# MCQ on Financial Management 3

Objective Questions and Answers of MBA: MCQ on Financial Management 3

Subject: MCQ on Financial Management 3

Part 3: List for questions and answers of Financial Management

Q1. While calculating Gross Profit ratio

a) Closing stock is deducted from cost of goods sold

b) Closing stock is added to cost of goods sold

c) Closing stock is ignored

d) None of the above

Q2. While calculating Gross Profit, if net profit is given

a) It can be converted into gross profit by adding interest to it

b) It can be converted into Gross profit by adding indirect expenses to it

c) Both a and b

d) None of the above

Q3. Gross profit ratio is calculated by

a) (Gross Profit/Gross sales)*100

b) (Gross Profit/Net sales)*100

c) (Net Profit/Gross sales)*100

d) None of the above

Q4. Given Sales is 1, 20,000 and Gross Profit is 30,000, the gross profit ratio is

a) 24%

b) 25%

c) 40%

d) 44%%

Q5. What will be the Gross Profit if, total sales is Rs 2,60,000 Cost of net goods sold is Rs 2,00,000 and Sales return is Rs 10,000?

a) 13%

b) 28%

c) 26%

d) 20%

Q6. If selling price is fixed 25% above the cost, the Gross Profit ratio is

a) 13%

b) 28%

c) 26%

d) 20%

Q7. Gross Profit ratio should be adequate to cover

a) Selling expenses

c) Dividends

d) All of the above

Q8. Net Profit ratio is calculated by

a) (Gross Profit/Gross sales)*100

b) (Gross Profit/Net sales)*100

c) (Net Profit/Net sales)*100

d) None of the above

Q9. If sales is Rs 5, 00,000 and net profit is Rs 1, 20,000 Net Profit ratio is

a) 24%

b) 416%

c) 60%

d) None of the above

Q10. If sales is Rs 10,00,000, sales returns is Rs 50,000, Profit Before Tax is Rs 2,00,000, Income tax is 40%, Net profit ratio is

a) 12.63%

b) 20%

c) 10%

d) 50%

Q11. Net operating profit ratio determines ___________ while net profit ratio determines

a) Overall efficiency of the business, working efficiency of the management

b) Working efficiency of the management, overll efficiency of the business

c) Overall efficiency of the external market, working efficiency of the internal management

d) None of the above

Q12. Operating ratio is calculated by

a) (Operating Cost/Gross sales)*100

b) (Operating Cost/Gross sales)*100

c) (Operating cost/Net sales)*100

d) None of the above

Q13. Determine Operating ratio, if operating expenses is Rs 60,000, Sales is Rs 9,40,000, Sales Return is Rs 40,000 and Cost of net goods sold is Rs 6,60,000

a) 80%

b) 15%

c) 25%

d) 11%

Q14. Which of the following is expenses ratio?

B) Selling and Distribution expenses ratio

C) Factory expenses ratio

D) Finance Expenses ratio

a) A, B and D

b) A, C and D

c) A, B and C

d) A, B , C, D

Q15. Overall Profitability ratios are based on

a) Investments

b) Sales

c) a and B

d) None of the above

Q16. Return on Proprietors’ funds is also known as

a) Return on net worth

b) Return on Shareholders’ fund

c) Return on Shareholders’ Investment

d) All of the above

Q17. Return on equity capital is calculated on basis of

a) Funds of equity shareholders

b) Equity capital only

c) Either a or b

d) None of the above

Q18. While calculating Earnings per share, if both equity and preference share capitals are there, then

a) Preference share is deducted from the net profit

b) Equity share capital is deducted from the net profit

c) Both a and b

d) None of the above

Q19. Turnover ratios are also known as

a) Activity ratios

b) Performance ratios

c) Both a and b

d) None of the above

Q20. The lower turnover ratio highlights the under utilizations of the resources accessible at the disposal of the firm

a) True

b) False

Part 3: List for questions and answers of Financial Management