Deck 5: Financial Ratios and Cash Flow Statements

Question 1

Opening stock + purchases + direct expenses - closing stock =

A)net profit.
B)cost of production
C)administrative expenses.
D)cost of goods sold

Answer 1

cost of goods sold

Question 2

Which ratio measures the number of times the receivables are rotated in a year in terms of sales?

A)stock turnover ratio.
B)debtors turnover ratio.
C)creditors velocity ratio.
D)working capital turnover ratio.

Answer 2

debtors turnover ratio.

Question 3

Debtors turnover ratio is also called .

A)stock turnover ratio.
B)debtors velocity ratio.
C)creditors velocity ratio.
D)working capital turnover ratio

Answer 3

debtors velocity ratio.

Question 4

Creditors turnover ratio is also called

A)stock turnover ratio.
B)debtors velocity ratio.
C)accounts payables ratio.
D)working capital turnover ratio.

Question 5

Debt-equity ratio is a sub-part of

A)short-term solvency ratio
B)long-term solvency ratio
C)debtors turnover ratio
D)none of the above

Question 6

The most precise test of liquidity is

A)quick ratio
B)current ratio
C)absolute liquid ratio
D)none of the above

Question 7

Quick ratio is 1.8:1, current ratio is 2.7:1 and current liabilities are Rs 60,000. Determine value of stock.

A)rs 54,000
B)rs 60,000
C)rs 1, 62,000
D)none of the above

Question 8

The purchase value of assets over its serviceable life is categorised as

A)appreciated liabilities
B)appreciated assets
C)depreciation
D)appreciation

Question 9

The basic financial statements include

A)statement of cash flows
B)income statement
C)balance sheet
D)all of the above

Question 10

Cash flow example from a financing activity is

A)payment of dividends
B)receipt of dividend on investment
C)cash received from customers
D)purchase of fixed asset

Question 11

Cash flow example from an investing activity is

A)issue of debenture
B)repayment of long-term loan
C)purchase of raw materials for cash
D)sale of investment by non-financial enterprise

Question 12

Cash flow example from an operating activity is

A)purchase of own debenture
B)sale of fixed assets
C)interest paid on term-deposits by a bank
D)issue of equity share capital

Question 13

Which item comes under financial activities in cash flow?

A)redemption of preference share
B)issue of preference share
C)interest paid
D)all of the above

Question 14

As per Accounting Standard-3, Cash Flow is classified into

A)operating activities and investing activities
B)investing activities and financing activities
C)operating activities and financing activities
D)operating activities, financing activities and investing activities

Question 15

Cash Flow Statement is based upon

A)cash basis of accounting
B)accrual basis of accounting
C)credit basis of accounting
D)none of the above

Question 16

Which of the following statements are true?

A)cash flow reveals only the inflow of cash
B)cash flow reveals only the outflow of cash
C)cash flow is a substitute for income statement
D)cash flow statement is not a replacement of funds flow statement.