Financial ratios

Which of the following is not a financial performance ratio

• Acid test ratio

• Labour turnover rate

• Net profit margin

•  Return on capital employed

Calculating the return on capital employed(ROCE) provides information on a firm’s

• Effectiveness in its use of capital resources

• Financial return to potential investors and shareholders

• Liquidity

• Profitability position

Which ratio would a business prefer not to be very high in value?

• Current ratio

• Gross profit margin

• Net profit margin

• Return on capital employed

The acid test ratio can be used to identify a firm’s

• Ability to pay its long term liabilities

• Ability to pay its short term debts

• Financial return on the use of fixed assets

• Profitability position

The net profit margin can be used to identify a firm’s

• Ability to control its overheads

• Ability to pay its debts

• Amount of return to its shareholders

• Profitability position

Capital employed is equal to

• Assets employed minus long-term liabilities

• Net assets minus liabilities

• Shareholders’ funds plus long-term liabilities

• Shareholders’ funds minus long-term liabilities

Ratio analysis cannot address which question below?

• Can the firm pay its liabilities?

• Has the firm’s market share improved?

• How does the firm’s performance compare to its rivals

• How profitable is the business?