McqMate
Chapters
| 1. |
When the concept of ratio is defined in respect to the item shown in the financial statements, it is termed as |
| A. | accounting ratio |
| B. | financial ratio |
| C. | costing ratio |
| D. | none of the above |
| Answer» B. financial ratio | |
| 2. |
The relationship between two financial variables can be expressed in: |
| A. | pure ratio |
| B. | percentage |
| C. | rate or time |
| D. | all the above |
| Answer» D. all the above | |
| 3. |
Stock is considered as a liquid asset as anytime it can be converted into cash immediately. |
| A. | yes |
| B. | no |
| C. | only yes |
| D. | none of the above |
| Answer» B. no | |
| 4. |
Return on properties funds is also known as. |
| A. | return on net worth |
| B. | return on shareholders fun |
| C. | return on the shareholders’ investment |
| D. | all the above |
| Answer» D. all the above | |
| 5. |
What will be the Gross Profit if , total sales is Rs 2,60,000,cost of net goods sold is Rs 2,00,000 & sales return is Rs10,000 ? |
| A. | 13 % |
| B. | 28% |
| C. | 26% |
| D. | 20% |
| Answer» D. 20% | |
| 6. |
Which of the following is not included in current assets. |
| A. | debtors |
| B. | stock |
| C. | cash at bank |
| D. | cash in hand |
| Answer» B. stock | |
| 7. |
Liquidity ratios are expressed in |
| A. | pure ratio form |
| B. | percentage |
| C. | rate or time |
| D. | none of the above |
| Answer» A. pure ratio form | |
| 8. |
Working capital turnover ratio can be determined by : |
| A. | ( gross profit / working capital ) |
| B. | ( cost of goods sold / net sales ) |
| C. | ( cost of goods sold / working capital) |
| D. | none of the above |
| Answer» A. ( gross profit / working capital ) | |
| 9. |
Determine Working capital turnover ratio if, Current asset is Rs 1,50,000, current liability is Rs 1,00,000 & cost of goods sold is Rs 3,00,000. |
| A. | 5 times |
| B. | 6 times |
| C. | 3 times |
| D. | 1.5 times |
| Answer» B. 6 times | |
| 10. |
Profit for the objective of calculating a ratio may be taken as |
| A. | profit before tax but after interest |
| B. | profit before interest &tax |
| C. | profit after interest & tax |
| D. | all the above |
| Answer» D. all the above | |
| 11. |
If sales is Rs 5,00,000 & net profit is Rs 1,20,000 Net profit ratio is |
| A. | 24% |
| B. | 41% |
| C. | 60% |
| D. | none of the above |
| Answer» A. 24% | |
| 12. |
General profitability ratios are based on |
| A. | investment |
| B. | sales |
| C. | a & b |
| D. | none of the above |
| Answer» B. sales | |
| 13. |
Determine stock turnover ratio if, Opening stock is Rs 31,000 , Closing stock is Rs 29,000, Sales is Rs 3,20,000 & Gross profit ratio is 25% on sales. |
| A. | 31 times |
| B. | 11 times |
| C. | 8 times |
| D. | 32 times |
| Answer» C. 8 times | |
| 14. |
The ratios which reveal the final result of the managerial policies and performance is . |
| A. | turnover ratios. |
| B. | profitability ratios. |
| C. | short term solvency ratio. |
| D. | long term solvency ratio. |
| Answer» B. profitability ratios. | |
| 15. |
Return on investment is a |
| A. | turnover ratios. |
| B. | short term solvency ratio. |
| C. | profitability ratios. |
| D. | long term solvency ratio. |
| Answer» C. profitability ratios. | |
| 16. |
Net profit ratio is a . |
| A. | turnover ratio. |
| B. | long term solvency ratio. |
| C. | short term solvency ratio |
| D. | profitability ratio. |
| Answer» D. profitability ratio. | |
| 17. |
Stock turnover ratio is a . |
| A. | turnover ratio. |
| B. | profitability ratio. |
| C. | short term solvency ratio. |
| D. | long term solvency ratio. |
| Answer» A. turnover ratio. | |
| 18. |
Current ratio is a |
| A. | short-term solvency ratio. |
| B. | long-term solvency ratio. |
| C. | profitability ratio. |
| D. | turnover ratio. |
| Answer» A. short-term solvency ratio. | |
| 19. |
Proprietary ratio is a |
| A. | short-term solvency ratio. |
| B. | long-term solvency ratio. |
| C. | profitability ratio. |
| D. | turnover ratio. |
| Answer» B. long-term solvency ratio. | |
| 20. |
Fixed assets ratio is a |
| A. | short-term solvency ratio. |
| B. | long-term solvency ratio. |
| C. | profitability ratio. |
| D. | turnover ratio. |
| Answer» B. long-term solvency ratio. | |
| 21. |
Fixed assets turnover ratio is a |
| A. | short-term solvency ratio. |
| B. | long-term solvency ratio. |
| C. | profitability ratio. |
| D. | turnover ratio. |
| Answer» D. turnover ratio. | |
| 22. |
The ratio which measures the profit in relation to capital employed is known as |
| A. | return on investment. |
| B. | gross profit ratio. |
| C. | operating ratio. |
| D. | operating profit ratio. |
| Answer» A. return on investment. | |
| 23. |
Return on equity is also called |
| A. | return on investment. |
| B. | gross profit ratio. |
| C. | return on shareholders’ funds. |
| D. | return on net worth. |
| Answer» D. return on net worth. | |
| 24. |
Preliminary expenses is an example of . |
| A. | fixed assets. |
| B. | current assets. |
| C. | fictitious assets. |
| D. | current liabilities. |
| Answer» C. fictitious assets. | |
| 25. |
Prepaid expenses is an example of . |
| A. | fixed assets. |
| B. | current assets. |
| C. | fictitious assets. |
| D. | current liabilities. |
| Answer» B. current assets. | |
| 26. |
The ratio which is calculated to measure the productivity of total assets is |
| A. | return on equity. |
| B. | return on shareholders’ funds. |
