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Finance Quiz

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1Which of the following would not improve the Current ratio ?
1. ABorrow short term to finance additional fixed assets
2. BIssue long-term debt to buy inventory
3. CSell common stock to reduce current liabilities
4. DSell fixed assets to reduce accounts payable
2ABC had sales last year of $265 million, including cash sales of $25 million. If its average collection period was 36 days, its ending accounts receivable balance is closest to
1. A$26.1 million
2. B$23.7 million
3. C$7.4 million
4. D$18.7 million
3Which of the following statements (in general) is correct
1. AThe higher the tax rate for a firm, the lower the interest coverage ratio
2. BThe lower the total debt-to-equity ratio, the lower the financial risk for a firm
3. CAn increase in net profit margin with no change in sales or assets means a poor ROI
4. DA low receivables turnover is desirable
4Debt-to-total assets (D/TA) ratio of XYZ is .4. What is its debt-to-equity (D/E) ratio
1. A0.2
2. B0.6
3. C0.667
4. D0.333
5Cash 10,000
Accounts Receivable 30,000
Inventory 80,000
Prepaid Insurance 6,000
Long Term Assets 200,000
Accounts Payable 30,000
Wages Payable 5,000
Long Term Liabilities 70,000
Equity 196,000

What is the Working capital of the company
1. A91000
2. B85000
3. C221000
4. DNone
6A company had Sales (all on credit) of $830,000 and Cost of Goods Sold of $525,000. At the beginning of the year its Accounts Receivable were $80,000 and its Inventory was $100,000. At the end of the year its Accounts Receivable were $86,000 and its Inventory was $110,000. What is the inventory turnover ratio for the year
1. A4.8
2. B5.0
3. C7.9
7What does an increasing collection period for accounts receivable suggest about a firm's credit policy
1. AThe firm is probably losing qualified customers
2. BThe credit policy may be too lenient
3. CThe collection period has no relationship to a firm's credit policy
4. DThe credit policy is too restrictive
8Operating Income does not include
1. AResearch and Development
2. BCost of Goods Sold
3. CInterest paid
4. DDepriciation
9A company XYZ has a loan of 10,000, Sales of 1,00,000, Days sales outstanding of 36.5, Accounts payable of 5,000 and a Net block of 25,000. What is its Net worth (Considering all sales are in credit)
1. A15,000
2. B20,000
3. C25,000
4. D30,000
10In a balance sheet Unearned Revenue fall under ___________ and prepaid Expenses fall under____________
1. ALiabilities, Assets
2. BLiabilities, Liabilities
3. CAssets, Liabilities
4. DAssets, Assets

11Cash - 500, Accounts Receivable - 200, Net Block - 100, Goodwill - 20, Accounts Payable - 100, Accrued Liabilities - 100, Long term Debt - 100, Quick ratio - 4.5.
What is the inventory value
1. A100
2. B150
3. C200
4. D250
12A company PK has the following structure to their shareholders Equity. Equity at par (10 rupees each) - 1000, Retained Earnings - 900, Share premium - 100, Revaluation Reserve - 100. What is the maximum dividend that can be paid with the existing structure
1. A9
2. B10
3. C11
4. D12
13A company ABC is considering to pay a stock dividend then which among the mentioned increases and decreases respectively.
1. AEquity at par value, Revaluation Reserve
2. BRevaluation Reserve, Share premium Reserve
3. CShare premium Reserve, Retained Earnings
4. DRetained Earnings, Equity at par value
14A gain or loss that is unusual and infrequent is considered as
1. ADiscontinued operation
2. BExtraordinary item
3. CChange in accounting principle
4. DNone
15Assets are usually mentioned on the balance sheet at what price
1. ACurrent market value
2. BCost
3. CExpected selling price
4. Dnone
16The primary objective of the matching principle is to
1. Aprovide timely information to external decision makers
2. Bprovide full disclosure
3. Crecognize expenses in the same period as the related revenue
4. DAll the above
17Basic earnings per share is calculated as
1. A(Net income - dividends) / Weighted Average no. shares outstanding
2. B(Net income - preferred dividends) / Weighted Average no. shares outstanding
3. CNet income / common shares outstanding
4. DNone
18Which of the following is not a current asset
1. AAccumulated depriciation
2. BAccounts Receivable
3. CNotes Receivable
4. DInventory
19A firm is purchased for more than fair value of its assets the excess is
1. Awritten off against the retained earnings on the balance sheet
2. Btreated as an extraordinary item
3. Cconsidered as goodwill
4. Dconsidered as a loss in the Income statement
20As a general rule, revenue is normally recognized when it is
1. Ameasurable and received
2. Bmeasurable and earned
3. Crealizable and earned
4. Drealizable and received
21The company has procured Furniture worth 500 and Vehicle worth 200 on 1st April 2005.
The net block of a company is as follows (Written down value method)

31st Mar 2005
Furniture - 1000
Land - 1500
Building - 1800
Vehicle - 2000

31st Mar 2006
Furniture - 1200
Land - 1200
Building - 1620
Vehicle - 1650

If no other assets are purchased during the year what is the Net block on 31st Mar 2007
1. A4570
2. B4860
3. C4620
4. D4760
22Which one of these actions might improve gross profit but increase overheads
1. AIncrease the shareholder dividend by 10%
2. BNegotiate better prices from a supplier
3. CHigher advertising for a new product
4. DIncrease selling price by 5%
23In Which among the following circumstances may result in increase of gross profit and decrease in gross margin
1. AMajor suppliers agree better purchase prices
2. BProblems with quality require greater reworking of output
3. CSlow moving stocks are sold at a significant discount
4. DSales of low margin products are replaced with high margin ones
24A firm makes a gross profit of 550,000, and has overheads of 250,000. If the interest costs are 25,000 and a tax of 20% is payable, What is the PAT
1. A300,000
2. B220,000
3. C275,000
4. D178,000
25If during the accounting period the assets increased by 5000 and the owners equity increased by 1000, then liabilities must have
1. Aincreased by 6000
2. Bincreased by 4000
3. Cdecreased by 6000
4. Ddecreased by 4000
26A firm has a lower asset turnover ratio than the industry average, which implies
1. AThe firm is less likely to avoid insolvency in the short run than other firms in the industry
2. BThe firm is less profitable than other firms in the industry
3. CThe firm has lower spending on new fixed assets than other firms in the industry
4. DThe firm is utilizing assets less efficiently than other firms in the industry
27Which one of the following lists are the Current Liabilities of a company
1. AAccounts Payable, Notes Payable, Accrued Expenses and Income Taxes Payable
2. BAccounts Payable, Notes Payable, Accrued Expenses and Prepaid Expenses
3. CAccounts Payable, Notes Payable, Accrued Expenses but not Income Taxes Payable
4. DAccounts Payable, Notes Payable, Income Taxes Payable but not Accrued Expenses
28Which is correct about Preferred Stock
1. AIt is reserved only for preferred customers or investors
2. BIt is always worth more than common stock
3. CIt has priority over common stock in the event of the dissolution of the company
4. DIt cannot be owned by full time employees of the company
29What will be the operating profit and retained earnings for the company with the below mentioned information
Sales=10,000 , COGS=6,000 , SG&A=1,000 , Depreciation=500 , Interest=100, Income Tax=100 , Extraordinary Expense=300 , Dividends=100
1. A2500,1900
2. B2500,2300
3. C2000,2000
4. D2000,2200

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Description: Exam on Finance
Author: pavanrachakonda9
Language: English
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Finance Quiz

Questions in this quiz (29)

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