Match the following lists.
| LIST 1 | LIST 2 |
| A) Current assets | I) Inventory turnover ratio |
| B) Quick assets | II) Debt-equity ratio |
| C) Shareholder's funds | III) Quick ratio |
| D) Cost of Revenue from operations | IV) Current ratio |
Choose the correct answer from below.
Answer & explanation
Correct answer: option 3
The correct answer is option 3- A-IV, B-III, C-II, D-I .
| LIST 1 | LIST 2 |
| A) Current assets | IV) Current ratio |
| B) Quick assets | III) Quick ratio |
| C) Shareholder's funds | II) Debt-equity ratio |
| D) Cost of Revenue from operations | I) Inventory turnover ratio |
* Current assets
Current Ratio = Current Assets / Current Liabilities
The Current Ratio measures a company's ability to meet its short-term obligations using its current assets. It assesses short-term liquidity and the company's ability to cover current liabilities.
* Quick assets
Quick Ratio = Quick Assets /Current Liabilities
The Quick Ratio measures a company's ability to meet its short-term liabilities using its most liquid assets, excluding inventory. It provides a more stringent measure of liquidity compared to the Current Ratio.
* Shareholder's funds
Debt-Equity Ratio = Long-term Debts / Shareholders’ Funds
The Debt-Equity Ratio measures the proportion of a company's financing that comes from long-term debt relative to shareholders' equity. It is an indication of the company's financial leverage or how much it relies on debt financing versus equity financing.
* Cost of Revenue from operations
Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory
The Inventory Turnover Ratio measures how efficiently a company manages its inventory. It indicates how many times a company's inventory is sold and replaced during a specific period.