Accounting Ratios

What is the accounting standard governing accounting ratios?

• IAS 2

• IFRS3

• IFRS 10

• There is no standards for ratios

The expenses to sales ratios for a business improved over the years. Which one of the below action most probably done to achieve the above results?

• Reduction in distribution costs

• Tax rebates

• Repayment of loans

• None of the above

what is the definition of capital employed for public limited companies?

• Equity Capital + Reserves

• Equity capital+ PSC + Reserves

• Equity capital+PSC+Reserves+NCL

• Equity Capital only

The following ratio is affected by Net Profit Margin and Asset Turnover....

• Returns on equity

• ROCE

• Returns on shareholders fund

• None of the above

What is the optimum ratio suggested for current ratio?

• 1:1

• 1:2

• 4:1

• 2:1

Gearing ratio and interest cover are normally used to measure.......

• Profitability

• Earnings capability

• Long Term Risk

• Short term Rick

In order to calculate the EPS, the shares to be used must be......

• Equity and preference shares

• Preference shares only

• Equity shares only

• None of the above

This ratio measures the confidence of the equity shareholders in the business...

• PE ratio

• EPS

• Dividend yield

• Dividend cover

This ratio measures the amount of operating profit earned for every $1 capital employed. Normally it should be above the governments yield....

• Returns on assets

• ROCE

• ARR

• NPV

The following are the advantages of ratio analysis except...

• Simple and easy to understand by non accountants

• Very cost effective as ready made FS available

• Can use user friendly tools such as Excel

• The only best method to analyse business performance