) Net Income
• D) Operating Income

Q22: 22. Which ratio measures the company's ability to cover its short-term liabilities with its most liquid assets?

• A) Quick Ratio
• B) Debt to Equity Ratio
• C) Return on Assets
• D) Inventory Turnover Ratio

Q23: 23. A high return on assets ratio indicates

• A) Inefficient use of assets
• B) Strong profitability
• C) Low asset turnover
• D) High financial leverage

Q24: 24. Which ratio measures the company's ability to generate profits from its equity financing?

• A) Return on Equity
• B) Gross Profit Margin
• C) Debt Ratio
• D) Price to Earnings Ratio

Q25: 25. The asset turnover ratio is calculated by dividing net sales by

• A) Total Assets
• B) Shareholders' Equity
• C) Net Income
• D) Operating Income