Lesson 5.12.1

5.12.1 Ratio analysis Quiz: OCR Business, Unit 5

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 5.12.1, Ratio analysis: 20 multiple choice questions for the OCR Business (H431), Unit 5: Accounting and finance, written with Revision Ninja.

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The 20 questions

  1. What formula is used to calculate the current ratio?

    • Current assets ÷ total assets
    • Current assets − current liabilities
    • Current liabilities ÷ current assets
    • Current assets ÷ current liabilities

  2. Which asset is excluded from current assets when calculating the acid test ratio?

    • Cash at bank
    • Prepayments
    • Trade receivables
    • Inventory

  3. Which ratio measures the proportion of capital employed financed by long-term debt?

    • Gearing ratio
    • ROCE
    • Interest cover
    • Current ratio

  4. A firm has operating profit of £100,000 and interest expenses of £20,000. What is its interest cover?

    • 0.2 times
    • 5 times
    • 20%
    • 5%

  5. What ratio measures how long it takes a business to collect payment from customers?

    • Stock turnover
    • Creditor turnover
    • Asset turnover
    • Debtor turnover

  6. Creditor turnover days is calculated using trade payables divided by which expense?

    • Cost of sales
    • Total revenue
    • Current assets
    • Operating profit

  7. A high stock turnover ratio indicates that a business is doing what with inventory?

    • Holding excessive stock
    • Selling it quickly
    • Writing off obsolete goods
    • Delaying supplier payments

  8. Which formula calculates Return on Capital Employed (ROCE) for a business?

    • (Operating profit ÷ revenue) × 100
    • (Operating profit ÷ capital employed) × 100
    • (Net profit ÷ equity) × 100
    • (Gross profit ÷ capital employed) × 100

  9. Return on equity compares net profit after tax against which balance sheet figure?

    • Current liabilities
    • Total shareholders' equity
    • Capital employed
    • Total assets

  10. A company pays total dividends of £50,000 across 100,000 ordinary shares. What is the dividend per share?

    • 5%
    • £2
    • 50p
    • £5

  11. What ratio compares the annual dividend per share to the current market share price?

    • Earnings per share
    • Price/earnings ratio
    • Dividend yield
    • Dividend per share

  12. Profit after tax divided by the total number of ordinary shares gives which financial ratio?

    • Dividend yield
    • Return on equity
    • Earnings per share
    • Price/earnings ratio

  13. A share costs £10 and has earnings per share of £2. What is its P/E ratio?

    • 20%
    • 0.2
    • £5
    • 5

  14. Which ratio measures how effectively a firm generates sales revenue from its fixed assets?

    • Current ratio
    • Non-current asset turnover
    • Stock turnover
    • ROCE

  15. What main financial risk is associated with having a high gearing ratio?

    • Poor stock flow
    • High interest burden
    • Low asset value
    • Excess cash

  16. What term describes manipulating accounting statements to present a financial position better than reality?

    • Asset turnover
    • Ratio analysis
    • Window dressing
    • Capital expenditure

  17. What current ratio benchmark is traditionally considered ideal for a typical manufacturing business?

    • 1.5 to 2.0
    • 0.5 to 1.0
    • 3.0 to 5.0
    • 10 to 12

  18. A firm has revenue of £200,000 and net profit of £30,000. What is its net profit margin?

    • 15%
    • 85%
    • 6.67%
    • 150%

  19. Which factor represents a major qualitative limitation of ratio analysis?

    • Ignores staff morale
    • Uses past financial figures
    • Requires mathematical formulas
    • Relies on monetary values

  20. Which ratio is calculated as gross profit divided by sales revenue, expressed as a percentage?

    • Net profit margin
    • Operating profit margin
    • Return on equity
    • Gross profit margin

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