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ACCA Knowledge Level Financial Ratios — practice questions

Explore 2 free Financial Ratios questions in ACCA Knowledge Level Financial Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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Financial Ratios questions and exercises with answers

Showing questions 1–2 of 2.

Spot the Lie: Ratios (ACCA FA)Read the answer and worked solution →Fix the Formula (ACCA FA)Read the answer and worked solution →

Worked practice questions

Spot the Lie: Ratios (ACCA FA)

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Questions
  1. False statement
    Gross profit margin is profit for the year over revenue.
    Statements
    1. Current ratio is current assets divided by current liabilities.
    2. The quick ratio excludes inventory.
    3. Gross profit margin is profit for the year over revenue.
  2. False statement
    A higher inventory days figure always means better liquidity.
    Statements
    1. A higher inventory days figure always means better liquidity.
    2. Gearing measures the level of debt finance.
    3. Receivables days estimate how long customers take to pay.
  3. False statement
    Net profit margin is always higher than gross profit margin.
    Statements
    1. ROCE relates profit to capital employed.
    2. Net profit margin is always higher than gross profit margin.
    3. The acid test ratio is a measure of liquidity.
Instructions
Tap the false ratio statement.

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Fix the Formula (ACCA FA)

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Questions
  1. Statement parts
    1. Current ratio
    2. =
    3. current assets
    4. /
    5. non-current liabilities
    Correction
    current liabilities
    Incorrect part
    non-current liabilities
  2. Statement parts
    1. Quick ratio
    2. excludes
    3. receivables
    4. from current assets
    Correction
    inventory
    Incorrect part
    receivables
  3. Statement parts
    1. Gross margin
    2. =
    3. gross profit
    4. /
    5. cost of sales
    Correction
    revenue
    Incorrect part
    cost of sales
  4. Statement parts
    1. Gearing
    2. =
    3. debt
    4. /
    5. revenue
    Correction
    equity plus debt
    Incorrect part
    revenue
Instructions
Tap the incorrect token in the formula.

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More Financial Accounting topics

Ratio AnalysisStatement of Cash FlowsThe Mechanics of the Accounting ProcessInventory ValuationAsset, Liability and Equity AccountsFinancial StatementsAccounting EquationBonds Payable