Chapter 25: Analysis of Accounts
2 years ago
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Host a game
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Homework
Solo Practice
Practice
• Question 1
30 seconds
Q. Gross Profit Refers to
money remaining after all expenses are paid
money remaining after taxes have been paid
Sales less cost of goods sold
None of the above
• Question 2
30 seconds
Q. Net Profit or Net Loss refers to
Gross Profit + Sales Revenue
The sum of assets and liabilities
Gross Profit - expenses
None of the above
• Question 3
30 seconds
Q. What is the Gross Profit Margin for this business?
20%
30%
25%
40%
• Question 4
30 seconds
Q. What is the Net Profit Ratio for this business?
17%
30%
22%
18%
• Question 5
30 seconds
Q. What is the Return on Capital Employed for this business?
10%
10.5%
11%
18%
• Question 6
30 seconds
Q. How can a business improve the Gross Profit Margin?
Finding a cheaper supplier
Lowering wages
Lowering the cost of electricity
All of the above are correct
• Question 7
30 seconds
Q. How can a business improve the Net Profit Margin?
Finding a more expensive supplier with better quality
Reducing the wage bill
Raising electricity usage
None of the above
• Question 8
30 seconds
Q. Financial ratios are used in comparison of other like businesses?
True
False
• Question 9
30 seconds
Q. It is better to have a lower NP than the industry average?
True
False
• Question 10
30 seconds
Q. The Return on Capital Employed is considered to be good if...
the return is greater than the sum total of Net Assets
the return is less than the bank interest rate
the return is equal to the bank interest rate
the return is greater than the bank interest rate
• Question 11
30 seconds
Q. What is a current asset?
Something a firm owes that must be paid in > 1 year.
Something a firm owns that can turn into cash in > 1 year.
Something a firm owns that you can turn into cash <1 year.
None of the above
• Question 12
30 seconds
Q. What is a current liability?
Something a firm owns that can be turned into cash <1 year.
Something a firm owns that can be turned into cash >1 year.
Something a firm owes that must be paid <1 year.
Something a firm owes that must be paid >1 year.
• Question 13
30 seconds
Q. What is the current ratio?
Non Current Assets: Non Current Liabilities
Current Assets: Non Current Liabilities
Non Current Assets: Current Liabilities
Current Assets:Current Liabilities
• Question 14
30 seconds
Q. What does the current ratio show us?
How many current assets a firm has
A measure of a firms ability to meet short term liabilities
How many current liabilities a firm owes
How much debt a firm owes
• Question 15
30 seconds
Q. What is removed from the current ratio to make it an acid test ratio?
Stock
Debtors
Creditors
Bank
• Question 16
30 seconds
Q. Current assets of £8m (£4m is stock) & Current Liabilities of £2m. What is their current ratio?
1:2
4:1
2:1
1:4
• Question 17
30 seconds
Q. Current assets of £8m (£4m is stock) & Current Liabilities of £2m. What is the Acid Test ratio?
1:2
4:1
2:1
1:4
• Question 18
30 seconds
Q. What is the ideal value for current ratio?
1:2
1:1
1.5:1
0.5:1
• Question 19
30 seconds
Q. What is the ideal value for the acid test ratio?
1:2
1:1
2:1
0.5:1
• Question 20
30 seconds
Q. How can you improve the current ratio?