_________ ratio refers to the analysis of profits in relation to sales or funds (or assets) employed in the business and the ratios calculated to meet this objective.

Liquidity

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Profitability

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Activity

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Solvency

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Solution

The correct option is B Profitability
Profitability ratios like net profit ratio, gross profit ratio, return on capital employed, etc are helpful in determining the profit earning capacity of an entity. Such ratios also assist in analyzing the performance of the company; which are helpful in decision making to the investors and other stakeholders of an entity.

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Similar questions

Q. The twin objective to ensure availability of funds whenever required, includes a proper estimation of the funds required for different purposes such as for the purchase of _______ assets or to meet day-today expense of business.

A ______ working capital turnover ratio indicates that a business is investing in too many accounts receivable and inventory assets to support its sales.

Q. ratios are calculated to analyse the profitability position of a business.

___

refer to the possibility of inadequate profits or even losses due to uncertainties or unexpected events which a business cannot control.

Q. A and B are partners in a business sharing profits in the ratio of

4 : 5

. They admit C into their business and they decided to share the profit in the ratio of

2 : 3 : 1.

To accommodate C , by what ratio do A and B have to give up the share of profits ?

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