Financial Statement Analysis

(c)The following information is given for Kabir Ltd., based on 360 days working in a year :

l Total revenue from operations INR 40,00,000/-

l Trade receivables as on April 2024 INR 4,15,000/l Trade receivables as on March 2025 INR 4,75,000/-

l Cash revenue from operations : 20% of revenues from operations

Calculate :

(i)Trade receivables turnover ratio

(ii)Average credit period.

(ii)Distinguish between free cash flow to firm and free cash flow to equity.

(b)Calculate Return on Equity and Return on Assets of Royden & Co.

(c)Calculate Trade Receivables turnover ratio and average collection period from the following information :

Assume 365 days in the year for calculation of average collection period.

(b)The following data is given for two similar companies :

(i)Calculate Return on Equity for A Ltd. and B Ltd.

(ii)Which company has higher Return on Equity ?

(iii)What is the reason for higher return on equity ?

(iii)What is the significance of debt service coverage ratio ?

Which of the following statements is false ?

(A)Buy back of shares must be authorised by articles of company

(B)A special resolution must be passed for buy back in general meeting

(C)Shares can be partly paid up for the purpose of buy back

(D)The ratio of debt owed by the company is not more than twice the paid-up capital and its free reserves after such buy back

According to the FASB conceptual framework, an entity’s revenue may result from ........................

(A)A decrease in an asset from primary operation

(B)A decrease in a liability from primary operation

(C)An increase in a liability from incidental transaction

(D)An increase in an asset from incidental transaction

Which of the following is considered a profitability measure ?

(A)Days sales in inventory

(B)Proprietary ratio

(C)Debt service ratio

(D)Return on assets

................. reflects the percentage return that an investor receives on his investment at the current market price of the shares.

(A)Interest Coverage Ratio

(B)Interest Yield Ratio

(C)Dividend Yield Ratio

(D)Capital-Gearing Ratio

Proprietary Ratio 0.6 = (Fixed asset/Proprietary fund)

Current assets = ₹ 2,00,000 Current liabilities = ₹ 80,000

Assuming no long-term liabilities, Fixed assets = ?

(A)₹ 3,00,000

(B)₹ 1,60,000

(C)₹ 2,40,000

(D)₹ 1,80,000

The following information from ABC Ltd.

Current Ratio = 2.5

Liquid Ratio = 1.5

Proprietary Ratio = 0.75

Working Capital = ₹ 60,000

Reserve and Surplus = ₹ 40,000

Bank Overdraft = ₹ 10,000

There is no long term loan and fictitious assets. You are required to calculate the amount of Current assets.

(A)₹ 1,00,000

(B)₹ 60,000

(C)₹ 40,000

(D)₹ 90,000

On the basis of Q. No. 82, you are required to calculate the amount of Liquid (Quick) assets.

(A)₹ 40,000

(B)₹ 60,000

(C)₹ 80,000

(D)₹ 50,000

On the basis of Q. No. 82, you are required to calculate the amount of Share Capital.

(A)₹ 2,40,000

(B)₹ 60,000

(C)₹ 2,00,000

(D)₹ 40,000

On the basis of Q. No. 82, you are required to calculate the amount of fixed assets.

(A)₹ 1,60,000

(B)₹ 2,00,000

(C)₹ 2,40,000

(D)₹ 1,80,000

On the basis of given information, calculate

Operating Profit Ratio.

Cost of goods sold = ₹ 4,80,000

Gross Profit is 20% on sales Operating Expenses = ₹ 30,000

(A)11.45%

(B)15%

(C)8.93%

(D)None of the above

The target payout ratio is :

(A)The inverse of a firm’s equity multiplier

(B)A firm’s preferred rate of dividend growth

(C)A firm’s long-term desired dividend to earnings ratio

(D)The preferred number of dividend payments per year divided by 12

If credit sales for the year is 5,40,000 and Debtors at the end of year is 90,000. The Average Collection Period will be ? Assume 1 year = 360 days.

(A)120 days

(B)90 days

(C)60 days

(D)30 days

(a)Calculate current Net Profit Margin, Return on Equity and Return on Capital Employed.

