Match List-I with List-II.
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List-I |
List-II |
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(A) Test of Activity |
(I) Acid Test Ratio |
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(B) Test of Liquidity |
(II) Debt equity Ratio |
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(C) Test of Solvency |
(III) Debtor Turnover Ratio |
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(D) Test of Profitability |
(IV) Return on Investment Ratio |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (A)-(III), (B)-(I), (C)-(II), (D)-(IV)
Ratios are grouped by the purpose for which they are calculated:
(A) Test of Activity — this matches (III) Debtor Turnover Ratio. It shows how fast debtors are collected.
(B) Test of Liquidity — this matches (I) Acid Test Ratio. It tests the ability to meet current liabilities from quick assets.
(C) Test of Solvency — this matches (II) Debt equity Ratio. It measures long-term debt against owners’ funds.
(D) Test of Profitability — this matches (IV) Return on Investment Ratio. It measures profit earned on capital employed.
NCERT (2026-27 edition):
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