Match List-I with List-IIList-I(ACCOUNTING RATIO)List-II(CATEGORY)(A)…

Match List-I with List-II

List-I (ACCOUNTING RATIO)		List-II (CATEGORY)
(A)	Total Assets to Debt Ratio	(I)	Profitability Ratio
(B)	Investment (Net assets) Turnover Ratio	(II)	Solvency Ratio
(C)	Acid-Test Ratio	(III)	Activity Ratio
(D)	Return on Investment	(IV)	Liquidity 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) - (III), (C) - (IV), (D) - (I)

Accounting ratios are grouped by what they measure: short-term ability to pay, long-term ability to pay, efficiency in using assets, and earning power.

(A) Total Assets to Debt Ratio — this matches (II) Solvency Ratio. It tests whether the firm’s assets cover its long-term debt, which is its ability to meet long-term obligations.

(B) Investment (Net assets) Turnover Ratio — this matches (III) Activity Ratio. It shows how many times the net assets employed are turned into revenue from operations, a measure of efficiency.

(C) Acid-Test Ratio — this matches (IV) Liquidity Ratio. It checks the firm’s ability to pay its current liabilities from quick assets.

(D) Return on Investment — this matches (I) Profitability Ratio. It measures the profit earned on the capital employed.

NCERT (2026-27 edition):
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):
Activity (or Turnover) Ratio – “… The important activity ratios calculated under this category are 1. Inventory Turnover; 2. Trade receivable Turnover; 3. Trade payable Turnover; 4. Investment (Net assets) Turnover 5. Fixed assets Turnover; and 6. Working capital 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.”