Question 1

Which of these is not an efficiency ratio?

Accepted Answer

A) Current ratio. 
B) Average settlement period for accounts receivable. 
C) Asset turnover period. 
D) Average inventory turnover period. 
A) Current ratio. 
B) Average settlement period for accounts receivable. 
C) Asset turnover period. 
D) Average inventory turnover period.

Question 2

If earnings per share is 30c and the market price of each share is $6, the price-earnings ratio is:

Accepted Answer

A) 20:1. 
B) 10:1. 
C) 5:1. 
D) 25:1. 
A) 20:1. 
B) 10:1. 
C) 5:1. 
D) 25:1.

Question 3

Which statement is not correct?

Accepted Answer

A) A business will prefer a shorter settlement time for its accounts receivable rather than a longer settlement period. 
B) An asset turnover figure of 1.5 times is preferred to a figure of 1.2 times. 
C) A business will prefer a longer average inventory turnover time rather than a shorter turnover time. 
D) None of the statements, i.e., all are correct. 
A) A business will prefer a shorter settlement time for its accounts receivable rather than a longer settlement period. 
B) An asset turnover figure of 1.5 times is preferred to a figure of 1.2 times. 
C) A business will prefer a longer average inventory turnover time rather than a shorter turnover time. 
D) None of the statements, i.e., all are correct.

Question 4

If the earnings yield is 6.67%, the price-earnings ratio is:

Accepted Answer

A) 12:1. 
B) 15:1. 
C) 6:1. 
D) 6.7:1. 
A) 12:1. 
B) 15:1. 
C) 6:1. 
D) 6.7:1.

Question 5

Which of these is not considered a limitation of financial ratio analysis?

Accepted Answer

A) Ratios are difficult to calculate. 
B) It does not consider qualitative factors. 
C) There is no adjustment for the effects of inflation. 
D) All of the above. 
A) Ratios are difficult to calculate. 
B) It does not consider qualitative factors. 
C) There is no adjustment for the effects of inflation. 
D) All of the above.

Question 6

If Line Ltd has a current ratio of 2.5:1 and current assets are $600,000, how much are the company's current liabilities?

Accepted Answer

A) $240,000. 
B) $300,000. 
C) $360,000. 
D) $200,000. 
A) $240,000. 
B) $300,000. 
C) $360,000. 
D) $200,000.

Which of these is not an efficiency ratio?

If earnings per share is 30c and the market price of each share is $6, the price-earnings ratio is:

Which statement is not correct?

If the earnings yield is 6.67%, the price-earnings ratio is:

Which of these is not considered a limitation of financial ratio analysis?

If Line Ltd has a current ratio of 2.5:1 and current assets are $600,000, how much are the company's current liabilities?

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Introduction to Limited Companies

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Cost-Volume-Profit Analysis and Relevant Costing

Full Costing

Budgeting

Capital Investment Decisions

The Management of Working Capital

Financing the Business

Filters

Exam 8: Analysis and Interpretation of Financial Statements

Which of these is not an efficiency ratio?

If earnings per share is 30c and the market price of each share is $6, the price-earnings ratio is:

Which statement is not correct?

If the earnings yield is 6.67%, the price-earnings ratio is:

Which of these is not considered a limitation of financial ratio analysis?

If Line Ltd has a current ratio of 2.5:1 and current assets are $600,000, how much are the company's current liabilities?

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Introduction to Limited Companies

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Cost-Volume-Profit Analysis and Relevant Costing

Full Costing

Budgeting

Capital Investment Decisions

The Management of Working Capital

Financing the Business

Filters