Match List-I with List-II. LIST I LIST II (A) Liquidity Ratio (I) Int…

Match List-I with List-II.

LIST I	LIST II
(A) Liquidity Ratio	(I) Interest Coverage Ratio
(B) Profitability Ratio	(II) Acid-Test Ratio
(C) Solvency Ratio	(III) Fixed Assets Turnover Ratio
(D) Activity Ratio	(IV) Return on Capital Employed Ratio

Choose the correct answer from the options given below.

Answer & explanation

Correct answer: option 2

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

Each group of ratios answers one question about the business: can it pay its short-term debts, how much does it earn, can it meet its long-term debts, and how well does it use its assets.

(A) Liquidity Ratio — this matches (II) Acid-Test Ratio. It tests the ability to meet current liabilities from quick assets.

(B) Profitability Ratio — this matches (IV) Return on Capital Employed Ratio. It measures the profit earned on the long-term funds used in the business.

(C) Solvency Ratio — this matches (I) Interest Coverage Ratio. It shows how many times the profit before interest and tax covers the interest on long-term debt.

(D) Activity Ratio — this matches (III) Fixed Assets Turnover Ratio. It measures the revenue earned for each rupee invested in fixed assets.

NCERT (2026-27 edition):
Types of Ratios – “… Types of Ratios: There are many types of ratios, viz., liquidity, solvency, activity and profitability ratios. The liquidity ratios include current ratio and acid test ratio. Solvency ratios are calculated to determine the ability of the business to service its debt in the long run instead of in the short run. They include debt equity ratio, total assets to debt ratio, proprietary ratio and interest coverage ratio.”

NCERT (2026-27 edition):
Types of Ratios – “… The turnover ratios basically exhibit the activity levels characterised by the capacity of the business to make more sales or turnover and include Inventory Turnover, Trade Receivables Turnover, Trade Payables Turnover, Working Capital Turnover, Fixed Assets Turnover and Current assets Turnover.”

NCERT (2026-27 edition):
Types of Ratios – “… Profitability ratios are calculated to analyse the earning capacity of the business which is the outcome of utilisation of resources employed in the business. The ratios include Gross Profit ratio, Operating ratio, Net Profit Ratio, Return on investment (Capital employed), Earnings per Share, Book Value per Share, Dividend per Share and Price/Earning ratio.”