CMA Intermediate · Financial Management and Business Data Analytics · Financial Ratio Analysis
In data analysis of a firm's liquidity, an analyst plots current ratio of ten companies against their quick ratio to see how they move together. Which chart type is most suited to this?
A scatter plot is the right choice because it plots one numeric variable against another and reveals correlation. Current ratio versus quick ratio across companies is a two-variable relationship, unlike pie charts, histograms or Gantt charts.
- APie chart
- BScatter plotCorrect
- CHistogram of one variable
- DGantt chart
Explanation
A scatter plot shows the relationship between two numeric variables, here current and quick ratios. A pie chart shows shares of a whole, a histogram shows one variable's distribution, and a Gantt chart shows schedules.
Did you get it right without looking?
One question tells you little. A timed set on Financial Ratio Analysis shows your real accuracy, how long you take and where you lose marks.
More Financial Ratio Analysis questions
- Kaveri Foods Ltd has sales of Rs 12,00,000, net profit of Rs 96,000, total assets of Rs 6,00,000 and shareholders' equity of Rs 4,00,000. It…
- Arvind Ltd's ROE fell from 20% to 15% while its net profit margin stayed constant at 5%. In the year the equity multiplier rose from 2.0 to …
- Sundaram Textiles Ltd has a net profit margin of 6%, total asset turnover of 2.5 times and an equity multiplier of 1.8. Its return on equity…
- Which of the following is a recognised limitation of financial statement analysis based on published annual reports?
- Sundaram Textiles Ltd has current assets of ₹6,00,000, which include inventory of ₹2,00,000 and prepaid expenses of ₹20,000. Current liabili…
- Hindustan Agro Ltd has a current ratio of 2:1 with current liabilities of ₹5,00,000. It pays ₹1,00,000 of trade payables in cash. What is th…