Directions: State whether the following statement is True Or False.

Equity to fixed interest bearing securities is Acid Test Ratio.

Directions: State whether the following statement is True Or False.

Debt Equity Ratio is a 'Solvency Ratio.'

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Ratio analysis is a technique of planning and control.

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Rate of return on capital employed is a turnover ratio.

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A firm’s ability to meet the interest charges and repayment dues on long term obligations is referred to as its solvency.

Directions: State whether the following statement is True Or False.

Capital gearing is the ratio of debt to equity.

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Low gearing is preferable to high gearing.

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Acid test denotes liquidity.

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For Stock Turnover Ratio, average stock is to be calculated.

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A decreased Stock Turnover Ratio usually indicates expanding business.

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Purchase of stock-in-trade is application of funds.

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Funds flow refers to change in long term funds.

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The funds flow statement shows changes in the individual items comprising of working capital.

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Fund flow analysis shows the position of business as on the closing date of business period.

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A decrease in current liabilities increases working capital.

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Cash or credit sales at a profit increase the working capital.

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Cash flow statement reveals the effects of transactions involving movement of cash.

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Amortization of preliminary expenses is a use of funds.

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Payment of dividend is a use of funds.

Directions: State whether the following statement is True Or False.

Purchase of fixed asset is a use of funds.

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For Fund Flow Statements, provision for taxation will be treated as an item of internal source.

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The term ‘funds’ means ‘current assets’ in case of a cash flow analysis.

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Working capital is the difference between fixed assets and current assets.

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A “Cash Flow Statement” can very well be equated with an “Income Statement”.

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A company should keep large balances of cash in hand so that it can meet all contingencies.