Finance — ratios
AQA GCSE Business Studies revision on Finance — ratios. Aligned to the AQA GCSE Business 8132 specification. This bank has 10 practice questions on this topic.
Sample questions (3 of 10)
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Question 1
Which of the following ratios is used to measure the liquidity of a business?
- A) Gross Profit Margin
- B) Current Ratio
- C) Return on Capital Employed
- D) Net Profit Margin
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Answer: Current Ratio
Liquidity refers to how easily a business can turn assets into cash to meet immediate obligations. The current ratio is calculated by dividing current assets by current liabilities, providing a snapshot of short-term financial health.
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Question 2
If a business has current assets of 20,000 pounds and current liabilities of 10,000 pounds, what is its current ratio?
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Answer: 2:1
The formula for the current ratio is current assets divided by current liabilities. Here, 20,000 divided by 10,000 equals 2, which is expressed as a ratio of 2:1.
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Question 3
Which formula correctly represents the Gross Profit Margin?
- A) (Gross Profit / Revenue) * 100
- B) (Net Profit / Revenue) * 100
- C) (Revenue / Gross Profit) * 100
- D) (Gross Profit / Cost of Sales) * 100
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Answer: (Gross Profit / Revenue) * 100
This ratio identifies how efficiently a business produces its goods or services before accounting for overheads. By dividing gross profit by revenue and multiplying by 100, you determine the percentage of every pound of sales that contributes to gross profit.
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7 more questions on Finance — ratios — plus mistakes tracking and spaced repetition across the whole Business Studies spec.