Understanding key financial metrics MCQs on Peach Tree

By: Prof. Dr. Fazal Rehman | Last updated: August 1, 2024

1. Which financial metric represents the percentage of revenue remaining after deducting the cost of goods sold (COGS)?
   a) Gross Profit Margin
   b) Net Profit Margin
   c) Return on Assets
   d) Current Ratio
   Answer: a) Gross Profit Margin
2. What does the Net Profit Margin measure?
   a) The percentage of net income to total revenue
   b) The percentage of gross profit to total revenue
   c) The ratio of current assets to current liabilities
   d) The efficiency of asset utilization
   Answer: a) The percentage of net income to total revenue
3. Which metric indicates the company’s ability to meet short-term liabilities with its short-term assets?
   a) Current Ratio
   b) Quick Ratio
   c) Debt-to-Equity Ratio
   d) Return on Equity
   Answer: a) Current Ratio
4. What does the Return on Assets (ROA) metric measure?
   a) The efficiency of asset utilization in generating profit
   b) The percentage of net income relative to total assets
   c) The ratio of total debt to total equity
   d) The proportion of sales revenue to net income
   Answer: b) The percentage of net income relative to total assets
5. Which financial metric evaluates the proportion of a company’s total debt relative to its total equity?
   a) Debt-to-Equity Ratio
   b) Gross Profit Margin
   c) Net Profit Margin
   d) Return on Assets
   Answer: a) Debt-to-Equity Ratio
6. How is the Quick Ratio different from the Current Ratio?
   a) The Quick Ratio excludes inventory from current assets, focusing on liquid assets
   b) The Current Ratio includes long-term liabilities
   c) The Quick Ratio includes all current assets, including inventory
   d) The Current Ratio excludes cash and cash equivalents
   Answer: a) The Quick Ratio excludes inventory from current assets, focusing on liquid assets
7. Which metric assesses how effectively a company uses its equity to generate profit?
   a) Return on Equity (ROE)
   b) Gross Profit Margin
   c) Operating Profit Margin
   d) Return on Assets
   Answer: a) Return on Equity (ROE)
8. What does the Operating Profit Margin indicate?
   a) The percentage of revenue remaining after operating expenses are deducted
   b) The percentage of net income to total revenue
   c) The percentage of gross profit to total sales
   d) The ratio of total liabilities to total equity
   Answer: a) The percentage of revenue remaining after operating expenses are deducted
9. Which metric would you use to evaluate how quickly a company collects receivables?
   a) Accounts Receivable Turnover Ratio
   b) Inventory Turnover Ratio
   c) Current Ratio
   d) Debt-to-Equity Ratio
   Answer: a) Accounts Receivable Turnover Ratio
10. What does the Inventory Turnover Ratio measure?
    a) How efficiently inventory is used and sold during a period
    b) The proportion of inventory to total sales
    c) The rate at which inventory is replaced
    d) The ratio of inventory to current assets
    Answer: a) How efficiently inventory is used and sold during a period

More MCQs on Peachtree

• Main navigation areas (e.g., Customers & Sales, Inventory & Services)
• Using menus and icons
• Accessing and customizing reports
• Customer and Sales Management MCQs
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  • Processing sales invoices
  • Handling sales returns and adjustments
• Inventory Management MCQs
  • Setting up and maintaining inventory items
  • Recording inventory purchases and adjustments
  • Tracking inventory levels and costs
• Vendor and Purchasing MCQs
  • Creating and managing vendor records
  • Recording purchase orders and bills
  • Handling vendor payments and adjustments
• Accounts Payable and Receivable MCQs
  • Managing accounts payable (AP) and accounts receivable (AR)
  • Generating and paying bills
  • Invoicing customers and receiving payments
• General Ledger and Journal Entries MCQs
  • Understanding the general ledger structure
  • Recording and adjusting journal entries
  • Managing and reconciling accounts
• Payroll and Employee Management MCQs
  • Setting up employee records
  • Processing payroll and employee deductions
  • Handling employee benefits and taxes
• Financial Statements and Reports MCQs:
  • Generating and interpreting financial statements (e.g., Balance Sheet, Income Statement)
  • Customizing and analyzing reports
  • Understanding key financial metrics
• Backup and Data Management MCQs
  • Performing and restoring backups
  • Managing data integrity and security
  • Handling data migrations and updates
• System Configuration and Setup MCQs
  • Setting up company information and preferences
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• Troubleshooting and Support MCQs
  • Common issues and solutions
  • Accessing help resources and support
  • Performing basic troubleshooting steps
• Integration and Advanced Features MCQs
  • Integrating with other software or systems
  • Using advanced features like job costing or project management
  • Exploring additional modules or functionalities MCQs