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Practice Quiz: Attempt review | Eduvos

Started on Friday, 11 October 2024, 9:27 AM

State Finished

Completed on Friday, 11 October 2024, 9:28 AM

Time taken 37 secs

Grade 2 out of 15 (13%)

Question 1

Complete

Mark 0 out of 1

Ratio analysis is used to evaluate the _____ of a firm.

' a. financial position

' b. financial performance and financial position

; c. financial performance

' d. cash flow

The correct answer is:

financial performance and financial position

Question 2

Complete

Mark 1 out of 1

Current Ratio is:

' a. Liquid Assets/Current Liabilities

; b. Current Assets/Current Liabilities

' c. Liquid Assets/Current Assets

' d. Fixed Assets/Current Assets

The correct answer is:

Current Assets/Current Liabilities

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Question 3

Complete

Mark 1 out of 1

Current Ratio is :

' a. Solvency Ratio

; b. Liquidity Ratio

' c. Profitability Ratio

' d. Activity Ratio

The correct answer is:

Liquidity Ratio

Question 4

Complete

Mark 0 out of 1

What is the possible corrective action for the Return on Equity?

' a. Improve marketing – to decrease the asset turnover rate

; b. Increase Operating expenses

' c. Improve marketing – to improve the asset turnover rate

The correct answer is:

Improve marketing – to improve the asset turnover rate

Question 5

Not answered

Marked out of 1

What is the possible corrective action for the Current Ratio?

' a. Reducing current assets, by decreasing the level of closing stock at the end of the period

' b. Increase current assets, by increasing the level of obsolete stock at the end of the period

' c. Increase current assets, by selling more goods on credit, thereby improving sales and accounts receivable

' d. Improve marketing – to improve the asset turnover rate due to the usage of an increased mark-up percentage

The correct answer is:

Increase current assets, by selling more goods on credit, thereby improving sales and accounts receivable

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Question 6

Not answered

Marked out of 3

ZB Bank Ltd has a current ratio of 2.5 and current liabilities of R773 000. The cost of goods sold amounts to R4 895 000. If the company has
an inventory turnover ratio of 5.46, what would its quick ratio be?

' a. 4.21

' b. 0.28

' c. 1.34

' d. 2.62

The correct answer is:

1.34

Question 7

Not answered

Marked out of 1

Which of the following are limitations of ratio analysis?

A) Ratio analysis may result in false results if variations in price levels are not considered.

B) Ratio analysis ignores qualitative factors

C) Ratio Analysis ignores quantitative factors

D) Ratio Analysis is historical analysis.

' a. A, B , C, D

' b. A, C and D

' c. A, B and D

' d. A, B and C

The correct answer is:

A, B and D

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Question 8

Not answered

Marked out of 1

A higher average collection period (ACP) ratio indicates:

' a. higher sales.

' b. cash flow increase.

' c. cash flow decrease.

' d. lower sales.

The correct answer is:

cash flow decrease.

Question 9

Not answered

Marked out of 1

What is the possible corrective action for the average collection period?

' a. Reduce telephone and printing costs by refraining from phoning clients and sending out statements to clients

' b. Charge interest on overdue accounts

' c. Provide a quick sign-up service to clients, where all new clients can purchase on credit without providing the necessary documentation

' d. Send out account statements late

The correct answer is:

Charge interest on overdue accounts

Question 10

Not answered

Marked out of 1

Ideal Current Ratio is :

' a. 1:2

' b. 1:1

' c. 2:1

' d. 1:3

The correct answer is:

2:1

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Question 11

Not answered

Marked out of 1

Which of the following statements is not correct with regards to ratio analysis?

' a. The larger the ratio, the better the conditions

' b. Data from same accounting systems and methods should be used

' c. Audited financial statements should be used to ensure data integrity

' d. Financial statement dates compared must correspond

The correct answer is:

The larger the ratio, the better the conditions

Question 12

Not answered

Marked out of 1

What is the possible corrective action for the earnings per share?

' a. Issuing new ordinary shares – This should not be done by means of a rights issue to prevent dilution of the shareholding of current
shareholders

' b. Increase the overdraft limit and negotiate with creditors for high debt limits

' c. Improve the profitability of the firm, by means of better marketing and reducing expenses

' d. Increase the use of preference share financing if possible

The correct answer is:

Improve the profitability of the firm, by means of better marketing and reducing expenses

Question 13

Not answered

Marked out of 1

Liquid Assets do not include :

' a. Debtors

' b. Bills Receivable

' c. Inventory

' d. Bank Balance

The correct answer is:

Inventory

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