MCQ Questions for Class 12 Commerce Accountancy Accounting Ratios Quiz 6

If the expected price earnings ratio and earnings per share are 33.3 and Rs. 7.5 respectively and the required rate of return and current dividend are

$15\%$ and Rs. 20, the growth rate of the stock is ____________.

0%
$3.75\%$
0%
$4.25\%$
0%
$6.48\%$
0%
$8\%$
0%
$8.2\%$

Given the equity multiplier is 4.The debt-asset ratio of a firm, according to DuPont analysis will be _________.

0%
0.22
0%
0.78
0%
1.28
0%
1.56
0%
Data insufficient

The capacity Utilization Ratio can be calculated as __________________.

0%
$\frac {Normal Capacity}{Standard Hours of Actual output}$
0%
$\frac {Standard Hours of Actual output}{Normal Capacity}$
0%
$\frac {Budgeted Capacity}{Normal Capacity}$
0%
$\frac{Normal Capacity} {Budgeted Capacity}$

Which of the following is not a correct statement?

0%
Debt equity is a solvency ratio
0%
'Acid Test' denotes liquidity
0%
Ratio analysis is a technique of co-ordination
0%
Composite ratios are known as Inter-statement Ratios

A high pay out ratio indicates that ___________________.

0%
Management is ploughing back profits
0%
Management is not reinvesting profits
0%
Company is earning high profits
0%
Earning per share is high

Given current ratio

$2$ :

$1$
Net working capital = Rs.

$60,000$
What is the amount of Current Liabilities?

0%
Rs. $30,000$
0%
Rs. $60,000$
0%
Rs, $1,20,000$
0%
Rs. $90,000$

Given current ratio

$2$ :

$1$
Net working capital = Rs.

$60,000$
With the information given above. what is the amount of current assets?

0%
Rs. $30,000$
0%
Rs. $60,000$
0%
Rs. $1,20,000$
0%
Rs. $90,000$

ROE (Return on Equity) is computed as ______________.

0%
Net profit / sales
0%
Cost of sales / capital employed
0%
Net profit after tax and pref. dividend / share holders fund
0%
Operating net profit / share holder's funds

If the current yield on a bond is

$9\%$ and its face value is Rs. 1,000 with a coupon rate of

$7\%$ its current market price is ___________.

0%
Rs. 700
0%
Rs. 778
0%
Rs. 845
0%
Rs. 1175
0%
Rs. 1285

Which of the following liabilities are taken into account for acid test ratio?
(i) Trade creditors
(ii) Bank overdraft
(iii) Cash credit
(iv) Outstanding expenses

0%
i & ii
0%
i & iv
0%
i, ii, iii & iv
0%
ii, iii & iv

Collection of cash from debtors will cause the current ratio to ________.

0%
Increase
0%
Decrease
0%
Have no effect
0%
None of the above

If a firm has realized its debtors and has paid off its creditors to the same extent then .

0%
The current ratio will increase if it was less than 1 previously
0%
The current ratio will decrease if it was more than 1 previously
0%
The current ratio will remain the same if it was equal to 1 previously
0%
All of the above
0%
Both (A) and (C) above

Explanation

If the firm has realized its debtors and paid-off its creditors to same extent then the current assets will increase and the current liabilities will decrease by the same amount and consequently the current ratio will remain unchanged.

Let Current Asset be

$Rs. 500000$ and Current liabilities be

$Rs.500000$

So, Current ratio = Current asset/ Current liabilities

$500000/500000$

$1$

Now, if the amount realized from debtors =

$Rs .100000$ and the amount paid off to creditors is

$Rs. 100000$ then,

New Current ratio =

$[500000-100000]/[500000-100000]$

$1$ .

Given : Cash = Rs.

$5,000$
Total liquid assets = Rs.

$40,000$
Stock = Rs.

$20,000$
Current assets will be ______________.

0%
Rs. $60,000$
0%
Rs. $40,000$
0%
Rs. $20,000$
0%
Rs. $65,000$

Which of the following assets are taken into account for current ratio?
Stock
Cash
Work in progress
Prepaid expenses

0%
1 and 2
0%
2 and 3
0%
1,2, and 3
0%
All of the above

Which of the following is a determinant of working capital of a firm?

0%
Depreciation policy
0%
Taxes payable by the firm
0%
Production policy
0%
All of the above
0%
Both (B) and (C) above

In debt/equity ratio equity includes ______________.

0%
Only equity capital
0%
Equity and preference capital
0%
Equity and preference + all reserves - losses
0%
None of the above

Selling inventory on account will cause the quick ratio to __________.

