Download Multiple Choice Multiple Answer Question The limitations of ratio analysis are

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Multiple Choice Multiple Answer
Question
The limitations of ratio analysis are
Correct Answer Ratios are based on historical financial statements rather than future
happenings , Ratios are only indicators, they cannot be taken as final
regarding good or bad financial position of the business , Ratio analysis takes
in to consideration only monetary transactions
Your Answer
Ratios are based on historical financial statements rather than future
happenings , Ratio analysis provides data for inter-firm comparison , Ratio
analysis takes in to consideration only monetary transactions
True/False
Question
Carrying cost of inventory includes cost incurred for preparation of purchase
requisition
Correct Answer False
Your Answer
True
True/False
Question
The excessive issue of equity shares may result in over-capitalisation to be
realized in future
Correct Answer True
Your Answer
True
Multiple Choice Single Answer
Question
Net revenue is arrived at
Correct Answer Sales revenue less cost
Your Answer
Sales revenue less tax liability
Match The Following
Question
Correct Answer
Your Answer
Term loan
represents a source of debt
finance which is generally
repayable in more than one
year but less than ten years
unsecured borrowings for the
company
Lessee
Not able to claim depreciation Residue left behind from
on asset
earnings available to equity
shareholders after the payment
of annual dividend
Hirer
Claims the depreciation on the instruments to raise long term
asset
debt capital
Retained earnings
Residue left behind from
earnings available to equity
shareholders after the
payment of annual dividend
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represents a source of debt
finance which is generally
repayable in more than one
year but less than ten years
Multiple Choice Single Answer
Question
The ratio which indicates the credit policy followed by a business firm is
known as
Correct Answer Debtors turnover ratio
Your Answer
Creditors turnover ratio
True/False
Question
Debtors turnover ratio is normally supported by the calculations of average
collection period
Correct Answer True
Your Answer
False
True/False
Question
The mostly used methods of short term forcasting is the Receipt and
Payment method
Correct Answer True
Your Answer
True
Match The Following
Question
Correct Answer
Your Answer
Financial ratios
Ratios disclosing the financial
position or solvency of the
firm
Ratios which indicates the
percentage of return on the
total capital employed in the
business
Profitability ratio
Ratios which reflect the final
Ratios measuring the efficiency
results of business operations with which the assets are
employed by a firm
Turnover ratios
Ratios measuring the
Ratios which reflect the final
efficiency with which the
results of business operations
assets are employed by a firm
Overall profitability ratio
Ratios which indicates the
percentage of return on the
total capital employed in the
business
The ratios indicate the long
term financial prospects of the
company
Multiple Choice Single Answer
Question
The rate of return which computes the average annual yield on the net
investment in the project is known as
Correct Answer Accounting rate of return
Your Answer
Return on investment
Multiple Choice Single Answer
Question
The hidden cost of capital which is not incurred directly is referred to as
Correct Answer Implicit cost
2
Your Answer
Explicit cost
Multiple Choice Single Answer
Question
For the calculation of Operating Profit / Loss , Preliminary expenses written
off should be
Correct Answer added to the Net Profit as per Profit and loss account
Your Answer
Deducted from the Net Profit as per Profit and loss account
Select The Blank
Question
Cost management is the function of a ________.
Correct Answer Treasurer
Your Answer
Finance manager
Multiple Choice Multiple Answer
Question
Advantages of Debentures from company's point of view are
Correct Answer The specific cost of debt capital represented by debentures is lower than the
cost of preference or equity capital , Debenture financing does not result in
dilution of control
Your Answer
The specific cost of debt capital represented by debentures is lower than the
cost of preference or equity capital , Debenture financing does not result in
dilution of control , Debenture prices are vulnerable to increase in interest
rates
Select The Blank
Question
If the project is accepted, Internal Rate of return resulting from the same
should be ________ than cost of capital
Correct Answer more
Your Answer
more
Select The Blank
Question
For accounting and tax purposes of hire purchase agreement, ________ is
treated as revenue expenditure and is considered to be a tax deductible
expenditure
Correct Answer Only interest
Your Answer
Lease rental
True/False
Question
Following lenient dividend policy without bothering much about building up
the reserves may be the cause for undercapitalisation
Correct Answer False
Your Answer
True
Select The Blank
Question
The following data are extracted from the published accounts of a company :
Sales Rs. 38,00,000/-, Net Profit after tax Rs. 2,50,000/-, Equity capital Rs.
