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CA Inter Financial Ratio — practice questions

Explore 50 free Financial Ratio questions in CA Inter Financial Management. Open each question or exercise to read its content, reference answers and available explanation.

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Financial Ratio questions and exercises with answers

Showing questions 1–30 of 50.

Which group of ratios measures the cash available to pay off debt?Read the answer and worked solution →Efficiency (activity) ratios mainly show how quickly a firm does what?Read the answer and worked solution →Debt ratios help judge a firm's ability to do what?Read the answer and worked solution →Which ratios capture how investors respond to owning a company's stock?Read the answer and worked solution →Ratios that gauge asset use and expense control to earn an acceptable return are called what?Read the answer and worked solution →Comparing different companies' ratios at one point in time is known as what?Read the answer and worked solution →Comparing a firm's current ratios with its own past ratios is called what?Read the answer and worked solution →Ratio values come from the income statement, cash flows and which other statement?Read the answer and worked solution →If a ratio is above 1, its reciprocal will be what?Read the answer and worked solution →Which ratio is usually quoted as a multiple rather than a percentage?Read the answer and worked solution →In financial statements, EBIT stands for what?Read the answer and worked solution →In ratio work, what does EPS stand for?Read the answer and worked solution →In a firm's accounts, COGS denotes which item?Read the answer and worked solution →Net sales are stated after deducting which items from invoices?Read the answer and worked solution →Why are ratios of firms in different industries hard to compare?Read the answer and worked solution →Financial ratios are generally not useful unless they are what?Read the answer and worked solution →Besides managers and shareholders, who also uses financial ratios?Read the answer and worked solution →The name DuPont analysis derives from what?Read the answer and worked solution →DuPont analysis separates which measure into its component parts?Read the answer and worked solution →The three-step DuPont breakdown uses profit margin, asset turnover and what?Read the answer and worked solution →In DuPont analysis, financial leverage is measured by which ratio?Read the answer and worked solution →Net income divided by pretax profit gives a firm's what?Read the answer and worked solution →A firm with no debt or financial leverage has an interest burden of what?Read the answer and worked solution →In the extended DuPont model, return on sales (ROS) is which ratio?Read the answer and worked solution →The equity multiplier equals average total assets divided by what?Read the answer and worked solution →Which kind of business may depend heavily on very high asset turnover with thin margins?Read the answer and worked solution →Which sector relies on high leverage to generate an acceptable ROE?Read the answer and worked solution →The DuPont ROA ratio combines which two effects?Read the answer and worked solution →In which year did a DuPont salesman's efficiency report containing the formula reach superiors?Read the answer and worked solution →In profit margin, the percentage is calculated on which base?Read the answer and worked solution →

Worked practice questions

Which group of ratios measures the cash available to pay off debt?

  1. Market-based ratios
  2. Efficiency ratios
  3. Profitability ratios
  4. Liquidity ratios
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Correct answer: D. Liquidity ratios

Liquidity ratios look at how readily a firm can find cash to settle what it owes.

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Efficiency (activity) ratios mainly show how quickly a firm does what?

  1. Pays its yearly dividends
  2. Lists its shares on a bourse
  3. Raises fresh long-term debt
  4. Converts non-cash assets into cash
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Correct answer: D. Converts non-cash assets into cash

Activity ratios track the speed at which assets such as stock and debtors turn into cash.

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Debt ratios help judge a firm's ability to do what?

  1. Raise fresh equity capital
  2. Turn stock into cash
  3. Pay its next dividend
  4. Repay its long-term debt
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Correct answer: D. Repay its long-term debt

Debt ratios show how heavily borrowed funds finance the business and whether long-term loans can be met.

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More Financial Management topics

Sources of FinanceCost of Capital BasicsLeverage (Finance)Working CapitalCapital Structure BasicsDividend BasicsCapital Budgeting BasicsDividend Policies