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Testbank
to accompany
Prepared by
Nila Latimer
LEARNING OBJECTIVES
5. Define, calculate and interpret the ratios that measure asset efficiency
Q16, Q17, Q18, Q19, Q20, Q21, Q22, Q23, Q24, Q56, Q57, Q58
7. Define, calculate and interpret the ratios that measure capital structure
Q34, Q35, Q36, Q37, Q38, Q39, Q62, Q63
a. profitability
*b. cash flow
c. none of the options is correct
d. turnover of debtors
Correct answer: b
Learning Objective 8.1 ~ Explain why different user groups require financial
statements to be analysed and interpreted
Correct answer: b
Learning Objective 8.2 ~ Describe the nature and purpose of financial
analysis
Correct answer: a
Learning Objective 8.2 ~ Describe the nature and purpose of financial
analysis
Correct answer: c
Learning Objective 8.3 ~ Apply the analytical methods of horizontal, trend,
vertical and ratio analysis
5. If year one equals $800, year two equals $830 and year three equals
$896 the value given to year three in a trend analysis, with year one as
the base year, is
a. 89%
b. 100%
c. 105%
*d. 112%
Correct answer: d
Learning Objective 8.3 ~ Apply the analytical methods of horizontal, trend,
vertical and ratio analysis
Correct answer: a
Learning Objective 8.3 ~ Apply the analytical methods of horizontal, trend,
vertical and ratio analysis
Correct answer: b
Learning Objective 8.3 ~ Apply the analytical methods of horizontal, trend,
vertical and ratio analysis
a. trend analysis
b. horizontal analysis
c. ratio analysis
*d. common size statements
Correct answer: d
Learning Objective 8.3 ~ Apply the analytical methods of horizontal, trend,
vertical and ratio analysis
Correct answer: b
Learning Objective 8.3 ~ Apply the analytical methods of horizontal, trend,
vertical and ratio analysis
10. Which of the following categories of ratios is not relevant to all business
entities?
Correct answer: a
Learning Objective 8.3 ~ Apply the analytical methods of horizontal, trend,
vertical and ratio analysis
Correct answer: c
Learning Objective 8.4 ~ Define, calculate and interpret the ratios that
measure profitability
12. Which ratio/s can be used to explain changes in the profit margin?
Correct answer: a
Learning Objective 8.4 ~ Define, calculate and interpret the ratios that
measure profitability
a. profit that the entity has generated specifically for its owners
*b. ability of an entity to generate income from its asset investments
c. the relative amount of cash flow generated by each sales
revenue dollar
d. none of the options is correct
Correct answer: b
Learning Objective 8.4 ~ Define, calculate and interpret the ratios that
measure profitability
14. Profit is $109 000, after deducting interest of $11 000 and average total
assets are $650 000. Return on assets to assess profitability from a
management view point is:
*a. 18.5%
b. 16.8%
c. 15%
d. 168%
Correct answer: a
Learning Objective 8.4 ~ Define, calculate and interpret the ratios that
measure profitability
Correct answer: b
Learning Objective 8.4 ~ Define, calculate and interpret the ratios that
measure profitability
a. market performance
*b. the average length of time it takes to sell inventory
c. profitability
d. the average length of time it takes to collect money due from
debtors
Correct answer: b
Learning Objective 8.5 ~ Define, calculate and interpret the ratios that
measure asset efficiency
Correct answer: b
Learning Objective 8.5 ~ Define, calculate and interpret the ratios that
measure asset efficiency
Correct answer: d
Learning Objective 8.5 ~ Define, calculate and interpret the ratios that
measure asset efficiency
19. If average inventory is $49 500, credit sales $820 000 and cost of sales
$630 000 inventory turnover in days is:
a. 78 days
b. 22 days
*c. 28.7 days
d. 46.5 days
Correct answer: c
Learning Objective 8.5 ~ Define, calculate and interpret the ratios that
measure asset efficiency
Correct answer: d
Learning Objective 8.5 ~ Define, calculate and interpret the ratios that
measure asset efficiency
Correct answer: b
Learning Objective 8.5 ~ Define, calculate and interpret the ratios that
measure asset efficiency
Correct answer: c
Learning Objective 8.5 ~ Define, calculate and interpret the ratios that
measure asset efficiency
23. If the debtors turnover ratio changes from 45 days to 40 days this
indicates that:
Correct answer: b
Learning Objective 8.5 ~ Define, calculate and interpret the ratios that
measure asset efficiency
24. If creditors allow 30 days from the date of purchase before requiring
payment, it takes, on average 40 days to sell inventory, and debtors
take, on average, 45 days to pay their accounts, the length of the cash
cycle is:
*a. 55 days
b. 85 days
c. 115 days
d. 45 days
Correct answer: a
Learning Objective 8.5 ~ Define, calculate and interpret the ratios that
measure asset efficiency.
