CHAPTER 12 Theory Questions


1 Does a rising Liquidity Ratio mean management are prudent? Explain. 2 What does Gross Profit % measure? 3 What does Net Profit % measure? 4 What are the uses for ratio analysis? 5 Who are the users of ratio analysis? 6 What are the limitations of ratio analysis? 7 What is a risk-free investment? 8 What does Return on Capital Employed measure? 9 What does Return on Shareholders’ Funds measure?


10 What does Stock Turnover measure? 11 What is Average Stock? 12 What does average period of credit given measure? 13 What does average period of credit received measure? 14 Compare and contrast two Liquidity Ratios. 15 What does the term Insolvency mean? 16 What does the term Overtrading mean? 17 What does Gearing measure? Use an appropriate ratio in your explanation. 18 What does Earnings per Share measure? 19 What does Dividend per Share measure? 20 What does Price Earnings Ratio measure? 21 What does Dividend Cover measure? 22 What does Dividend Yield measure? 23 What does Price Dividend Ratio measure? 24 What does Interest Cover measure?


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