Financial analysis and ratios quiz: N(A)-Level Principles of Accounts (SEAB 7086) quiz

Gross profit over sales, as a percentage

Profit for the year over sales, as a percentage

Sales over gross profit, as a percentage

Gross profit over cost of sales, as a percentage

$3.5\%$

$35\%$

$65\%$

$135\%$

The gross profit margin

The current ratio

The profit margin

They are always equal

Current liabilities divided by current assets

Current assets divided by sales

Current assets minus current liabilities

Current assets divided by current liabilities

$2:1$

$1:2$

$15:1$

$45:1$

It adds inventory

It excludes inventory from current assets

It uses non-current assets

It divides by sales instead

$2:1$

$0.75:1$

$1.25:1$

$3:1$

Because ratios are illegal on their own

Because the bank requires three ratios

Because comparison changes the figures

Because a ratio means little until compared with a previous year, budget or another business

Running expenses have risen

The cost of goods has risen sharply

Sales have doubled

Inventory was undervalued

It means the business is making a loss

It may mean resources are idle, such as too much inventory or cash earning nothing

It always means fraud

It means the business cannot pay its debts

Ratios are too easy to calculate

Ratios always give the exact future profit

Ratios use past figures and ignore non-financial factors

Ratios can only be used by banks

$1 of current assets for every$2 of current liabilities

$2 of current assets for every$1 of current liabilities

Twice as many non-current assets as liabilities

Made twice the profit of last year