Financial Planning & Cost Accounting MCQs

1. 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) both a and b
(d) Turnover
Solvency
2.In inventory turnover calculation, what is taken in the numerator?
(a) Sales
(b) Cost of Goods Sold
(c) Opening Stock
(d) Closing Stock
Cost of Goods Sold
3. Capital turnover actions the relationship of working capital with:
(a) Fixed Assets
(b) Sales
(c) Purchases
(d) Stock
Fixed Assets
4. In Ratio analysis, the term capital employed refers to:
(a) Equity Share Capital
(b) Net worth
(c) Shareholders Funds,
(d) None of these.
None of these
5. Dividend Payout Ratio is:
(a) PAT Capital
(b) DPS+EPS
(c) Pref. Dividend + PAT
(d) Pref. Dividend + Equity Dividend
DPS+EPS
6. DU PONT Examination deals with: (a) Analysis of Current Assets
(b) Analysis of Profit
(c) Capital Budgeting
(d) Analysis of Fixed Assets
Analysis of Profit
7. In Net profit Ratio, the denominator is:
(a) Net Purchases
(b) Net Sales
(c) Credit Sales
(d) Cost of goods sold
Net Sales
8. Inventory Turnover measures relationship of inventory with:
(a) Average Sales
(b) Cost of Goods Sold
(c) Total-Purchases
(d) Total Assets
Cost of Goods Sold
9. The term ‘EVA’ is used for:
(a) Extra Value Analysis
(b) Economic Value Added
(c) Expected Value Analysis
(d) Engineering Value Analysis.
Economic Value Added
10. Return on improved by: Investment may be
(a) Increasing Turnover
(b) Reducing Expenses
(c) Increasing Capital Utilization,
(d) All of the above
All of the above
11. In Current Ratio, Current Assets are
(a) Current Profit,
(b) Current Liabilities
(c) Fixed Assets
(d) Equity Share Capital
Current Liabilities
12. ABC Ltd. has a Current Ratio of 1:5:1 and Net Current Assets of Rs.5,00000. What are the Current Assets?
(a) Rs.5,00,000
(b) Rs. 10,00,000
(c) Rs.15,00,000
(d) None of these
Rs.15,00,000
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 debtor’s collection period has increased
(d) That Sales has decreased
That debtor’s collection period has increased
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.
Avail Bank Overdraft to buy Machine.
15. Debt to Total Assets Proportion can be improved by:
(a) Borrowing More
(b) Issue of Debentures
(c) Issue of Equity Shares,
(d) Redemption of Debt
Redemption of Debt
16. Ratio of Net Income to Number of Equity Parts 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 these
With other industries
18. A Current Ratio of Less than One means:
(a) Current Liabilities < Current Assets
(b) Fixed Assets > Current Assets
(c) Current Assets Liabilities < Current
(d) Share Capital > Current Assets
Fixed Assets > Current Assets
19. A firm has Capital of Rs. 10,00,000; Sales of Rs. 5,00,000; Gross Profit of Rs, 2,00,000 and Expenses of Rs. 1,00,000. What is the Net Profit Ratio?
(a) 20%
(c) 10%
(b) 50%
(d) 40%
10%
20. XYZ Ltd. has earned 8% Return on Total Assets of Rs. 50 ,00000 and has a Net Profit Ratio of 5%. Find out the Sales of the firm:
(a) Rs.4,00:000
(b) Rs.2,50,000
(c) Rs.80,00,000
(d) Rs.83,33,333
Rs.4,00:000
21. Suppliers and Creditors of a firm are interested in:
(a) Profit ability position
(b) Liquidity position
(c) Market share position
(d) Debt position
22. 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
Acid Test Ratio
23. 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 Soid
(b) If Increase in Expense
(c) Increase in Dividend
(d) Decrease in Sales
Increase in Dividend
24. Which of the following statements is correct?
(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
Interest coverage ratio depends upon tax rate
25. 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
0.75
26. Which of the following helps analysing return Shareholders? to equity
(a) Return on Assets
(b) Earnings Per Share
(c) Net Profit Ratio
(d) Return on Investment
Earnings Per Share
27. Return on Assets and Return on
Investment Ratios belong to:
(a) Liquidity Ratios
(b) Profitability Ratios
(c) Solvency Ratios
(d) Turnover
Profitability Ratios
28. 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
Higher Financial Risk,
29. Accounting Ratios are important tools used by:
(a) Managers
(b) Researchers
(c) Investors
(d) All of the above
All of the above
30. Net Profit Ratio Signifies:
(a) Operational Profitability
(b) Liquidity Position
(c) Big-term Solvency
(d) Profit for Lenders
Operational Profitability

Financial Planning & Cost Accounting MCQs
By: Prof. Dr. Fazal Rehman | Last updated: July 28, 2024

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