WAEC Accounting 2015 Theory — Question 6
Question 6 of 13 from the West African Examinations Council (WAEC) Accounting 2015 Theory paper, with the correct answer and a full explanation.
Advertisement
3(a). State two ratios which fall under each of the following classification of accounting ratios: (i) Profitability; (ii) Activity; (iii) Liquidity; (iv) Investment; (v) Leverage.
Model answer
(i) Profitability ratio: Gross profit margin ratio; Return on capital employed ratio; Net profit margin ratio. (ii) Activity ratio: Rate of stock turnover; Average collection period; Average payment period. (iii) Liquidity ratio: Current asset ratio; Acid test ratio; Working capital. (iv) Investment ratio: Earnings per share; Profit-earning ratio; Dividend ratio. (v) Leverage ratio: Gearing ratio; Time interest earned ratio.
Advertisement
Sign up free to unlock
- Score tracking
- Practice history
- Saved questions
- Progress dashboard
- Personalized sessions
- Weak-topic breakdown
…and/or go further with premium services and No Ads.