Question

When ratio is calculated using both figures from the income statement it is known as .

• A. Balance sheet ratios
• B. Income statement ratios
• C. Composite ratios
• D. All of the above

Answer 1

The correct option is B Income statement ratios

When ratio is calculated using both figures from the income statement it is known as Income statement ratios. For example Gross profit ratio is calculated using Gross profit figure and the Net sales figure from the income statement and therefore is known as income statement ratios.