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Accountancy Question on Ratio analysis

Match List-I with List-II.

List-I**List-II **
(A) Test of Activity(I) Acid Test Ratio
(B) Test of Liquidity(II) Debt Equity Ratio
(C) Test of Solvency(III) Debtor Turnover Ratio
(D) Test of Profitability(IV) Return on Investment Ratio
A

(A)-(III), (B) - (I), (C)- (II), (D) - (IV)

B

(A)-(I), (B)-(II), (C)-(III), (D) - (IV)

C

(A)-(IV), (B) - (III), (C)- (II), (D) - (I)

D

(A)-(I), (B) - (IV), (C) - (III), (D) - (II)

Answer

(A)-(III), (B) - (I), (C)- (II), (D) - (IV)

Explanation

Solution

Test of Activity is matched with Debtor Turnover Ratio (A)-(III), as it measures how efficiently a company is using its assets. - Test of Liquidity is matched with Acid Test Ratio (B)-(I), which measures a company’s ability to meet short-term obligations. - Test of Solvency is matched with Debt Equity Ratio (C)-(II), which assesses long-term financial stability. - Test of Profitability is matched with Return on Investment Ratio (D)-(IV), which evaluates how profitably a company is utilizing its investments.