(b)lf debt is paid off using fresh equity, what will be new Net Profit Margin and Return on Equity ? Assume debt is repaid on first day of financial year. Comment on change in return on equity.

( a )Alpha Ltd. has provided you the following information as on 31st March, 2024 :

Calculate lnventory Turnover Ratio and Gross Profit Ratio.

Activity ratio is :

(A)80%

(B)125%

(C)90%

(D)111.11%

Net Profit before

Earnings per share from the data is :

(A)₹ 10 per share

(B)₹ 18.5 per share

(C)₹ 8.5 per share

(D)₹ 20 per share

Total Assets ₹ 1,25,000

Total debts ₹ 1,00,000

Current Liabilities ₹ 50,000

The Debt-Equity ratio will be :

(A)2 : 1

(B)2.5 : 1

(C)1.25 : 1

(D)1.75 : 1

Which ratio is the barometer of the market sentiment ?

(A)P/E Ratio

(B)Dividend Yield Ratio

(C)Dividend Payout Ratio

(D)Earnings Per Share (EPS)

Diluted earnings per share shall be calculated :

(A)by dividing profit or loss attributable to ordinary equity holders of the entity (numerator) by the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares (denominator) during the period

(B)by dividing profit or loss attributable to ordinary equity holders of the entity (numerator) by the average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares (denominator) during the period

(C)by dividing profit or loss attributable to ordinary equity holders of the entity (numerator) by the weighted average number of ordinary shares outstanding (denominator) during the period

(D)by dividing profit or loss attributable to ordinary equity holders of the entity (numerator) by the average number of ordinary shares outstanding (denominator) during the period

The P/E ratio (also known as the P/E multiple) is the method most widely used by finance managers, investment analysts and equity shareholders to arrive at :

(A)the market price of an equity share

(B)the market price of preference share

(C)the issue price of an equity share

(D)the issue price of preference share

The ratio that explains how efficiently companies use their assets to generate sales is .............. .

(A)Revenue asset ratio

(B)Receivable turnover ratio

(C)Income ratio

(D)Fixed Asset turnover ratio

Which of the following indicates the two basic aspects of financial management ?

(A)Procurement of funds and utilization of funds

(B)Utilization of funds and ratio analysis

(C)Procurement of funds and ratio analysis

(D)Distribution of profits and ratio analysis

A new project under consideration requires a capital outlay of ₹ 300 lakhs. The required funds can be raised either fully by equity shares of ₹ 100 each or by equity shares of the value of ₹ 200 lakhs and by the loan of ₹ 100 lakh at 15% interest. Assuming a tax rate of 50%, calculate the figure of profit before tax ( ₹ ) that would keep the equity investors indifferent to the two options.

(A)4.5 lakh

(B)40.5 lakh

(C)450 lakh

(D)45 lakh

The following information is extracted from Z Ltd. :

Net Working capital ₹ 2,80,000 Current Ratio 2.4

Liquid ratio 1.6

Amount of Current Assets is ₹ :

(A)2,00,000

(B)2,80,000

(C)4,80,000

(D)3,60,000

If a firm has ₹ 100 in inventories, a current ratio equal to 1.2, and a quick ratio equal to 1.1, what is the firm’s Networking Capital ( ₹ ) ? Assume no prepaid expenses.

(A)1000

(B)100

(C)200

(D)1,200

80% of sales of ₹ 12,00,000 of a firm are on credit. It has a Receivable Turnover of 8. What is the Average collection period (360 days a year) and Average Debtors of the firm ( ₹ ) ?

(A)45 days and 1,20,000

(B)36 days and 1,00,000

(C)45 days and 1,50,000

(D)360 days and 1,25,000

(a)Calculate inventory turnover, average collection period and interpret the ratios.

(b)Calculate Return on Equity by using Du Pont Analysis. Comment on how can Return on Equity be improved.

(c)Prepare the estimate of Profit & Loss A/c for 2023-24. What will be the Owner’s capital as on 31st March, 2024 ?

(b)Calculate net profit margin from the following given information :

When inventory is ₹ 1,00,000, prepaid expenses are ₹ 20,000, current liabilities are ₹ 80,000 and quick-ratio is 2.5. Current ratio will be ..................... .