| C. | return on total assets. |
| D. | return on equity share holders’ funds. |
| Answer» C. return on total assets. | |
| 27. |
The ratio which shows the proportion of profits retained in the business out of the current year’s profits is |
| A. | retained earnings ratio. |
| B. | payout ratio |
| C. | earnings per share. |
| D. | price earnings ratio |
| Answer» A. retained earnings ratio. | |
| 28. |
The ratio establishes the relationship between profit before interest and tax and fixed interest charges is |
| A. | interest cover ratio. |
| B. | fixed dividend cover ratio. |
| C. | debt service coverage ratio. |
| D. | dividend yield ratio. |
| Answer» A. interest cover ratio. | |
| 29. |
The ratio shows the preference dividend as a proportion of profit available for shareholders is |
| A. | interest cover ratio. |
| B. | fixed dividend cover ratio. |
| C. | debt service coverage ratio. |
| D. | dividend yield ratio. |
| Answer» B. fixed dividend cover ratio. | |
| 30. |
The dividend is related to the market value of shares in . |
| A. | interest cover ratio. |
| B. | fixed dividend cover ratio. |
| C. | debt service coverage ratio. |
| D. | dividend yield ratio. |
| Answer» D. dividend yield ratio. | |
| 31. |
Turnover ratio is also known as . |
| A. | activity ratios. |
| B. | solvency ratios. |
| C. | liquidity ratios. |
| D. | profitability ratios. |
| Answer» A. activity ratios. | |
| 32. |
Inventory or stock turnover ratio is also called . |
| A. | stock velocity ratio. |
| B. | debtors velocity ratio. |
| C. | creditors velocity ratio. |
| D. | working capital turnover ratio. |
| Answer» A. stock velocity ratio. | |
| 33. |
The ratio which measures the relationship between the cost of goods sold and the amount of average inventory is |
| A. | stock turnover ratio. |
| B. | debtors velocity ratio. |
| C. | creditors velocity ratio. |
| D. | working capital turnover ratio. |
| Answer» A. stock turnover ratio. | |
| 34. |
Sales – Gross Profit = . |
| A. | net profit. |
| B. | administrative expenses. |
| C. | cost of production. |
| D. | cost of goods sold. |
| Answer» D. cost of goods sold. | |
| 35. |
Opening stock + purchases + direct expenses – closing stock = |
| A. | net profit. |
| B. | cost of production |
| C. | administrative expenses. |
| D. | cost of goods sold |
| Answer» D. cost of goods sold | |
| 36. |
Which ratio measures the number of times the receivables are rotated in a year in terms of sales? |
| A. | stock turnover ratio. |
| B. | debtors turnover ratio. |
| C. | creditors velocity ratio. |
| D. | working capital turnover ratio. |
| Answer» B. debtors turnover ratio. | |
| 37. |
Debtors turnover ratio is also called . |
| A. | stock turnover ratio. |
| B. | debtors velocity ratio. |
| C. | creditors velocity ratio. |
| D. | working capital turnover ratio |
| Answer» B. debtors velocity ratio. | |
| 38. |
Creditors turnover ratio is also called |
| A. | stock turnover ratio. |
| B. | debtors velocity ratio. |
| C. | accounts payables ratio. |
| D. | working capital turnover ratio. |
| Answer» C. accounts payables ratio. | |
| 39. |
The primary purpose of the liquidity ratios is to determine |
| A. | how much working capital is tied up in inventory? |
| B. | the relative level of short-term debt. |
| C. | how well a firm is able to pay off short-term obligations? |
| D. | more than one of the above. |
| Answer» C. how well a firm is able to pay off short-term obligations? | |
| 40. |
Which of the following statements about liquidity ratios is true? |
| A. | the higher the current ratio, the more likely a firm is able to pay its short-term obligations. |
| B. | the lower the quick ratios relative to the current ratio, the safer a firm is in terms of liquidity. |
| C. | the ratio of net working capital to total assets always lies between 0 and 1. |
| D. | relatively high current ratios are usually a sign of efficient working capital management. |
| Answer» A. the higher the current ratio, the more likely a firm is able to pay its short-term obligations. | |
| 41. |
The ________ ratios help determines the degree of financial risk and earnings volatility present in a firm. |
| A. | profitability |
| B. | asset utilization |
| C. | liquidity |
| D. | none of the above. |
| Answer» D. none of the above. | |
| 42. |
Which of the following statements are true? |
| A. | debt to equity and debt to asset ratios measure capital structure and vary widely among industries. |
| B. | debt utilization ratios alone do not measure a firm\s ability to meet its cash obligations. |
| C. | dupont analysis considers the impact of debt on the profitability of the firm. |
| D. | two of the above are true. |
| Answer» D. two of the above are true. | |
| 43. |
Debt-equity ratio is a sub-part of |
| A. | short-term solvency ratio |
| B. | long-term solvency ratio |
| C. | debtors turnover ratio |
| D. | none of the above |
| Answer» D. none of the above | |
| 44. |
The most precise test of liquidity is |
| A. | quick ratio |
| B. | current ratio |
| C. | absolute liquid ratio |
| D. | none of the above |
| Answer» C. absolute liquid ratio | |
| 45. |
Quick ratio is 1.8:1, current ratio is 2.7:1 and current liabilities are Rs 60,000. Determine value of stock. |
| A. | rs 54,000 |
| B. | rs 60,000 |
| C. | rs 1, 62,000 |
| D. | none of the above |
| Answer» A. rs 54,000 | |
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