1204-MPHMS010
MULTIPLE CHOICE QUESTIONS 1. The view of investors and creditors about firm’s financial position put an impact on firm’s……….. a) Effective interest rate. b) Market value. c) Reputation d) All of above.
2. In vertical analysis, each liability and equity account is expressed as a percentage of total….. a) Capital. b) Liabilities and shareholder’s equity. c) Assets. d) Sales.
3. If a company found a high current ratio and a low acid test ratio, what does it mean? a) Company has more cash. b) Company has more marketable securities. c) Company has more account receivable balance d) Company has more investment in inventory.
4. According to the standards, current assets should be ……………of current liabilities. a) Half. b) Three-quarter. c) Double d) Triple
5. A profitable entity will find itself bankrupt if it fails to meet its obligation of…….. a) Short term b) Long term c) Intermediate term d) None of above.
6. If future cash outflows are expected to be low relative to inflows, the liquidity position of the company will………… a) Deteriorate. b) Improve. c) ok d) Not show any effect.
7. The doomsday ratio is another name of ….. a) Cash burn ratio. b) Acid- test ratio. c) Quick ratio. d) Cash ratio.
8. The account receivable turnover ratio is expressed in….. a) Days. b) Times. c) Dollars. d) None of them.
9. If the accounts receivable turnover is 5, then what will be the average collection period. a) 93. b) 85. c) 73. d) 60. 10. What will be the operating cycle; if average collection period is 80 days and inventory turnover is 1.05 times. a) 428 days. b) 328 days. c) 430 days. d) 330 days.
11. Cash cycle is used to determine a) Working capital b) Work capital. c) Non cash working capital. d) Cash working capital.