3
10,00,000/-,General Reserve Rs. 6,50,000/-, Rs. Long term debt Rs.
7,00,000/-, Creditors Rs. 6,90,000/-, Bank credit/short term loan Rs.
2,30,000/-, Fixed Assets Rs. 17,50,000/-, Inventories Rs. 7,25,000/-, Other
Current assets Rs. 5,25,000/-. The Inventory Turnover ratio is ________
Correct Answer 5.24
Your Answer
8.85
Multiple Choice Multiple Answer
Question
If Profit maximization is accepted as the only goal of finance function, it is
criticised on the following grounds
Correct Answer Ignores risk factor , Does not consider social obligation , Ignores quality
aspect of benefits associated with a financial course of action
Your Answer
Ignores risk factor , Does not consider social obligation , Ignores quality
aspect of benefits associated with a financial course of action
Multiple Choice Multiple Answer
Question
The depreciation is being charged for the following assets
Correct Answer Plant and Machinery , Building
Your Answer
Plant and Machinery , Building , Stock
Multiple Choice Multiple Answer
Question
Advantages of the issue of Bonus shares in the form of Dividend to the
company are
Correct Answer Remedy for undercapitalisation , Increase marketability of shares , Increase
credit standing of the company in the eyes of the lending financial
institutions
Your Answer
Remedy for overcapitalisation , Remedy for undercapitalisation , Increase
marketability of shares
True/False
Question
A partnership is an incorporated association of individuals.
Correct Answer False
Your Answer
True
True/False
Question
Wealth maximization goal is only an extension of Profit maximization goal of
the organisation
Correct Answer True
Your Answer
True
Multiple Choice Single Answer
Question
From the following data, work out the Economic order quantity : Annual
Demand : 5000 units, Ordering cost Rs. 60 per order, Price per unit Rs. 100,
Inventory carrying cost is 15% on average inventory
Correct Answer 200 units
Your Answer
250 units
4
Multiple Choice Multiple Answer
Question
The factor may provide the following services to the client
Correct Answer It may undertake the credit analysis of the customers of the client , It will
undertake the various book-keeping and accounting activities in relation to
the receivables management , It undertakes the responsibility of following up
with the customers for the purpose of making the collection from the
customer
Your Answer
It may undertake the credit analysis of the customers of the client , It will
undertake the various book-keeping and accounting activities in relation to
the receivables management , It undertakes the responsibility of following up
with the customers for the purpose of making the collection from the
customer
Multiple Choice Multiple Answer
Question
Advantages of Preference shares from shareholders point of view
Correct Answer For a corporate investor, preference dividend income , It earns a stable
dividend rate
Your Answer
For a corporate investor, preference dividend income , It earns a stable
dividend rate , Enjoys controlling power over the firm
True/False
Question
With limited funds, the company must obtain the optimum combination of
acceptable investment proposals
Correct Answer True
Your Answer
True
Select The Blank
Question
________ leverage also acts as a guideline in setting maximum limit upto
which the company should use the debt capital
Correct Answer Financial
Your Answer
Operating
Multiple Choice Single Answer
Question
Interest coverage ratio is useful in indicating the symptom of
Correct Answer Inability to pay interest
Your Answer
True/False
Question
Inability to pay dues to financial institutions
Financial lease is also referred to as Capital lease
Correct Answer True
Your Answer
True
Multiple Choice Single Answer
Question
Technical terminology used to invest in the current assets being
5
Correct Answer Working Capital Management
Your Answer
Working Capital Management
Multiple Choice Multiple Answer
Question
The advantages of stable Dividend policy are
Correct Answer Credit standing of the company in the market increases , Share price of the
