Question

Match List-I with List-II and select the correct answer using the codes given the following lists.

List-I	List-II
I. Financial leverage	(a) Efficiency
II. Quick ratio	(b) Profitability
III. Stock turnover	(c) Liquidity
IV. Margin on sales	(d) Risk

• A. I-(d), II-(c), III-(a), IV-(b)
• B. I-(a), II-(b), III-(d), IV-(c)
• C. I-(d), II-(b), III-(a), IV-(c)
• D. I-(a), II-(c), III-(d), IV-(b)

Answer 1

The correct option is A I-(d), II-(c), III-(a), IV-(b)

Financial leverage which is also known as leverage or trading on equity, refers to the use of debt to acquire additional assets.

The quick ratio is an indicator of a company’s short-term liquidity position and measures a company’s ability to meet its short-term obligations with its most liquid assets.

The inventory turnover ratio is an efficiency ratio that shows how effectively inventory is managed by comparing cost of goods sold with average inventory for a period. This measures how many times average inventory is “turned” or sold during a period.

The profit margin ratio, also called the return on sales ratio or gross profit ratio, is a profitability ratio that measures the amount of net income earned with each dollar of sales generated by comparing the net income and net sales of a company.