0%
Increase
0%
Decrease
0%
Have no effect
0%
None of the above

Which of the following statement(s) is/are true?

0%
Average collection period evaluates all aspects of credit policy
0%
All other things remaining the same, issue of new shares for cash will improve the current ratio.
0%
Ratio analysis is technique of planning and control
0%
All of the above
0%
Both (A) and (C) above

When fixed interest charge is Rs.

$50,000$ and interest coverage ratio is

$10$ times. What is the net profit before interest and tax?

0%
Rs. $5,000$
0%
Rs. $50,00,000$
0%
Rs. $45,00,000$
0%
None of the above

Match List I and List II and select the correct answer using the codes given below the lists:

List I	List II
Debt service coverage ratio	Solvency ratio
Turnover of receivables	Structural ratio
Proprietary ratio	Activity ratio
Capital turnover ratio	Efficiency of credit and collection policy

0%
(a)-1, (b)-4, (c)-3, (d)-2
0%
(a)-4, (b)-1, (c)-3, (d)-2
0%
(a)-1, (b)-4, (c)-2, (d)-3
0%
(a)-4, (b)-1, (c)-2, (d)-3

Given stock turnover ratio =

$8$ times
Average stock = Rs.

$10,000$
Selling price =

$25\%$ above cost
What is the amount of gross profit?

0%
Rs. $2,000$
0%
Rs. $4,000$
0%
Rs. $20,000$
0%
Rs. $12,000$

Which one of the following ratio is most important for judging the long term solvency of the firm?

0%
Debt equity ratio
0%
Stock turnover ratio
0%
Return on investments
0%
Fixed assets turnover ratio

V kare P. Ltd. has an adverse current ratio. Which one of the following would improve this ratio?

0%
Sale of fixed assets for cash
0%
Collection of some of the current assets receivable
0%
Use of cash to pay off some long-term debts
0%
Collection from sundry debtors

Sarvesh limited earns a net profit of Rs.

$2,00,000$ after tax during a certain financial period. Provision for taxation is Rs.

$2,00,000$ and income from investments is Rs.

$2,000$ . Capital employed during the same period is Rs.

$10,00,000$ return on capital employed is __________.

0%
$10\%$
0%
$20\%$
0%
$38\%$
0%
$42\%$

Match List I and List II and select the correct answer using the codes given below lists :

List I	List II
Leverage ratio	Liquidity position
Acid test	Efficiency of asset
Turnover ratio	Management of working capital
Current ratio	Debt and equity relationship

0%
(a)-4, (b)-1, (c)-3, (d)-2
0%
(a)-2, (b)-4, (c)-1, (d)-3
0%
(a)-2, (b)-3, (c)-1, (d)-4
0%
(a)-4, (b)-1, (c)-2, (d)-3

Sonu Ltd. provided the following data for 2009
Current ratio :

$2.5$ :

$1$
Net working capital : Rs.

$3,00,000$
Current assets and Current Liabilities of this firm are respectively :

0%
Rs. $3,00,000$ and Rs. $1,50,000$
0%
Rs. $5,00,000$ and Rs. $2,00,000$
0%
Rs. $5,00,000$ and Rs. $1,00,000$
0%
Rs. $3,00,000$ and Rs. $1,00,000$

Which of the following ratio indicates a favourable position if it is high?

0%
Inventory turnover ratio
0%
Capital turnover ratio
0%
Debtors turnover ratio
0%
All of the above

Gross profit may be increased by :-
(i) increasing selling price
(ii) increasing cost of sales
(iii) increasing sales of items with higher gross margin
(iv) increasing sales by giving extra discounts

0%
i, ii & iii
0%
i, ii & iv
0%
i & iii
0%
i, iii & iv

Which of the following ratio is a favourable indication if it is low?

0%
Operating ratio
0%
Operating profit ratio
0%
Inventory turnover ratio
0%
All of the above

If new shares issued against the purchase of a fixed asset, the Debt- equity ratio will ____________.

0%
Decrease
0%
Increase
0%
No effect
0%
None of the above

CBSE Questions for Class 12 Commerce Accountancy Accounting Ratios Quiz 6 - MCQExams.com

0:0:1

Practice Class 12 Commerce Accountancy Quiz Questions and Answers

CBSE Questions for Class 12 Commerce Accountancy Accounting Ratios Quiz 6 - MCQExams.com

0:0:1

Practice Class 12 Commerce Accountancy Quiz Questions and Answers

Support mcqexams.com by disabling your adblocker.