Correct answer: a
Learning Objective 8.6 ~ Define, calculate and interpret the ratios that
measure liquidity
Correct answer: b
Learning Objective 8.6 ~ Define, calculate and interpret the ratios that
measure liquidity
Correct answer: d
Learning Objective 8.6 ~ Define, calculate and interpret the ratios that
measure liquidity
28. Weston Trading Ltd has the following balance sheet figures. The quick
asset ratio is:
$
Total current assets 500 000
Total current liabilities 150 000
Inventory 200 000
Bank 30 000
a. 1.67:1
b. 1:1
*c. 2:1
d. 3.33:1
Correct answer: c
Learning Objective 8.6 ~ Define, calculate and interpret the ratios that
measure liquidity
29. For a retail firm the quick asset ratio will always be:
Correct answer: b
Learning Objective 8.6 ~ Define, calculate and interpret the ratios that
measure liquidity
30. Westbury Pty Ltd has a current ratio of 2 to 1 and current liabilities of
$22 000. If Westbury Pty Ltd has $10 000 of inventory, the quick asset
ratio is:
*a. 1.6:1
b. 2.5:1
c. 1:1
d. 1.2:1
Correct answer: a
Learning Objective 8.6 ~ Define, calculate and interpret the ratios that
measure liquidity
31. Greenfields Pty Ltd has a quick asset ratio of 2 to 1 and current
liabilities of $22 000. If Greenfields Pty Ltd has $10 000 of inventory,
the total current assets is:
a. $44 000
*b. $54 000
c. $64 000
d. $32 000
Correct answer: b
Learning Objective 8.6 ~ Define, calculate and interpret the ratios that
measure liquidity
32. Net cash flows from operating activities divided by current liabilities, is
the formula for:
Correct answer: b
Learning Objective 8.6 ~ Define, calculate and interpret the ratios that
measure liquidity
Correct answer: b
Learning Objective 8.6 ~ Define, calculate and interpret the ratios that
measure liquidity
Correct answer: d
Learning Objective 8.7 ~ Define, calculate and interpret the ratios that
measure capital structure
a. If the equity ratio is less than 50% then the entity is more reliant
on equity funding than debt funding
b. The debt ratio indicates how many dollars of debt exist per dollar
of equity financing
c. If the equity ratio is 50% the debt to equity ratio is 200%
*d. The sum of the debt ratio and the equity ratio equals 100%
Correct answer: d
Learning Objective 8.7 ~ Define, calculate and interpret the ratios that
measure capital structure
36. If Morgan Trading Pty Ltd has the following balance sheet figures the
debt ratio is:
$
Current assets 500 000
Current liabilities 150 000
Non-current assets 200 000
Noncurrent liabilities 50 000
a. 71.4%
b. 40%
c. 30%
*d. 28.6%
Correct answer: d
Learning Objective 8.7 ~ Define, calculate and interpret the ratios that
measure capital structure
37. Morgan Trading Pty Ltd has the following balance sheet figures; the
debt to equity ratio is:
$
Current assets 500 000
Current liabilities 150 000
Non-current assets 200 000
Noncurrent liabilities 50 000
a. 71.4%
*b. 40%
c. 30%
d. 28.6%
Correct answer: b
Learning Objective 8.7 ~ Define, calculate and interpret the ratios that
measure capital structure
a. profitability ratios
b. liquidity ratios
c. management efficiency ratios
*d. gearing ratios
Correct answer: b
Learning Objective 8.7 ~ Define, calculate and interpret the ratios that
measure capital structure
39. Which of the following statements regarding the interest coverage ratio
is true?
Correct answer: d
Learning Objective 8.7 ~ Define, calculate and interpret the ratios that
measure capital structure
Correct answer: d
Learning Objective 8.8 ~ Define, calculate and interpret the ratios that
measure market performance
Correct answer: b
Learning Objective 8.8 ~ Define, calculate and interpret the ratios that
measure market performance
42. All the statements concerning net tangible asset backing (NTAB) per
share are true, except:
Correct answer: d
Learning Objective 8.8 ~ Define, calculate and interpret the ratios that
measure market performance
Ilmatehtaassa
Tällä välin oli kuu jo ehtinyt korkealle, ja näin, että Woola oli vain
varjo entisestään. Ja kun se kääntyi pois hyväilyistäni, alkaen ahmia
maassa viruvan eläimen ruumista, huomasin selvästi, että eläin-
parka oli melkein kuoliaaksi nälkiytynyt. Olin itsekin vain vähän
paremmassa tilassa, mutta en voinut syödä pedon lihaa raakana eikä
minulla ollut minkäänlaisia tulentekovehkeitä. Kun Woola oli
päättänyt ateriansa, lähdin uudelleen väsyttävälle ja loputtomalta
tuntuvalle vaellukselleni, etsimään vesiväylää, joka näytti minua
pakenevan.
Lentoretki Zodangassa
"— Olen ollut täällä kolme päivää", jatkoi Kantos Kan, "mutta en
ole vielä löytänyt Dejah Thorisin vankilaa. Tänään liityin Zodangan
laivastoon lentopartiolaisena ja toivon sitä tietä saavuttavani prinssi
Sab Thanin luottamuksen, joka on tämän laivasto-osaston
komentaja, ja siten saavani tietää Dejah Thorisin olinpaikan. Olen
iloinen siitä, että sinä, John Carter, olet täällä, sillä tunnen sinun
kiintymyksesi prinsessaan, ja yhdessä toimien meidän kahden pitäisi
kyetä tekemään paljon."
Sitä Marsista poispäin työntävä voima oli niin suuri, että se oli
kiitänyt kauas avaruuteen, mistä sen vieläkin saattaa voimakkaalla
kaukoputkella nähdä. Yli kuudentoistatuhannen kilometrin
etäisyydellä Marsista se kiertää taivaalla tämän tähden pienenä
seuralaisena aikojen loppuun saakka.
Löydän Dejahin
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