You are on page 1of 2

TEST 1 (FINANCE)

1. Accounting Ratios are important tools used by a _________?


(a) Managers (b) Researchers (c) Investors (d) All of the above
2. Net Profit Ratio Signifies_________?
(a) Operational Profitability (b) Liquidity Position(c) Big-term Solvency (d) Profit for Lenders.
3. Working Capital Turnover measures the relationship of Working Capital with_____?
(a) Fixed Assets (b) Sales (c) Purchases (d) Stock
4. In Ratio Analysis the term Capital Employed refers to__________?
(a)Equity Share Capital (b) Net worth (c) Shareholders' Funds (d) None of the above.
5. Dividend Payout Ratio is__________?
(a) PAT Capital (b) DPS EPS (c) Pref. Dividend PAT (d) Pref. Dividend Equity Dividend.
6. DU PONT Analysis deals with__________?
(a) Analysis of Current Assets (b) Analysis of Profit (c) Capital Budgeting (d) Analysis of Fixed Assets
7. In Net Profit Ratio the denominator is__________?
(a) Net Purchases (b) Net Sales (c) Credit Sales (d) Cost of goods sold.
8. Inventory Turnover measures the relationship of inventory with__________?
(a) Average Sales (b) Cost of Goods Sold (c) Total Purchases (d) Total Assets.
9. The term 'EVA' is used for__________?
(a)Extra Value Analysis (b) Economic Value Added (c) Expected Value Analysis (d)Engineering Value Analysis.
10. Return on Investment may be improved by__________?
(a)Increasing Turnover (b) Reducing Expenses (c) Increasing Capital Utilization (d) All of the above.
11. In Current Ratio Current Assets are compared with__________?
(a) Current Profit (b) Current Liabilities (c) Fixed Assets (d) Equity Share Capital.
12. ABC Ltd. has a Current Ratio of 1.5__________? 1 and Net Current Assets of Rs. 500000. What are the Current Assets?
(a) Rs. 500000 (b) Rs. 1000000 (c) Rs. 1500000 (d) Rs. 2500000
13. There is deterioration in the management of working capital of XYZ Ltd. What does it refer to?
(a)That the Capital Employed has reduced
(b) That the Profitability has gone up
(c) That debtors collection period has increased
(d) That Sales has decreased.
14. Which of the following does not help to increase Current Ratio?
(a) Issue of Debentures to buy Stock
(b) Issue of Debentures to pay Creditors
(c) Sale of Investment to pay Creditors
(d) Avail Bank Overdraft to buy Machine.
75. Debt to Total Assets Ratio can be improved by__________?
(a) Borrowing More (b) Issue of Debentures (c) Issue of Equity Shares (d) Redemption of Debt
16. Ratio of Net Income to Number of Equity Shares known as__________?
(a) Price Earnings Ratio (b) Net Profit Ratio (c) Earnings per Share (d) Dividend per Share
17. Trend Analysis helps comparing performance of a firm
(a) With other firms (b) Over a period of firm (c) With other industries (d) None of the above.
18. A Current Ratio of Less than One means__________?
(a) Current Liabilities < Current Assets (b) Fixed Assets > Current Assets
(c) Current Assets < Current Liabilities (d) Share Capital > Current Assets.
19. A firm has Capital of Rs. 1000000; Sales of Rs. 500000; Gross Profit of Rs. 200000 and Expenses of Rs. 100000. What is
the Net
Profit Ratio?
(a)20% (b) 50% (c)10% (d)40%.
20. XYZ Ltd. has earned 8% Return on Total Assets of Rs. 5000000 and has a Net Profit Ratio of 5%. Find out the Sales of the
Firm.
(a) Rs. 400000 (b) Rs. 250000(c) Rs. 8000000 (d) Rs. 8333333
21. Suppliers and Creditors of a firm are interested in
(a) Profitability Position (b) Liquidity Position (c) Market Share Position (d) Debt Position.
TRUE OR FALSE
22. Financial statements are an important source of information to shareholders and stakeholders.
23. Preparation of Profit & Loss Appropriation A/c is a requirement under the Companies Act, 1956.
24. Methodical presentation of financial statements helps in Nation of various ratios.
25. Trend Percentage Analysis helps in Dynamic Analysis.
26. In calculation of Acid Test Ratio, Inventory is included in current assets.
27. Debt-Equity Ratio is a measure of long-term solvency of a firm.
28. Return on Equity and Earnings per Share are one and the same thing.
29. BS of a company must be prepared in the horizontal format only.
30. Working Capital Turnover Ratio may be classified as an Activity Ratio.

