Chap 16 to 19

Company A has a net profit of $800,000 and total assets of $4,000,000. It also has a liability of $2,000,000. What is the capital employed?

• $800,000

• $2,000,000

• $4,000,000

• $6,000,000

A company has a total capital employed of $10,000,000 and net operating profit of $1,200,000. Calculate the ROCE.

• 10%

• 12%

• 15%

• 20%

A company has total sales of $1,200,000 and average total assets of $600,000. What is its Asset Turnover Ratio?

• 1.5

• 2

• 0.5

• 1

A company has current assets of $800,000, inventory of $250,000, and current liabilities of $400,000. What is its Acid Test Ratio?

• 1.25

• 1.75

• 1.00

• 2.00

A company has net credit sales of $1,200,000 and average accounts receivable of $150,000. What is the Receivables Collection Period?

• 45 days

• 60 days

• 75 days

• 90 days

A company has total equity of $500,000 and total debt of $250,000. What is the financial gearing ratio?

• 0.50

• 1.0

• 1.5

• 0.25

A company has a net income of $500,000, total equity of $4,000,000, and a cost of equity of 10%. What is its Residual Income (RI)?

• $300,000

• $400,000

• $500,000

• $600,000

Which of the following is a potential reason for a company to use transfer pricing?

• To minimize its global tax liability

• To maximize the efficiency of production

• To determine the market price of a product

• To set competitive prices with external competitors