(A)5.0

(B)4.5

(C)4.0

(D)4.8

From the following information, find the average collection period :

Total sales – ₹ 4,00,000

Debtors – ₹ 40,000

Cash Sales – ₹ 80,000

No. of days in a year – 360

Creditors – ₹ 20,000

Sales returns – ₹ 20,000

Reserve for bad debts – ₹ 7,000

Bills receivable – ₹ 15,000.

(A)48 days

(B)50 days

(C)52 days

(D)66 days

Following information are given :

Sales = ₹ 15,00,000

Gross profit ratio = 20%

Stock Turnover ratio = 8

If closing stock is more than opening stock by ₹ 20,000, the value of closing stock is :

(A)₹ 1,70,000

(B)₹ 1,60,000

(C)₹ 1,50,000

(D)₹ 1,40,000

The expected earnings per share of RR Ltd. for the current year are ₹ 8. The standard P/E ratio of the industry to which the company belongs to is 16 to 18 and the company is in the medium growth stage. The maximum price at which an investor should buy the shares of RR Ltd. is :

(A)₹ 128

(B)₹ 136

(C)₹ 144

(D)₹ 145

Following data are available :

Share Capital :

50,000 equity shares of ₹ 10 each

20,000, 10% preference shares of ₹ 10 each

Market price per equity share is ₹ 58

Profit after tax ₹ 3,10,000

Rate of tax 30%

Equity dividend paid 20%

The Price Earnings ratio is :

(A)10 times

(B)9.35 times

(C)6.2 times

(D)8.4 times

A company has an existing EPS of ₹ 7.5; it makes an FPO of 15000 shares (Face value ₹ 10) issued at a price of ₹ 25 per share. The additional funds thus raised are expected to earn a post-tax return of 28%. What will be the expected impact on EPS considering the EPS on existing shares to be constant ?

(A)EPS will remain 7.5

(B)EPS will be greater than 7.5

(C)EPS will be below than 7.5

(D)Information not sufficient for calculation

Which of the following statements is not covered in Credit Monitoring Arrangements report ?

(A)Particulars of current and proposed limits

(B)Comparative statement of current assets and current liabilities

(C)Statement of contingent liabilities

(D)Ratio Analysis

Following information is available in respect of Rama Ltd. :

No. of shares outstanding : 4 lakh

Net profit : ₹ 20 lakh Equity capitalization rate : 15%

Rate of return on investment : 20%

You are required to calculate Dividend payout ratio to keep share price at ₹ 40.

(A)30%

(B)40%

(C)45%

(D)50%

(a)Following Summarized Statement of Profit/Loss and Balance Sheet are provided by ABC Ltd. :

Summarized Profit/Loss account of ABC Ltd.

(For the year ended 31st March, 2023)

You are required to calculate the following ratios :

(i)Current Ratio

(ii)Liquid Ratio

(iii)Gross Profit Margin Ratio

(iv)Net Profit Margin Ratio

(v)Return on Equity.

..................... Is an activity concerned with recording and classifying financial data related to business operations in order of occurrence.

(A)Recording

(B)Classifying

(C)Measurement

(D)Book-keeping

Following are the data extracted from the financial statement of ABC Limited: Authorized capital 50 crore Paid up share capital 30 crore Reserve & surplus 10 crore Revaluation reserve 2 crore Working capital loan 1 crore Preliminary expenses not written off 1.5 crore Profit and loss (Loss) (2.5) crore What will be the amount of effective capital to calculate the managerial remuneration?

(A)36 crore

(B)39 crore

(C)37 crore

(D)38.5 crore

From the following data, calculate Inventory Turnover Ratio: Cost of goods sold ₹ 3, 00,000, Purchases ₹ 3,30,000, opening stock ₹ 60,000.

(A)4 times

(B)3 times

(C)2 times

(D)6 times

From the following data, calculate the earnings per share (EPS) 50,000 Equity shares of ₹ 10 each ₹ 5,00,000 9% Debentures ₹ 2,00,000 Net profit after tax ₹ 1,18,000

(A)₹ 6

(B)₹ 5

(C)₹ 3

(D)₹ 2

Current liabilities of a company are ₹ 3, 00,000. Its c urrent ratio is 3: 1 and the liquid ratio is 1: 1. The value of the stock is....................

