Question

Match the items of List I with the items in List II.

Answer 1

1. Capital gearing ratio is used to show the proportion of fixed interest bearing capital to funds belonging to the shareholder. It is used to measure the long term solvency of the company.
2. Fixed asset turnover used to measure the efficiency with which the firm uses its fixed asset to generate revenue.
3. Return on equity measures the profitability of the funds invested in the company. In other words it calculates the percentage returns generated to equity shareholders.
4. Acid test or quick ratio is used to measure the short term solvency of the company.