ACCA FA Interpretation & Ratios Practice Questions
Interpretation & Ratios makes up 2 of every 50 questions on a Tigertest ACCA FA practice test. Here are 8 of the 8 questions on it, each with the answer and the reason.
Updated by the Tigertest team. Based on ACCA's FA syllabus and study guide for 2026-27, with IFRS 18 formats. Original Section A style questions; Section B not included. Not affiliated with ACCA.
1. Current assets are $186,000, including inventory of $71,000. Current liabilities are $128,000. The quick (acid test) ratio is:
- A.2.5:1
- B.0.9:1
- C.1.5:1
- D.0.6:1
Answer: B. Quick ratio = (current assets - inventory) / current liabilities = $115,000 / $128,000 = 0.9:1. Including inventory gives the current ratio of 1.5:1.
2. Trade receivables are $61,200 and credit sales for the year are $496,400. The receivables collection period is:
- A.49.9 days
- B.54.8 days
- C.8.1 days
- D.45.0 days
Answer: D. Collection period = $61,200 / $496,400 x 365 = 45.0 days. 8.1 is the number of times receivables turn over in a year, not days.
3. Revenue is $350,000 and gross profit $98,000. The gross profit margin is:
- A.28.0%
- B.25.0%
- C.38.9%
- D.72.0%
Answer: A. Margin = gross profit / revenue = $98,000 / $350,000 = 28.0%. Dividing by cost of sales ($252,000) gives the mark-up of 38.9%.
4. Inventory is $47,000 and cost of sales for the year is $391,000. The inventory holding period is:
- A.52.6 days
- B.6.3 days
- C.43.9 days
- D.8.3 days
Answer: C. Inventory days = $47,000 / $391,000 x 365 = 43.9 days. 8.3 is inventory turnover, the number of times a year.
5. A company has loan notes of $300,000 and equity of $700,000. Measuring gearing as debt divided by debt plus equity, gearing is:
- A.70.0%
- B.23.1%
- C.30.0%
- D.42.9%
Answer: C. Gearing = $300,000 / ($300,000 + $700,000) = 30.0%. Debt divided by equity alone gives 42.9%.
6. Profit before financing and income taxes is $84,000 and interest expense is $12,000. Interest cover is:
- A.7 times
- B.0.14 times
- C.8 times
- D.6 times
Answer: A. Interest cover = profit before financing and income taxes / interest expense = $84,000 / $12,000 = 7 times. Deducting the interest first gives 6, which understates cover.
7. A business's receivables collection period rises from 38 days to 61 days. The most likely cause is:
- A.Lower inventory levels
- B.Faster payment by customers
- C.Stricter credit limits
- D.Weaker credit control
Answer: D. Customers are taking longer to pay, which points to poorer chasing of debts or more generous terms. Faster payment and stricter limits would shorten the period.
8. Profit before financing and income taxes is $117,000. Equity is $610,000 and non-current liabilities are $170,000. Return on capital employed is:
- A.18.0%
- B.15.0%
- C.19.2%
- D.11.7%
Answer: B. ROCE = $117,000 / ($610,000 + $170,000) = 15.0%. Using equity alone as capital employed gives 19.2%.
Practice all 8 interpretation & ratios questions, and the rest of the 200-question bank, in the free ACCA FA training sets. Questions you miss come back until you have mastered them.
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