The term "factoring" refers to which of the following?

• A) Selling all accounts receivable to different companies
• B) Paying all notes payable when they come due
• C) Selling accounts receivable to a particular company
• D) Paying all accounts payable at the end of the year

A company has declared and paid a cash dividend of Rs. 1 million among the share holders. What will be its effect on the net working capital of the company?

• A) Decrease
• B) Depends upon the situation
• C) No effect
• D) Increase

Companies that have low gross profit rates often need which type of inventory turnover rate in order to operate profitably?

• A) High inventory turnover
• B) High seasonal inventory turnover
• C) Inventory turnover equal to industry average
• D) Low inventory turnover

Which of the following would NOT improve the current ratio?

• A) Sell common stock to reduce current liabilities
• B) Sell fixed assets to reduce accounts payable
• C) Issue long-term debt to buy inventory
• D) Borrow short term to finance additional fixed assets

The gross profit margin is unchanged, but the net profit margin declined over the same period. When this could have happened?

• A) Cost of goods sold increased relative to sales
• B) The tax rate has increased
• C) Sales increased relative to expenses
• D) Dividends were decreased

Nishat Corporation had net income of Rs. 100,000, paid income taxes of Rs. 30,000, and had interest expense of Rs. 8,000. What was Nishat's times interest earned ratio?

• A) 12.5
• B) 16.25
• C) 17.85
• D) 17.25

Which group of ratios relates gain on sales and investment?

• A) Liquidity ratios
• B) Profitability ratios
• C) Debt ratios
• D) Coverage ratios

A company can improve (lower) its debt-to-total asset ratio by doing which of the following?

• A) Borrow more
• B) Shift short-term debt to long-term debt
• C) Sell common stock
• D) Shift long-term debt to short-term debt

ABC company Ltd has 40% debt-to-total assets ratio. What is its debt-to-equity ratio?

• A) 40%
• B) 20%
• C) 60%
• D) 66.67%

Which group of ratios measures a firm's ability to meet short-term obligations?

• A) Liquidity ratios
• B) Debt ratios
• C) Profitability ratios
• D) Coverage ratios

Which of the following is NOT true about the current ratio?

• A) Current ratio of a company may be grater than quick ratio
• B) Current ratio of a company is always less than cash ratio
• C) Long term loan paid will decrease the current ration of a period
• D) It shows the liquidity of the business

The high cash ratio of a company may indicate that:

• A) All of the given option
• B) The company is not managing its cash well
• C) The company has resources to expand its business
• D) The company has high amount of cash and cash equivalents

How is the gross profit margin calculated?

• A) (Gross profit divided by sales) x 100
• B) (Gross profit divided by investment) x 100
• C) Gross profit less overheads
• D) Sales less cost of sales

Which of the following depreciation methods charges higher depreciation in early years and lower rate in later years?

• A) Straight Line Method
• B) Accelerated-Depreciation method
• C) Written Down Value method
• D) Straight Line Method and Accelerated-Depreciation method

The most widely used means of estimating periodic depreciation expense is the ____________ method.

• A) Double declining balance
• B) Accelerated depreciation method
• C) Straight line
• D) Sum of the year digit methods

The owner(s) of which of the following are personally liable for the debt of the business?

• A) Private Company
• B) Single member Corporations
• C) Public Limited Company
• D) Sole proprietorship

Which of the following accounts would be increased by a debit?

• A) Equity and revenues
• B) Liabilities and expenses
• C) Assets and expenses
• D) Assets and equity

In inventory management, the interest foregone on money invested in inventory is considered as:

• A) Stock out cost
• B) Reorder cost
• C) Safety cost
• D) Holding cost

Terms of sales in a credit policy includes decision (s) regarding:

• A) Credit period
• B) Credit discount
• C) All of the given options
• D) Credit instrument

According to the hedging approach to financing, seasonal variations in current assets should be financed with:

• A) Long-term debt
• B) Common stock.
• C) Retained earnings.
• D) Short-term debt.