Statement Analysis Tools and Accounting Ratios Test

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Statement Analysis Tools and Accounting Ratios Test - 30

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Weekly Quiz Competition

Question 1
1 / -0

Du-pont system refers to

A
Stock Index in USA

B
Stock Index in Japan

C
Analyzing profit ratios in terms of profit margin and turnover ratios

D
All of the above
Question 2
1 / -0

When one variable is from income statement and another variable from balance sheet it is known as___________ratio.

A
Balance sheet

B
Income statement

C
Composite

D
All of the above

Solution

When one variable is from income statement and another variable from balance sheet it is known as composite ratio. For example Trade receivable turnover ratio is calculated using the Net credit sales figure from the income statement and the Average balance of trade receivables figure from the balance sheet.
Question 3
1 / -0

When ratio is calculated using both figures from the income statement it is known as .

A
Balance sheet ratios

B
Income statement ratios

C
Composite ratios

D
All of the above

Solution

When ratio is calculated using both figures from the income statement it is known as Income statement ratios. For example Gross profit ratio is calculated using Gross profit figure and the Net sales figure from the income statement and therefore is known as income statement ratios.
Question 4
1 / -0

Which of the following is an example of activity ratio?

A
Net profit ratio

B
Operating ratio

C
Current ratio

D
None of the above
Question 5
1 / -0

The most commonly used classification of ratio is .

A
Activity ratios

B
Solvency ratios

C
Liquidity ratios

D
All of the above
Solution
The functional classification is based on the purpose for which the ratio is computed is and it is as follows:
Activity ratios
Solvency ratios
Liquidity ratios
Profitability ratios
Question 6
1 / -0

If fully depreciated fixed assets costing Rs.$$45,000$$ is discarded and no salvage value is realised, the current ratio will ___________.

A
Decrease

B
Increase

C
No effect

D
None of the above
Question 7
1 / -0

Which of the following statement(s) is / are true regarding Net Benefit Cost Ratio (NBCR)?

A
It does not take time value of money into consideration

B
This criterion cannot be used when the investment outlay is spread over more than one period

C
IF NBCR = 0.75 the project cannot be accepted

D
All of the above

E
Both (B) and (C) above

Solution

Net benefit cost ratio takes into consideration the time value of money.
Net benefit cost ratio = NPV /Investment = BCR-1
When NBCR>1 (BCR>1), the project is accepted. Therefore, a project with NBCR = 0.75 will be accepted. This criterion cannot be used when investment outlay is spread over more than one period.
Question 8
1 / -0

When Quick Ratio $$3$$, Current Assets Rs.$$70,000$$, Inventory Rs.$$10,000$$ then the current liabilities will be __________.

A
Rs.$$40,000$$

B
Rs.$$30,000$$

C
Rs.$$20,000$$

D
Rs.$$10,000$$

Solution

Quick Ratio
= $$\frac{Current Assets-Inventory}{Current Liabilities}$$
3 = Rs$$\frac{70,000-10,000}{Current Liabilities}$$
3 Current Liabilities = Rs.$$60,000$$
Current Liabilities = Rs.$$\frac{60,000}{3}
= Rs. $$20,000$$
Question 9
1 / -0

Debtors turnover ratio is ____________.

A
$$\frac{creditsales}{Average debtors}$$

B
$$\frac{Total sales}{Average debtors}$$

C
$$\frac{credit sales \times days in the year}{Debtors}$$

D
None of the above
Question 10
1 / -0

Formula for current ratio is .

A
Current liabilities/current assets

B
Current assets/current liabilities

C
Fixed asset/ fixed liabilities

D
Fixed liabilities/fixed assets

Solution

Current ratio = Current Assets/Current liabilities
= [Inventories + Sundry Debtors + Cash and Bank balances + Receivables +
Loans and advances + Disposable Investments etc] /
[Creditors + Short term loans + Bank Overdraft + Cash credit+
Outstanding Expenses+ Provisions etc}

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Re-Attempt Weekly Quiz Competition

Statement Analysis Tools and Accounting Ratios Test - 30

Result

Statement Analysis Tools and Accounting Ratios Test - 30

Score

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Rank

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SHARING IS CARING

Question 1

Stock Index in USA

Stock Index in Japan

Analyzing profit ratios in terms of profit margin and turnover ratios

All of the above

Question 2

Balance sheet

Income statement

Composite

All of the above

Solution

Question 3

Balance sheet ratios

Income statement ratios

Composite ratios

All of the above

Solution

Question 4

Net profit ratio

Operating ratio

Current ratio

None of the above

Question 5

Activity ratios

Solvency ratios

Liquidity ratios

All of the above

Solution

Question 6

Decrease

Increase

No effect

None of the above

Question 7

It does not take time value of money into consideration

This criterion cannot be used when the investment outlay is spread over more than one period

IF NBCR = 0.75 the project cannot be accepted

All of the above

Both (B) and (C) above

Solution

Question 8

Rs.$$40,000$$

Rs.$$30,000$$

Rs.$$20,000$$

Rs.$$10,000$$

Solution

Question 9

$$\frac{creditsales}{Average debtors}$$

$$\frac{Total sales}{Average debtors}$$

$$\frac{credit sales \times days in the year}{Debtors}$$

None of the above

Question 10

Current liabilities/current assets

Current assets/current liabilities

Fixed asset/ fixed liabilities

Fixed liabilities/fixed assets

Solution

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