WorksheetsChapter 25: Analysis of Accounts
Total questions: 20
Worksheet time: 19mins
Name
Class
Date
1.
Gross Profit Refers to
a)
money remaining after all expenses are paid
b)
money remaining after taxes have been paid
c)
Sales less cost of goods sold
d)
None of the above
2.
Net Profit or Net Loss refers to
a)
Gross Profit + Sales Revenue
b)
The sum of assets and liabilities
c)
Gross Profit - expenses
d)
None of the above
3.
What is the Gross Profit Margin for this business?
a)
20%
b)
30%
c)
25%
d)
40%
4.
What is the Net Profit Ratio for this business?
a)
17%
b)
30%
c)
22%
d)
18%
5.
What is the Return on Capital Employed for this business?
a)
10%
b)
10.5%
c)
11%
d)
18%
6.
How can a business improve the Gross Profit Margin?
a)
Finding a cheaper supplier
b)
Lowering wages
c)
Lowering the cost of electricity
d)
All of the above are correct
7.
How can a business improve the Net Profit Margin?
a)
Finding a more expensive supplier with better quality
b)
Reducing the wage bill
c)
Raising electricity usage
d)
None of the above
8.
Financial ratios are used in comparison of other like businesses?
a)
True
b)
False
9.
It is better to have a lower NP than the industry average?
a)
True
b)
False
10.
The Return on Capital Employed is considered to be good if...
a)
the return is greater than the sum total of Net Assets
b)
the return is less than the bank interest rate
c)
the return is equal to the bank interest rate
d)
the return is greater than the bank interest rate
11.
What is a current asset?
a)
Something a firm owes that must be paid in > 1 year.
b)
Something a firm owns that can turn into cash in > 1 year.
c)
Something a firm owns that you can turn into cash <1 year.
d)
None of the above
12.
What is a current liability?
a)
Something a firm owns that can be turned into cash <1 year.
b)
Something a firm owns that can be turned into cash >1 year.
c)
Something a firm owes that must be paid <1 year.
d)
Something a firm owes that must be paid >1 year.
13.
What is the current ratio?
a)
Non Current Assets: Non Current Liabilities
b)
Current Assets: Non Current Liabilities
c)
Non Current Assets: Current Liabilities
d)
Current Assets:Current Liabilities
14.
What does the current ratio show us?
a)
How many current assets a firm has
b)
A measure of a firms ability to meet short term liabilities
c)
How many current liabilities a firm owes
d)
How much debt a firm owes
15.
What is removed from the current ratio to make it an acid test ratio?
a)
Stock
b)
Debtors
c)
Creditors
d)
Bank
16.
Current assets of £8m (£4m is stock) & Current Liabilities of £2m. What is their current ratio?
a)
1:2
b)
4:1
c)
2:1
d)
1:4
17.
Current assets of £8m (£4m is stock) & Current Liabilities of £2m. What is the Acid Test ratio?
a)
1:2
b)
4:1
c)
2:1
d)
1:4
18.
What is the ideal value for current ratio?
a)
1:2
b)
1:1
c)
1.5:1
d)
0.5:1
19.
What is the ideal value for the acid test ratio?
a)
1:2
b)
1:1
c)
2:1
d)
0.5:1
20.
How can you improve the current ratio?
a)
Manage debts
b)
Seek long term finance
c)
Reduce investments
d)
All of the above
100 %
