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CS Executive Practice Test: Ratio Analysis – Corporate and Management Accounting
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CS Executive Practice Test: Ratio Analysis – Corporate and Management Accounting
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25 Questions

1. In an organization, the current ratio is 2.5, the liquid ratio 1.5, prepaid expenses nil, and stock ₹ 4,000. The amount of current liabilities is –
2. Return on investment (ROI) is calculated to measure
3. Assertion (A):
Either the gross profit ratio, the better it is.
Reason (R):
A low gross profit ratio indicates an unfavorable trend in the form of a reduction in selling prices.
Select the correct answer from the following
4. Conducted to ensure borrowings capacity of a concern to meet contingencies in near future is:
5. ABC Ltd. has earned 12% returns on total assets of ₹ 8,00,000 and has a net profit ratio of 8%. Sales of the firm shall be:
6. Which of the following statement(s) is/are true:
(i) Common size balance sheet is a vertical financial analysis
(ii) Financial analysis performed on behalf of shareholders is called internal analysis
(iii) Trend percentage may be used for both balance sheet and profit and loss account.
Select the correct answer from the options given below
7. Working capital will not change if there is:
8. Which of the following is not a limitation of financial statements
9. Dividing net credit sales by average debtors would yield
10. Cost of Goods Sold is ₹ 90 Lakh, Purchases are ₹ 96 Lakh and Closing Stock is ₹ 18 Lakh, then Stock Turnover Ratio will be:
11. Which of the following is not an objective of Management Accounting
12. Proprietor’s net capital employed is known as:
13. Working capital ratio is also known as:
14. Which one of the following statements is correct
15. Assertion (A)
Accountants do not take into consideration the price level changes while valuing various assets in different periods.
Reason (R)
It is difficult to determine the value of assets, as the value of assets changes with change in time.
Select the correct answer from the options given below
16. Gross profit ratio for a firm was 20% in the year 2015 and 2016 but the net profit ratio was 15% in the year 2015 and 12% in the year 2016. The reason for such behavior could be
17. If average collection period is 15 days and average account receivables is ₹ 45,000, the total amount of credit sales will be (assume 360 days in a year)
18. EBIT/Total assets ratio is:
19. Which of the following pairs is correctly matched
20. The ratio that explains how efficiently companies use their assets to generate sales is:
21. DStatement-I:
If any fixed asset remains idle due to abnormal or unusual events, it should be included in capital employed.
Statement-II:
Idle machines and tools required for the normal operation of the plant would not be included in capital employed.
Select the correct answer from the following
22. Short-term solvency is indicated by:
23. Return on investment depends on two ratios
24. Statement -1
Working capital is short-term capital that is financed from long-term sources.
Statement – II
Working capital turnover measures the relationship of working capital with sales.
Select the correct answer from the options given below
25. are necessary for the study of trends and direction of movements in the financial position and operating results of a concern

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