Question

Financial position ratio is generally shown in —

• A. Simple ratio
• B. Percentage
• C. Times
• D. None of these

Hint:

Liquidity and solvency ratios (like current or debt-equity) are best shown in simple ratio form for clarity.

Answer 1

The Correct Option is A

Step 1: Understanding Financial Position Ratios.
Financial position ratios are used to measure a company’s liquidity, solvency, and stability based on its financial statements.
Examples include current ratio, debt-equity ratio, and proprietary ratio.
Step 2: Expression of these ratios.
These ratios are generally expressed in simple ratio form (like 2:1, 1:1), rather than in percentages or times.
This simple ratio format helps compare the relationship between two financial statement items easily.
Step 3: Analysis of options.
- (1) Simple ratio: Correct — expresses relation like 2:1, 3:2, etc.
- (2) Percentage: Incorrect — used mainly in profitability ratios.
- (3) Times: Incorrect — used in turnover or activity ratios.
- (4) None of these: Incorrect — option (1) is correct.
Step 4: Conclusion.
Thus, the Financial position ratio is generally shown in Simple ratio form.