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Financial & Performance Evaluation Quiz

Authored by Marsita (AS)

Education

3rd Grade

Used 2+ times

Financial & Performance Evaluation Quiz
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10 questions

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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the main objective of financial statements in ratio analysis?

To evaluate the efficiency of operations

To assess the risk of operation

To evaluate various aspects of financial and operating performance

To determine the firm's declaration and payment of taxes

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What does a high current ratio indicate?

Inability to pay current bills

Efficient management of assets in generating sales

Ability to cover current liabilities with current assets

Overreliance on inventory for current assets

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What does a low inventory turnover ratio indicate?

High marketability of inventory

Poor liquidity

Excess inventory and poor sales

Efficient sales and inventory management

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the purpose of the debt to equity ratio?

To assess the firm's ability to pay high annual interest

To measure the level of debt in the organization

To show how effectively management uses equity financing

To evaluate the firm's efficiency in utilizing assets to generate profits

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What does a high gross profit margin indicate?

Poor management of fixed assets

Effective generation of gross net from sales

Inefficient use of assets to generate profits

Overreliance on debt financing

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the implication of a high return on asset ratio?

Overcapacity and idle assets

Inability to pay high annual interest

Effective management of assets to generate profits

Overreliance on debt financing

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What are the limitations of financial ratios according to the text?

Average performance as shown in industry averages is always desirable

Seasonal factors do not distort ratios

Inflation does not distort the firm's financial statements

Comparison with industry averages is easy for conglomerates

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