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

TEST -1 (FINANCE)

31. Which of the following is a measure of Debt Service capacity of a firm?


(a) Current Ratio (b) Acid Test Ratio (c) Interest Coverage Ratio (d) Debtors Turnover.
32. Gross Profit Ratio for a firm remains same but the Net Profit Ratio is decreasing. The reason for such behavior could
be__________?
(a) Increase in Costs of Goods Sold (b) If Increase in Expense (c) Increase in Dividend (d) Decrease in Sales.
33. Which of the following statements is correct?
(a) A Higher Receivable Turnover is not desirable
(b) Interest Coverage Ratio depends upon Tax Rate
(c) Increase in Net Profit Ratio means increase in Sales (d) Lower Debt-Equity Ratio means lower Financial Risk.
34. Debt to Total Assets of a firm is .2. The Debt to Equity boo would be__________?
(a) 0.80 (b) 0.25 (c) 1.00 (d) 0.75
35. Which of the following helps analyzing return to equity Shareholders?
(a) Return on Assets (b) Earnings Per Share (c) Net Profit Ratio (d) Return on Investment.
36. Return on Assets and Return on Investment Ratios belongs to__________?
(a) Liquidity Ratios (b) Profitability Ratios (c) Solvency Ratios (d)Turnover.
37. XYZ Ltd. has a Debt Equity Ratio of 1.5 as compared to 1.3 Industry average. It means that the firm has__________?
(a) Higher Liquidity (b) Higher Financial Risk (c) Higher Profitability (d) Higher Capital Employed.
38. Ratio Analysis can be used to study liquidity turnover profitability etc. of a firm. What does Debt-Equity Ratio help to
Study?
(a) Solvency (b) Liquidity (c) Profitability(d) Turnover
39. In Inventory Turnover calculation what is taken in the numerator?
(a) Sales (b) Cost of Goods Sold (c) Opening Stock (d) Closing Stock.
40. Financial Planning deals with:
(a) Preparation of Financial Statements (b)Planning for a Capital Issue (c) Preparing Budgets (d)All of the above.
41. Financial planning starts with the preparation of:
(a) Master Budget (b) Cash Budget(c) Balance Sheet (d) None of the above.
42. Which of the following is not a part of Master Budget?
(a)Projected Balance Sheet (b) Capital Expenditure Budget (c) Operating Budgets (d) Budget Manual.
43. Which of the following is not shown in Cash Budget?
(a) Proposed Issue of Capital (b) Loan Repayment (c) Interest on loan(d) Depreciation.
44. During year 1 the sales and Cost of goods sold were Rs. 600000 and Rs. 430000 respectively. Next year the sales are
expected to increase by 10%. The Cost of goods sold for next year would be:
(a) Rs. 430000(b) Rs. 490000(c) Rs. 473000(d) Rs. 440000.
45. In 'Percentage of Sales' method of preparation of Projected Financial Statements the Operating Expenses should be
projected on the basis of:
(a) % of Profit before tax (b) % of Cost of goods Sold (c) % of Gross Profit (d) % of Sales.
46. In'% of Sales' method various items of balance sheet are estimated on the basis of.
(a) % of Share Capital (b) % of Sales in current year (c) % of Fixed Assets(d) % of Sales in preceding year.
47. In Projected Balance Sheet a balancing figure:
(a) May appear on Assets Side(b) May appear on Liabilities Side(c) Would never appear(d) Any of (a) or (&).
48. Procedure for preparation of 'Projected Financial Statements' should start from:
(a) Projection of Fixed Assets(b) Projection of Capital(c) Projection of Sales(d) Projection of Profit.
49. Which of the following is not considered which preparing cash budget?
(a) Accrual Principle(b) Difference in Capital and Revenue items (c) Conservation Principle (d) All of the above.
50. Which of the following may not be apart of projected Financial Statements?
(a) Projected Income Statement
(b) Projected Trial Balance
(c) Projected Cash Flow Statement
(d) Projected Balance Sheet.
51. Process of Financial Planning ends with:
(a) Preparation of Projected Statements
(b) Preparation of Actual Statements
(c) Comparison of Actual with Projected
(d) Ordering the employees that projected figures come true.
52. Which of the following is not true for cash Budge?
(a) That shortage or excess of cash would appear in a particular period
(b) All inflows would arise before outflows for those periods
(c) Only revenue nature cash flows are shown
(d) Proposed issue of share capital in shown as an inflow
TRUE OR FALSE
53. Cash planning is a part of long-term financial planning.
54. Financial forecasting is followed by financial planning.
55. Budgeting helps in establishing the responsibilities at different levels.
56. A budget is a collation of forecasts and plans expressed in financial terms.
57. Cash budget is also known as Master Budget.
58. Sales and Production Budgets are Capital Budgets.
59. Rolling Budget System, budget for every month is prepared.
60. Cash budget is an important element of profit planning.
31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

You might also like