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

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 ____________.
  • $$3.75\%$$
  • $$4.25\%$$
  • $$6.48\%$$
  • $$8\%$$
  • $$8.2\%$$
Given the equity multiplier is 4.The debt-asset ratio of a firm, according to DuPont analysis will be _________.
  • 0.22
  • 0.78
  • 1.28
  • 1.56
  • Data insufficient
The capacity Utilization Ratio can be calculated as __________________.
  • $$\frac {Normal Capacity}{Standard Hours of Actual output}$$
  • $$\frac {Standard Hours of Actual output}{Normal Capacity}$$
  • $$\frac {Budgeted Capacity}{Normal Capacity}$$
  • $$\frac{Normal Capacity} {Budgeted Capacity}$$
Which of the following is not a correct statement?
  • Debt equity is a solvency ratio
  • 'Acid Test' denotes liquidity
  • Ratio analysis is a technique of co-ordination
  • Composite ratios are known as Inter-statement Ratios
A high pay out ratio indicates that ___________________.
  • Management is ploughing back profits
  • Management is not reinvesting profits
  • Company is earning high profits
  • Earning per share is high
Given current ratio $$2$$ : $$1$$
Net working capital = Rs.$$60,000$$
What is the amount of Current Liabilities?
  • Rs.$$30,000$$
  • Rs.$$60,000$$
  • Rs,$$1,20,000$$
  • 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?
  • Rs.$$30,000$$
  • Rs.$$60,000$$
  • Rs.$$1,20,000$$
  • Rs.$$90,000$$
ROE (Return on Equity) is computed as ______________.
  • Net profit / sales
  • Cost of sales / capital employed
  • Net profit after tax and pref. dividend / share holders fund
  • 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 ___________.
  • Rs. 700
  • Rs. 778
  • Rs. 845
  • Rs. 1175
  • 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
  • i & ii
  • i & iv
  • i, ii, iii & iv
  • ii, iii & iv
Collection of cash from debtors will cause the current ratio to ________.
  • Increase
  • Decrease
  • Have no effect
  • None of the above
If a firm has realized its debtors and has paid off its creditors to the same extent then                       .
  • The current ratio will increase if it was less than 1 previously
  • The current ratio will decrease if it was more than 1 previously
  • The current ratio will remain the same if it was equal to 1 previously
  • All of the above
  • Both (A) and (C) above
Given : Cash             =  Rs.$$5,000$$
Total liquid assets     =  Rs.$$40,000$$
Stock                         =  Rs.$$20,000$$
Current assets will be ______________.
  • Rs.$$60,000$$
  • Rs.$$40,000$$
  • Rs.$$20,000$$
  • Rs.$$65,000$$
Which of the following assets are taken into account for current ratio?
Stock
Cash
Work in progress
Prepaid expenses
  • 1 and 2
  • 2 and 3
  • 1,2, and 3
  • All of the above
Which of the following is a determinant of working capital of a firm?
  • Depreciation policy
  • Taxes payable by the firm
  • Production policy
  • All of the above
  • Both (B) and (C) above
In debt/equity ratio equity includes ______________.
  • Only equity capital
  • Equity and preference capital
  • Equity and preference + all reserves - losses
  • None of the above
Selling inventory on account will cause the quick ratio to __________.
  • Increase
  • Decrease
  • Have no effect
  • None of the above
Which of the following statement(s) is/are true?
  • Average collection period evaluates all aspects of credit policy
  • All other things remaining the same, issue of new shares for cash will improve the current ratio.
  • Ratio analysis is technique of planning and control
  • All of the above
  • 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?
  • Rs. $$5,000$$
  • Rs. $$50,00,000$$
  • Rs. $$45,00,000$$
  • None of the above
Match List I and List II and select the correct answer using the codes given below the lists:
List IList II
Debt service coverage ratioSolvency ratio
Turnover of receivablesStructural ratio
Proprietary ratioActivity ratio
Capital turnover ratioEfficiency of credit and collection policy
  • (a)-1, (b)-4, (c)-3, (d)-2
  • (a)-4, (b)-1, (c)-3, (d)-2
  • (a)-1, (b)-4, (c)-2, (d)-3
  • (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?
  • Rs.$$2,000$$
  • Rs.$$4,000$$
  • Rs.$$20,000$$
  • Rs.$$12,000$$
Which one of the following ratio is most important for judging the long term solvency of the firm?
  • Debt equity ratio
  • Stock turnover ratio
  • Return on investments
  • Fixed assets turnover ratio
V kare P. Ltd. has an adverse current ratio. Which one of the following would improve this ratio?
  • Sale of fixed assets for cash
  • Collection of some of the current assets receivable
  • Use of cash to pay off some long-term debts
  • 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 __________.
  • $$10\%$$
  • $$20\%$$
  • $$38\%$$
  • $$42\%$$
Match List I and List II and select the correct answer using the codes given below lists : 
List IList II
Leverage ratioLiquidity position
Acid testEfficiency of asset
Turnover ratioManagement of working capital
Current ratioDebt and equity relationship 
  • (a)-4, (b)-1, (c)-3, (d)-2
  • (a)-2, (b)-4, (c)-1, (d)-3
  • (a)-2, (b)-3, (c)-1, (d)-4
  • (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 :
  • Rs. $$3,00,000$$ and Rs. $$1,50,000$$
  • Rs. $$5,00,000$$ and Rs. $$2,00,000$$
  • Rs. $$5,00,000$$ and Rs. $$1,00,000$$
  • Rs. $$3,00,000$$ and Rs. $$1,00,000$$
Which of the following ratio indicates a favourable position if it is high?
  • Inventory turnover ratio
  • Capital turnover ratio
  • Debtors turnover ratio
  • 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
  • i, ii & iii
  • i, ii & iv
  • i & iii
  • i, iii & iv
Which of the following ratio is a favourable indication if it is low?
  • Operating ratio
  • Operating profit ratio
  • Inventory turnover ratio
  • All of the above
If new shares issued against the purchase of a fixed asset, the Debt- equity ratio will ____________.
  • Decrease
  • Increase
  • No effect
  • None of the above
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