Match List-I with List-II.

Choose the correct answer from the options given below:

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

The correct answer is option 2- (A)-(II), (B)-(III), (C)-(IV), (D)-(I).

(A) Current ratio- (II) Current Assets/Current Liabilities.
Current ratio is the proportion of current assets to current liabilities. It is expressed as follows: Current Ratio = Current Assets/Current Liabilities.
Current assets include current investments, inventories, trade receivables (debtors and bills receivables), cash and cash equivalents, short-term loans and advances and other current assets such as prepaid expenses, advance tax and accrued income, etc. Current liabilities include short-term borrowings, trade payables (creditors and bills payables), other current liabilities and short-term provisions.

(B) Operating Margin- (III) 100-Operating Ratio.
Operating Profit Ratio is calculated to reveal operating margin. It may be computed directly or as a residual of operating ratio. Operating Profit Ratio = 100 – Operating Ratio. ‘Operating Profit Ratio’ helps to analyse the performance of business and throws light on the operational efficiency of the business. It is very useful for inter-firm as well as intra-firm comparisons. Lower operating ratio is a very healthy sign.

(C) Return on Capital employed- (IV) Profit before interest and tax/Capital employed X 100.
Return on Capital Employed explains the overall utilisation of funds by a business enterprise. Capital employed means the long-term funds employed in the business and includes shareholders’ funds, debentures and long-term loans. Profit refers to the Profit Before Interest and Tax (PBIT) for computation of this ratio. Thus, it is computed as follows: Return on Investment (or Capital Employed) = Profit before Interest and Tax/ Capital Employed × 100. It measures return on capital employed in the business. It reveals the efficiency of the business in utilisation of funds entrusted to it by shareholders, debenture-holders and long-term loans. For inter-firm comparison, return on capital employed funds is considered a good measure of profitability. It also helps in assessing whether the firm is earning a higher return on capital employed as compared to the interest rate paid. 

(D) Price earning ratio- (I) Market Price of a share/EPS. 
Price / Earning Ratio is computed as Market Price of a share/earnings per share. For example, if the EPS of X Ltd. is Rs. 10 and market price is Rs. 100, the price earning ratio will be 10 (100/10). It reflects investors expectation about the growth in the firm’s earnings and reasonableness of the market price of its shares. P/E Ratio vary from industry to industry and company to company in the same industry depending upon investors perception of their future.