Financial Management
751. Cash receipts from interest and dividends are classified as
- financing activities
- investing activities
- operating activities
- either financing or investing activities
Correct answer: (C)
operating activities
752. In preparing a statement of cash flows, a conversion of bonds into common stock will bereported in
- the financing section
- the "extraordinary" section
- a separate schedule or note to the financial statements
- the stockholders' equity section
Correct answer: (C)
a separate schedule or note to the financial statements
753. If a company revalues its assets,its net worth:
- Will improve
- Will remain same
- Will be positively affected
- None of the above
Correct answer: (A)
Will improve
754. In last year the current ratio was 3:1 and quick ratio was 2:1. Presently current ratio is 3:1 but quick ratio is 1:1. This indicates comparably
- high liquidity
- higher stock
- lower stock
- low liquidity
Correct answer: (B)
higher stock
755. The ideal quick ratio is
- 2:1
- 1:1
- 5:1
- None of the above
Correct answer: (B)
1:1
756. What does a decreasing inventory turnover ratio usually indicate about a rirm?
- The firm is selling more inventory
- The firm is managing its inventory we//
- The firm is inefficient in the management of inventory
- Both (a) and (b)
Correct answer: (C)
The firm is inefficient in the management of inventory
757. If a firm is using financial/ leverage successfully what would be the impact of doubling operating earnings?
- The returns on equity will more than double
- The return on equity will decline by half
- The return on equity will double
- The return on equity will increase, but not double
Correct answer: (A)
The returns on equity will more than double
758. In Ratio Analysis, the term Capital Employed refers to:
- Equity Share Capital
- Net worth
- Shareholders' Funds
- None of the above
Correct answer: (D)
None of the above
759. There is deterioration in the management of working capital of XYZ Ltd. What does it refer to?
- That the Capital Employed has reduced
- That the Profitability has gone up
- That debtors collection period has increased
- That Sales has decreased
Correct answer: (C)
That debtors collection period has increased
760. XYZ Ltd. has earned 8% Return on Total Assets of Rs. 50,00,000 and has a Net Profit Ratio of 5%. Find out the Sales of the firm
- Rs. 4,00,000
- Rs. 2,50,000
- Rs. 80,00,000
- Rs. 83,33,333
Correct answer: (C)
Rs. 80,00,000