company increases , Enjoys Confidence of the shareholders
Your Answer
Credit standing of the company in the market increases , Share price of the
company increases , Enjoys Confidence of the shareholders
Multiple Choice Single Answer
Question
Denomination of the equity shares in the public issue or rights issue can be
decided by
Correct Answer the company
Your Answer
Company law Board
Multiple Choice Multiple Answer
Question
Limitations of credit rating are
Correct Answer Credit rating is based upon the evaluation made by the agencies which may
vary depending upon the experience, knowledge and individual opinion of the
rators which may be biased in some cases , Credit rating is primarily based
upon the past performance whereas the future prospects should be given
more importance while deciding the credit rating , Multiplicity of the rating
agencies can be considered to be the limitation of the credit rating
Your Answer
Credit rating is based upon the evaluation made by the agencies which may
vary depending upon the experience, knowledge and individual opinion of the
rators which may be biased in some cases , Credit rating is primarily based
upon the past performance whereas the future prospects should be given
more importance while deciding the credit rating , Multiplicity of the rating
agencies can be considered to be the limitation of the credit rating
Multiple Choice Single Answer
Question
The amount of cheques deposited by a Bank awaiting clearance is called
Correct Answer Collection float
Your Answer
Deposit float
Select The Blank
Question
________ is an example of Intangible asset
Correct Answer Goodwill
Your Answer
Goodwill
Multiple Choice Multiple Answer
Question
The classification of return on Investment are
Correct Answer Return on Asset , Return on Capital Employed
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Your Answer
Return on Asset , Capital Employed ratio , Debt Equity ratio
Multiple Choice Multiple Answer
Question
The classification of ratios under miscellaneous group includes
Correct Answer Earnings per share , Dividend Payment ratio
Your Answer
Earnings per share , Dividend Payment ratio , Return on Asset
Multiple Choice Multiple Answer
Question
Undue decrease in Gross Profit ratio may indicate
Correct Answer Non-consideration of sales invoices , Under-valuation of closing stock ,
Improper utilisation of infrastructural facilities
Your Answer
Non-consideration of sales invoices , Under-valuation of closing stock ,
Improper utilisation of infrastructural facilities
Select The Blank
Question
________ implies arithmetical relationship between two related figures
Correct Answer Ratio
Your Answer
Ratio
True/False
Question
If the cash is held to take advantage of profit making opportunities arising
out of changes in the value of securities, the cash holding is called
Precautionary motive
Correct Answer False
Your Answer
True
Multiple Choice Single Answer
Question
Calculate the Gross Profit Ratio from the following figures : Sales Rs.
1,00,000/-, Purchases Rs. 60,000/-, Sales Return Rs. 10,000/-, Opening
stock Rs. 20,000/-, Purchases Return Rs. 15,000/-, Closing Stock Rs.
5,000/Correct Answer 0.3333
Your Answer
0.3234
Select The Blank
Question
Shareholders of a joint stock company appoint their representative in the
form of ________ to carry on the day-to-day affairs of the company
Correct Answer Directors
Your Answer
Accountant
Select The Blank
Question
under no circumstances , ________ term requirement of funds should be
met out of short term sources of funds
7
Correct Answer long
Your Answer
long
Select The Blank
Question
Proprietory ratio indicates the relationship between the owner's fund and
________
Correct Answer Total assets
Your Answer
Profits
Select The Blank
Question
________ is one of the current assets that takes the longest time to get
converted into cash
Correct Answer Stock
Your Answer
Debtors
Multiple Choice Single Answer
Question
Current Assets Turnover ratio is calculated as
Correct Answer Net Sales / Current Assets
Your Answer
Liquid assets / Liquid liabilities
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