Lesson 6.2.4

6.2.4 Ratio Analysis Quiz: NCFE Business & Enterprise, Unit 6

20 questions · by Revision Ninja

In partnership with Revision Ninja

This free Ratio Analysis quiz has 20 multiple choice questions for the NCFE Level 1/2 Technical Award in Business and Enterprise (NCFE Business & Enterprise), Unit 6: Finance. It covers lesson 6.2.4, Ratio Analysis, one of the ready-made revision sets written with Revision Ninja and organised by unit on Qwiz Rush.

Use it as a starter, a plenary or an end-of-unit check: host it live on the board and students join with a game code on their own devices — no student accounts and nothing to install — or set it for independent revision with Free Play, where each student works through the questions alone.

Every question runs on a 20-second countdown and the fastest correct answers score the most. All the questions and their choices are listed below so you can see what the quiz covers; the answers are revealed in the game. Want to change something? Make your own copy and edit it in your library.

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The 20 questions

  1. How is the acid-test (quick) ratio calculated?

    • Current assets / Current liabilities
    • Current assets / (Current liabilities - inventory)
    • Current liabilities / (Current assets - inventory)
    • (Current assets - inventory) / Current liabilities

  2. How is the net profit margin calculated?

    • (Net profit / Revenue) x 100
    • (Net profit / Gross profit) x 100
    • (Gross profit / Revenue) x 100
    • (Revenue / Net profit) x 100

  3. What does the ROCE ratio measure?

    • Profit earned per £ of capital invested
    • Profit kept from each £ of sales made
    • Cash and debtors available to pay bills due within a year
    • Speed at which inventory is sold

  4. Which group of ratios shows whether a business can meet the bills that fall due in the next few months?

    • Liquidity ratios
    • Profitability ratios
    • Capital gearing ratios
    • Efficiency ratios

  5. A shop has current assets of £60,000 (including £20,000 of inventory) and current liabilities of £30,000. What is its current ratio?

    • 2:1
    • 1.33:1
    • 0.5:1
    • 3:1

  6. Why does the acid-test ratio leave inventory out of current assets?

    • Inventory is classed as a non-current asset
    • Inventory is subtracted from liabilities
    • Inventory can be slow to turn into cash
    • Inventory is recorded at its selling price

  7. A firm's net profit margin rises from 8% to 12%. What does this tell you?

    • Its costs have risen faster than sales
    • It holds more cash in the bank than before
    • Its total profit has risen in pounds
    • It keeps more profit from each £ of sales

  8. Which formula is used to work out return on capital employed (ROCE)?

    • Gross profit / Capital employed x 100
    • Capital employed / Operating profit x 100
    • Operating profit / Capital employed x 100
    • Operating profit / Revenue x 100

  9. How is the current ratio calculated?

    • Current liabilities / Current assets
    • Current assets - Current liabilities
    • Current assets / Current liabilities
    • Current assets / Total assets

  10. A business has an acid-test ratio of 0.4:1. What does this most likely suggest?

    • It is making a loss on its sales
    • It has borrowed too much relative to its share capital
    • It may struggle to pay debts due soon
    • It is holding too much idle cash

  11. What does the net profit margin ratio tell you about a business?

    • Whether debts due within a year can be met from current assets
    • The profit earned on the capital invested by its owners
    • The profit left from each £1 of sales after costs
    • How much cash is held compared with inventory

  12. What is the formula for calculating net profit margin?

    • (Total sales / Net profit) * 100
    • (Net profit / Total sales) * 100
    • (Net profit / Capital employed) * 100
    • (Gross profit / Total sales) * 100

  13. What does return on capital employed (ROCE) measure?

    • The profit made for each £1 of sales revenue
    • Whether current assets cover current liabilities
    • The profit earned for each £1 of capital invested
    • How much of the capital employed is borrowed rather than owned

  14. What is the formula for calculating ROCE?

    • (Operating profit / Total sales) * 100
    • (Capital employed / Operating profit) * 100
    • (Net profit / Capital employed) * 100
    • (Operating profit / Capital employed) * 100

  15. What does the current ratio measure?

    • How much profit is made from each £1 of sales
    • Whether long-term loans can be repaid on time
    • Whether short-term debts can be met from assets
    • How quickly inventory is sold and replaced

  16. What is the formula for calculating the current ratio?

    • (Current assets - Inventory) / Current liabilities
    • Current assets / Current liabilities
    • Current assets / Total liabilities
    • Current liabilities / Current assets

  17. What does the acid-test ratio measure?

    • How efficiently invested capital earns profit
    • How much profit is left once costs are paid
    • Whether debts can be paid from current assets including stock
    • Whether debts can be paid without selling stock

  18. What is the formula for calculating the acid-test ratio?

    • (Current assets - Inventory) / Current liabilities
    • (Current assets + Inventory) / Current liabilities
    • Current assets / Current liabilities
    • Current liabilities / (Current assets - Inventory)

  19. A café has sales revenue of £250,000, gross profit of £100,000 and net profit of £20,000. What is its net profit margin?

    • 40.0%
    • 8.0%
    • 12.5%
    • 20.0%

  20. A shop's acid-test ratio has fallen from 1.1 to 0.6 in a year. What does this most likely suggest?

    • It is earning a poor return on capital employed
    • It is making a loss on each product it sells
    • Its cash has grown faster than its short-term debts
    • It may struggle to pay its short-term debts