Chapter 25: Analysis of Accounts
2 years ago
deanhoss
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20 QuestionsShow answers
  • Question 1
    30 seconds
    Q. Gross Profit Refers to
    answer choices
    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
    answer choices
    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?
    answer choices
    20%
    30%
    25%
    40%
  • Question 4
    30 seconds
    Q. What is the Net Profit Ratio for this business?
    answer choices
    17%
    30%
    22%
    18%
  • Question 5
    30 seconds
    Q. What is the Return on Capital Employed for this business?
    answer choices
    10%
    10.5%
    11%
    18%
  • Question 6
    30 seconds
    Q. How can a business improve the Gross Profit Margin?
    answer choices
    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?
    answer choices
    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?
    answer choices
    True
    False
  • Question 9
    30 seconds
    Q. It is better to have a lower NP than the industry average?
    answer choices
    True
    False
  • Question 10
    30 seconds
    Q. The Return on Capital Employed is considered to be good if...
    answer choices
    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?
    answer choices
    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?
    answer choices
    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?
    answer choices
    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?
    answer choices
    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?
    answer choices
    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?
    answer choices
    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?
    answer choices
    1:2
    4:1
    2:1
    1:4
  • Question 18
    30 seconds
    Q. What is the ideal value for current ratio?
    answer choices
    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?
    answer choices
    1:2
    1:1
    2:1
    0.5:1
  • Question 20
    30 seconds
    Q. How can you improve the current ratio?
    answer choices
    Manage debts
    Seek long term finance
    Reduce investments
    All of the above
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