(A)₹ 3, 00,000

(B)₹ 6, 00,000

(C)₹ 9, 00,000

(D)₹ 12, 00,000

If the current ratio is very high, then................. .

(A)positive impact on the profitability of the organization

(B)no impact on the profitability of the organization

(C)adverse impact on the profitability of the organization

(D)sometimes profitability may affect

The formula of Price-Earnings Ratio is:

(A)Yield per share/Normal rate of return × 100

(B)Rate of earning/Normal rate of return × 100

(C)Market value per share/Earning per share

(D)Possible rate of dividend × paid up value per share/Normal rate of dividend

The formula using for calculating diluted earnings per share is :

(A)profit or loss attributable to ordinary equityholders/weighted average number of ordinary shares outstanding

(B)the weighted average number of ordinary shares outstanding/profit or loss attributable to ordinary equityholders

(C)profit or loss attributable to ordinary equityholders/average number of ordinary shares outstanding

(D)the average number of ordinary shares outstanding/profit or loss attributable to ordinary equityholders

The following data available from the record of ABC Limited : 10,000, 9% Preference Shares of ₹ 100 each fully paid and 80,000 equity shares of ₹ 10 each fully paid, Reserves and Surplus; ₹ 1,00,000. Total assets ₹ 30,00,000 out of total assets ₹ 40,000 worth of Assets are fictitious. Calculate the intrinsic value per equity share.

(A)₹ 23.25

(B)₹ 10.75

(C)₹ 8.25

(D)₹ 6.75

Prospective Price Earnings Ratio/Prospective average earnings growth is a formula for calculation of...................

(A)Price to Book Ratio

(B)Price Earnings Growth Ratio

(C)Dividend Yield Ratio

(D)Dividend Growth Ratio Executive Programme - June 2023 Corporate and Management Accounting - Paper 425

The project is unviable when Benefit Cost Ratio (BCR) it is less than :

(A)One

(B)Two

(C)Three

(D)None of the above

A Ltd. has provided the following information : Net working capital ₹ 2,800; Current ratio 2.4; Liquid ratio 1.6; Amount of Current Assets is :

(A)₹ 2,000

(B)₹ 4,800

(C)₹ 2,800

(D)₹ 3,600

Which is not key requirement/premise for an efficient securities market ?

(A)Prices must be efficient so that new inventions and better products will cause a fi rms’ securities prices to rise and motivate investors to buy the stocks

(B)Information must be discussed freely and quickly across the nations so that all investors can react to the new information

(C)Transaction costs such as brokerage on sale and purchase of securities are not ignored

(D)Investors are rational and make investments in the securities providing maximum yield

The following details are given for March 2022 :

Budgeted production 200 units.

Actual production 250 units.

Budgeted working days 24

Actual days worked 27

Standard time per unit 1.2 hours

Actual hours worked 194

The calendar ratio is :

(A)88.89%

(B)125%

(C)112.5%

(D)154.6%

Interest cover ratio is an example of :

(A)Profitability ratios

(B)Activity ratios

(C)Market-Test ratios

(D)Solvency ratios

Cash sales ₹ 1,50,000

Cost of goods sold ₹ 7,00,000 Debtors turnover ratio 2.5 times

Gross profit ₹ 2,00,000

If closing debtors are ₹ 80,000 more than the opening debtors, the average debtors would be :

(A)₹ 2,80,000

(B)₹ 3,00,000

(C)₹ 3,60,000

(D)₹ 4,40,000

The following information is given :

Cost of goods sold ₹ 7,20,000

Sales returns ₹ 20,000

Capital employed ₹ 2,80,000

Gross profit ratio 25% on cost

Working capital ₹ 60,000

Fixed assets turnover ratio is :

(A)3.4 times

(B)4 times

(C)5.2 times

(D)6 times

If current ratio is 2.5, Acid test ratio is 1.2 and net working capital is ₹ 1,80,000, the value of liquid assets would be :

