A firm has paid out Rs. 150,000 as dividends from its net income of Rs. 250,000. What is the retention ratio for the firm?
A. 12%
B. 25%
C. 40%
D. 60%
Retention ratio = Net income – Dividend / Net income
= 250 – 150 / 250 = 0.4 or 40%
The most important item that can be extracted from financial statements is the actual ________ of the firm.
A. Net Working Capital
B. Cash Flow
C. Net Present Value
D. None of the given options
Which of the following statement is considered as the accountant’s snapshot of firm’s accounting value as of a particular date?
A. Income Statement
B. Balance Sheet
C. Cash Flow Statement
D. Retained Earning Statement
When the market’s required rate of return for a particular bond is much less than its coupon rate, the bond is selling at:
A. Premium
B. Discount
C. Par
D. Cannot be determined without more information
If the bond’s price is higher than its par value, it will sell at a premium because its interest rate is higher than current prevailing rates..
Mr. Y and Mr. Z are planning to their capital to run a business. They are going to employ which of the following type of business?
A. Sole-proprietorship
B. Partnership
C. Corporation
D. None of the given options
Having more than 2 owners of a business entity is called “Partnership”. Having more than seven owners of a business entity is called corporation..
Which of the following ratios are particularly interesting to short term creditors?
A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Profitability Ratios
D. Market Value Ratios
Which of the following ratios are particularly interesting to short term creditors? Read More »
Finance McqsStandard Corporation sold fully depreciated equipment for Rs.5,000. This transaction will be reported on the cash flow statement as a(n):
A. Operating activity
B. Investing activity
C. Financing activity
D. None of the given options
Investing activities – changes in investments and long-term assets
Cash inflows:
From sale of property, plant, and equipment.
From sale of investments in debt or equity securities of other entities.
From collection of principal on loans to other entities.
Cash outflows:
To purchase property, plant, and equipment.
To purchase investments in debt or equity securities of other entities.
To make loans to other entities..
If a firm uses cash to purchase inventory, its quick ratio will?
A. Increase
B. Decrease
C. Remain unaffected
D. Become zero
When inventory is purchased for cash, the cash is converted into inventories and there is no effect on net current assets. The current assets remain the same as before the purchase of inventory the current ratio will not be changed. Quick ratio, however, will be reduced if the cash is converted into inventories because while computing quick ratio inventories are not added but cash is included in quick assets. (Quick assets / current liab.) Quick assets = current assets-inventories.
If a firm uses cash to purchase inventory, its quick ratio will? Read More »
Finance McqsWhich of the following set of ratios relates the market price of the firm’s common stock to selected financial statement items?
A. Liquidity Ratios
B. Leverage Ratios
C. Profitability Ratios
D. Market Value Ratios
It determines the market price or fair value of the common stock of company and compare it with the items of balance sheet like holder’s equity etc.
Which one of the following terms refers to the risk arises for bond owners from fluctuating interest rates?
A. Fluctuations Risk
B. Interest Rate Risk
C. Real-Time Risk
D. Inflation Risk
