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Question
If a ratio is computed with one variable from income statement and another variable from balance sheet, it is called as ________ ratio.
If a ratio is computed with one variable from income statement and another variable from balance sheet, it is called as ________ ratio.
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Solution
The correct option is C Composite
If a ratio is computed with one variable from income statement and another variable form balance sheet, it is called as composite ratios. For example Debtors turnover ratio which is the ratio of Credit sales to the average debtors balance, here the figure of sales is a from income statement and debtors figure is from balance sheet.
If a ratio is computed with one variable from income statement and another variable form balance sheet, it is called as composite ratios. For example Debtors turnover ratio which is the ratio of Credit sales to the average debtors balance, here the figure of sales is a from income statement and debtors figure is from balance sheet.
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