MCQ Bank
The amount of current assets that varies with seasonal requirements is referred to as which of the following?
- A) Temporary Working Capital
- B) Gross Working Capital
- C) Net Working Capital
- D) Permanent Working Capital
What will be the effect on the day’s sales in accounts receivables of a company if it closed during peak activity?
- A) Accounts receivables will be understated for service firms
- B) Accounts receivables will have no effect
- C) Accounts receivables will be understated
- D) Accounts receivables will be overstated
If gross profit stays high, but net profit falls this implies which of the following?
- A) The expenses of the business are firmly under control
- B) The market is becoming saturated
- C) The expenses of the business may be growing too rapidly
- D) Competitive pressures are increasing
Which of the following statement best describes the operating profit margin?
- A) It shows what portion of profits are being distributed to shareholders
- B) It shows what return is being made on assets employed in the business
- C) It shows how efficiently a company is turning profits into cash
- D) It shows how well a company is controlling its costs, including overheads
Felton Farm Supplies, Inc., has 8 percent return on total assets of Rs. 300,000 and a net profit margin of 5 percent. What are its sales?
- A) Rs. 480,000
- B) Rs. 3,750,000
- C) Rs. 1,500,000
- D) Rs. 300,000
Which of the following would NOT result in an improved overall gross margin of a business?
- A) Increased selling price of existing products
- B) Introduction of new products with a higher gross profit margin
- C) Higher discounts offered to customers
- D) A fall in raw material prices resulting in a lower cost of sales
Which of the following is MOST likely to offer you the higher rate of return together with the highest risk?
- A) defence saving certificates
- B) Preference shares
- C) Government bonds
- D) Ordinary shares
The suppliers of your company are more concerned to which of the following ratios?
- A) Long term solvency ratios
- B) Coverage ratios
- C) Liquidity ratios
- D) Leverage ratios
Who is internal user of the financial statements?
- A) Media and the general public
- B) Shareholders
- C) Financial institutions
- D) Prospective investors
Which of the following ratio is calculated in order to know the liquidity of the trade debtors?
- A) Defensive interval ratio
- B) Total Asset Turnover ratio
- C) Accounts receivables turnover
- D) Operating cycle
In the vertical analysis of income statement, all the accounts are expressed as a percentage of which of the following?
- A) Net sales
- B) Gross sales
- C) Net income
- D) Total expenses
Which group of ratios relates the financial charges of a firm to its ability to service them?
- A) Coverage ratios
- B) Liquidity ratios
- C) Debt ratios
- D) Profitability ratios
Return on Sales is also known as which of the following?
- A) Firm's return on total assets
- B) Firm's return on investment
- C) Firm's operating profit margin
- D) Firm's gross profit margin
To financial analysts, "working capital" means the same thing as which of the following?
- A) Total assets
- B) Fixed assets
- C) Current assets
- D) Current assets minus current liabilities
Ratio analysis may be undertaken to study liquidity, turnover, profitability, and other indicators. To which does the current ratio most relate?
- A) Solvency
- B) Stability
- C) Liquidity
- D) Profitability
If a firm has Rs. 100 in inventories, a current ratio equal to 2:1, and a quick ratio equal to 1:1, what is the firm's Net Working Capital?
- A) Rs. 200
- B) Rs. 1,000
- C) Rs. 100
- D) Rs. 0
Which of the following represent the length of time from the commitment of cash for purchases until the collection of receivables resulting form the sale of services?
- A) Accounting cycle
- B) Cash cycle
- C) Operating cycle
- D) Cash conversion cycle
Which of the following is NOT a form of financial analysis?
- A) Trend analysis
- B) Ratio analysis
- C) Du Pont analysis
- D) SWOT Analysis
Earnings per share, return on sales, and return on equity are all examples of which of the following?
- A) Liquidity ratios
- B) Turnover ratios
- C) Leverage ratios
- D) Profitability ratios
Which of the following indicates the relative size of each item included in a total?
- A) Relative percentages
- B) Both trend and component percentages
- C) Trend percentages
- D) Component percentages