Current Liabilities and Financial Ratios Quiz

Test your knowledge on current liabilities & financial ratios with these 16 questions. Understand liquidity, solvency & efficiency.

#1

Which of the following is an example of a current liability?

Accounts payable
Property, plant, and equipment
Common stock
Retained earnings
1 answered
#2

Which of the following is considered a current liability?

Long-term bonds payable
Accumulated depreciation
Prepaid expenses
Short-term notes payable
1 answered
#3

Which of the following is an example of an accrued liability?

Accounts payable
Wages payable
Accounts receivable
Prepaid expenses
1 answered
#4

Which of the following represents a typical example of a short-term liability?

Machinery and equipment
Land and buildings
Accounts payable
Goodwill
1 answered
#5

Which of the following represents a typical example of a current liability?

Long-term loan
Accumulated depreciation
Accounts payable
Goodwill
1 answered
#6

What financial ratio measures a company's ability to cover its short-term liabilities with its short-term assets?

Current ratio
Debt-to-equity ratio
Return on assets
Gross margin ratio
1 answered
#7

If a company's current ratio is less than 1, what does it indicate?

The company is in good financial health
The company is unable to meet its short-term obligations with its current assets
The company has high profitability
The company has low leverage
1 answered
#8

Which of the following is NOT a component of working capital?

Accounts payable
Inventory
Short-term investments
Long-term debt
1 answered
#9

What financial ratio measures a company's ability to generate sales from its assets?

Inventory turnover ratio
Debt ratio
Earnings per share
Return on equity
1 answered
#10

Which of the following is NOT an example of a current liability?

Wages payable
Accrued expenses
Notes payable due in 10 years
Accounts payable
1 answered
#11

If a company has a high current ratio, what does it indicate?

The company is at risk of bankruptcy
The company has a weak liquidity position
The company can easily meet its short-term obligations
The company has low profitability
1 answered
#12

What financial ratio measures a company's ability to pay off its short-term liabilities with its most liquid assets?

Quick ratio
Profit margin ratio
Asset turnover ratio
Price-to-earnings ratio
1 answered
#13

What financial ratio measures the efficiency of a company's management in utilizing its assets to generate earnings?

Operating margin ratio
Return on assets ratio
Debt-to-equity ratio
Inventory turnover ratio
1 answered
#14

What financial ratio measures the proportion of a company's assets financed by creditors versus shareholders?

Debt-to-equity ratio
Current ratio
Quick ratio
Inventory turnover ratio
1 answered
#15

What financial ratio measures a company's ability to meet its short-term obligations using its most liquid assets?

Current ratio
Debt-to-equity ratio
Quick ratio
Return on assets ratio
1 answered
#16

What financial ratio measures the percentage of each sales dollar that results in net income?

Gross profit margin ratio
Operating profit margin ratio
Net profit margin ratio
Return on equity ratio
1 answered

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