Question 1

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

Question 2

Which of these are alternative measures of gearing?

Accepted Answer

A) Total liabilities/total assets 
B) Total liabilities/total owners' equity 
C) Long-term liabilities/ total owners' equity 
D) All are alternative measures of gearing 
A) Total liabilities/total assets 
B) Total liabilities/total owners' equity 
C) Long-term liabilities/ total owners' equity 
D) All are alternative measures of gearing

Question 3

A firm has total assets of $900 000 and total liabilities of $400 000. There are no preference shareholders. Earnings before interest and taxes are $100 000. Interest is $21 000 and taxes are $34 000. The return on ordinary shareholders' funds is:

Accepted Answer

A) 8.0% 
B) 12.5% 
C) 9.0% 
D) 3.8% 
A) 8.0% 
B) 12.5% 
C) 9.0% 
D) 3.8%

Question 4

Why is interest added back to profit before tax when calculating return on total assets?

Accepted Answer

A) Because interest rates vary over time 
B) To indicate to lenders that some risk is involved 
C) Because the efficient use of resources should be examined independently from the method of financing 
D) Both A and B 
A) Because interest rates vary over time 
B) To indicate to lenders that some risk is involved 
C) Because the efficient use of resources should be examined independently from the method of financing 
D) Both A and B

Question 5

Solvent Ltd has a quick ratio of 1.2:1 and its current liabilities amount to $200 000. If it purchased $40 000 of inventory on credit, its new quick ratio would be:

Accepted Answer

A) unable to be calculated. 
B) higher. 
C) unaffected by the transaction. 
D) lower. 
A) unable to be calculated. 
B) higher. 
C) unaffected by the transaction. 
D) lower.

Question 6

Which statement concerning the average settlement period for accounts payable is correct?

Accepted Answer

A) It is always best for the business to make creditors wait for their money for as long as possible. 
B) It is best to pay accounts payable as quickly as possible. 
C) Accounts payable provide a free source of finance for a business. 
D) A change in the accounts payable turnover period of 56 days to 65 days means that accounts payable are being paid faster. 
A) It is always best for the business to make creditors wait for their money for as long as possible. 
B) It is best to pay accounts payable as quickly as possible. 
C) Accounts payable provide a free source of finance for a business. 
D) A change in the accounts payable turnover period of 56 days to 65 days means that accounts payable are being paid faster.

Question 7

Using the information below find the average inventory turnover for Vox Ltd in days. $\begin{array}{ll}
\text { Sales } & \$ 1,800,000 \
\text { Cost of sales } & 1,200,000 \
\text { Stock on hand start } & 360,000 \
\text { Stock on hand end } & 312,000
\end{array}$

Accepted Answer

A) 102.2 days 
B) 63.26 days 
C) 94.8 days 
D) 68 days 
A) 102.2 days 
B) 63.26 days 
C) 94.8 days 
D) 68 days

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?

Which of these are alternative measures of gearing?

A firm has total assets of $900 000 and total liabilities of $400 000. There are no preference shareholders. Earnings before interest and taxes are $100 000. Interest is $21 000 and taxes are $34 000. The return on ordinary shareholders' funds is:

Why is interest added back to profit before tax when calculating return on total assets?

Solvent Ltd has a quick ratio of 1.2:1 and its current liabilities amount to $200 000. If it purchased $40 000 of inventory on credit, its new quick ratio would be:

Which statement concerning the average settlement period for accounts payable is correct?

Using the information below find the average inventory turnover for Vox Ltd in days. Sales \ 1,800,000 Cost of sales 1,200,000 Stock on hand start 360,000 Stock on hand end 312,000

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Recording Transactionsthe Journal and Ledger Accounts

Accounting Systems and Internal Control

Introduction to Limited Companies

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Costvolumeprofit Analysis and Relevant Costing

Full Costing

Planning and Budgeting

Capital Investment Decisions

Filters

Exam 10: Analysis and Interpretation of Financial Statements

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?

Which of these are alternative measures of gearing?

A firm has total assets of $900 000 and total liabilities of $400 000. There are no preference shareholders. Earnings before interest and taxes are $100 000. Interest is $21 000 and taxes are $34 000. The return on ordinary shareholders' funds is:

Why is interest added back to profit before tax when calculating return on total assets?

Solvent Ltd has a quick ratio of 1.2:1 and its current liabilities amount to $200 000. If it purchased $40 000 of inventory on credit, its new quick ratio would be:

Which statement concerning the average settlement period for accounts payable is correct?

Using the information below find the average inventory turnover for Vox Ltd in days. Sales \ 1,800,000 Cost of sales 1,200,000 Stock on hand start 360,000 Stock on hand end 312,000

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Recording Transactionsthe Journal and Ledger Accounts

Accounting Systems and Internal Control

Introduction to Limited Companies

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Costvolumeprofit Analysis and Relevant Costing

Full Costing

Planning and Budgeting

Capital Investment Decisions

Filters