# MCQ on Financial Management 4

Objective Questions and Answers of MBA: MCQ on Financial Management 4

Subject: MCQ on Financial Management 4

Part 4: List for questions and answers of Financial Management

Q1. Determine stock turnover ratio if, Opening stock is Rs 31,000, Closing stock is Rs 29,000, Sales is Rs 3,20,000 and Gross profit ratio is 25% on sales

a) 31 times

b) 11 times

c) 8 times

d) 32 times

Q2. Determine Debtors turnover ratio if, closing debtors is Rs 40,000, Cash sales is 25% of credit sales and excess of closing debtors over opening debtors is Rs 20,000

a) 4 times

b) 2 times

c) 6 times

d) 8 times

Q3. Working capital turnover ratio can be determined by

a) (Gross Profit/Working capital)

b) (Cost of goods sold/Net sales)

c) (Cost of goods sold/Working capital)

d) None of the above

Q4. Determine Working capital turnover ratio if, Current assets is Rs 1,50,000, current liabilities is Rs 1,00,000 and Cost of goods sold is Rs 3,00,000

a) 5 times

b) 6 times

c) 3 times

d) 1.5 times

Q5. Which ratio is considered as safe margin of solvency?

a) Liquid ratio

b) Quick ratio

c) Current ratio

d) None of the above

Q6. The ideal level of current ratio is

a) 4:2

b) 2:1

c) Both a and b

d) None of the above

Q7. Current ratio is stated as a crude ratio because

a) It measures only the quantity of current assets

b) It measures only the quality of current assets

c) Both a and b

d) Offerings dimension

Q8. Stock is considered as a liquid asset as anytime it can be converted into cash immediately

a) Yes

b) No

c) NA

d) NA

Q9. The ideal level of liquid ratio is

a) 3:3

b) 4:4

c) 5:5

d) All of the above

Q10. Debt-equity ratio is a sub-part of

a) Short-term solvency ratio

b) Long-term solvency ratio

c) Debtors turnover ratio

d) None of the above

Q11. Which of the following is not included in current assets?

a) Debtors

b) Stock

c) Cash at bank

d) Cash in hand

Q12. Higher the ratio, the more favorable it is, doesn’t stands true for

a) Operating ratio

b) Liquidity ratio

c) Net profit ratio

d) Stock turnover ratio

Q13. The most precise test of liquidity is

a) Quick ratio

b) Current ratio

c) Absolute Liquid ratio

d) None of the above

Q14. Quick ratio is 1.8:1, current ratio is 2.7:1 and current liabilities are Rs 60,000. Determine value of stock

a) Rs 54,000

b) Rs 60,000

c) Rs 1, 62,000

d) None of the above

Q15. Collection of debtors

a) Decreases current ratio

b) Increases current ratio

c) Has no effect on current ratio

d) None of the above

Q16. Which statement is prepared in the process of funds flow analysis?

a) Schedule of changes in working capital

b) Funds Flow Statement

c) Both a and b

d) None of the above

Q17. Funds Flow Statement is prepared on the basis of data of P and L statement and two consecutive balance sheets

a) True

b) False

c) Value delivery

d) None of the above

Q18. If reserve for bad and doubtful debts is mentioned in the question of Funds Flow Statement Preparation, it can be shown as

a) In the schedule by deducting from total debtors under current assets

b) In the schedule separately under the heading of capital liabilities

c) Both a and b

d) None of the above

Q19. Funds Flow Statement is also known as

a) Statement of Funds Flow

b) Statement of Sources and Application of Funds

c) Statement of Sources and Uses of Funds

d) All of the above

Q20. Given Net profit for the year Rs 2, 50,000 Transferred to general reserves Rs 40,000 and old machinery bought for Rs 50,000 was sold for Rs 20,000. Calculate funds from operations

a) Rs 2, 80,000

b) Rs 2, 20,000

c) Rs 2, 90,000

d) Rs 3, 00,000

Part 4: List for questions and answers of Financial Management