# Financial Ratios and Ratio Analysis MCQs

When interpreting financial statements, it is important to ascertain who are the users of accounts and what information they need.

## Financial Ratios and Ratio Analysis MCQs

When interpreting financial statements, it is important to ascertain who are the users of accounts and what information they need. Here on MCQs.club we have prepared easy and useful Multiple-Choice Questions (MCQs) on ratio analysis and financial ratios that fully cover current ratio, debt to equity ratio, interest coverage ratio, profitability ratio, accounts receivable/payable turnover, financial leverage ratio, working capital turnover ratio. We have prepared mcqs on different types of financial ratios, including the most important financial ratios with examples, uses and purpose of financial ratios. Theses are a complete list of accounting ratios. These common ratios for financial analysis are useful for competitive exams, professional exams, accountancy exams and business management exams.

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1. When interpreting financial statements, it is important to ascertain who are the users of accounts and what information they need.
1. True
2. False
2. Users of financial statements include:
1. shareholders and potential investors
2. suppliers and lenders
3. financial journalists and commentators
4. All of the above
3. Gross profit margin – This is the margin that the company makes on its sales, and would be expected to remain reasonably constant.
1. True
2. False
4. The Gross profit margin ratio is affected by only a small number of variables, a change may be traced to a change in:
1. selling prices
2. sales mix
3. purchase cost and production cost
4. All of the above
5. Any changes in operating profit margin should be considered further:
1. Are they in line with changes in gross profit margin?
2. Are they in line with changes in sales revenue?
3. As many costs are fixed, they need not necessarily increase/decrease with a change in revenue.
4. Look for individual cost categories that have increased/decreased significantly.
5. All of the above
6. For calculating the ROCE ration profit is measured as:
2. the PBIT, i.e. the profit before taking account of any returns paid to the providers of long-term finance.
3. Both A&B
4. None
7. For ROCE ratio the ‘Capital employed’ is measured as equity, plus interest-bearing finance, i.e. the long-term finance supporting the business.
1. True
2. False