(A)₹ 1,44,000

(B)₹ 1,24,000

(C)₹ 1,20,000

(D)₹ 1,38,462

From the following information find out the return on capital employed : Net profit after tax ₹ 2,40,000 (Tax Rate 40%)

10% Convertible debentures ₹ 5,15,000

Fixed assets at cost price ₹ 11,20,000

Accumulated depreciation till date ₹ 1,80,000

Working capital ₹ 3,50,000

(A)18.6%

(B)22.6%

(C)31%

(D)35%

The following information is provided :

Net profit after tax ₹ 80,000

Tax Rate 30%

11% Preference share capital (10 each) ₹ 5,00,000

Equity share capital ( ₹ 100 each) ₹ 4,00,000

Working capital ₹ 1,00,000

The earnings per share is :

(A)1.48

(B)4.60

(C)6.25

(D)20

Which of the following statements regarding liquidity ratios is true ?

(A)Higher the current ratio of a firm is, greater is its ability to pay off its current liabilities.

(B)Current ratio is a crude ratio and it does not take into account the differences amongst different categories of current assets.

(C)To assess the quick liquidity position (liquidity ratio) of the firm, inventory is excluded from the calculation.

(D)All the above are true

The total capital invested in Firm A is ₹ 500 Crore, including 40% of borrowed funds. The total capital invested in Firm B is ₹ 500 Crore, including 20% of borrowed funds. There are no preference shares in both the firms. If the rate of operating earnings (EBIT) for both the firms is l8%, applicable income tax rate is 30% and rate of interest is l2% p.a., which of the follwing statements is true in the light of this information ?

(A)Return on Equity of firm A will be higher as compared to that of firm B

(B)Return on Equity of firm B will be higher as compared to that of firm A

(C)Both the firms are indifferent in terms of rate of return on equity

(D)None of the above

Which of the following statements is false ?

(A)Assuming a constant level of fixed assets, a higher Current Assets to Fixed Assets Ratio indicates a conservative current asset policy

(B)A conservative current asset policy implies lower liquidity and higher risk

(C)A firm needs to strike off a balance between fixed assets and current assets so as to assure optimum liquidity and profitability

(D)All the above are true

When the effective capital of a company is ₹ 5 crore and above but less than 100 crore, the maximum remuneration payable by the company to its managerial personnel when the company has inadequate profits or no profits, will be .................... .

(A)₹ 42 lakhs

(B)₹ 60 lakhs

(C)₹ 84 lakhs

(D)₹ 120 lakhs

The ideal norm preferred by Banks for current ratio is .................... .

(A)2 : 1

(B)2.2 : 1

(C)1.33 : 1

(D)1.5 : 1

The following information is given :

Current Ratio : 3

Acid Test Ratio : 1.8

Current Liabilities : ₹ 20 lakh

What is the value of Inventory ?

(A)₹ 36 lakh

(B)₹ 30 lakh

(C)₹ 24 lakh

(D)₹ 60 lakh

...................... examines the policy of the company regarding dividend and retained earnings.

(A)Return on Investment

(B)Price Earnings Ratio

(C)Dividend Payout Ratio

(D)Earnings Per Share (EPS)

Interest Coverage Ratio = 7. It indicates that .................. .

(A)Assets are 7 times of interest

(B)Sales are 7 times of interest

(C)EBIT is 7 times of interest

(D)Profit after tax is 7 times of interest

Which of the following is NOT included in the activity ratios ?

(A)Proprietary Ratio

(B)Debtors Turnover Ratio

(C)Sales to Capital Employed Ratio

(D)Working Capital Turnover Ratio

A Ltd. has the following details :

What is the expected growth rate and its price per equity ?

(A)4% and ₹ 60

(B)6% and ₹ 60

(C)4% and ₹ 75

(D)6% and ₹ 75

High financial gearing will increase the earnings per share of the company if:

(A)Earnings before Interest and Taxes are rising

(B)Earnings before Interest and Taxes are falling

(C)Earnings after Taxes are rising

(D)Earnings after Taxes are falling

Which of the following is correct ?

(A)Business Risk does not have an impact on the past operational profitability of the firm

(B)Business Risk pertains to day-to-day operations of the firm

(C)Both (A) and (B) are correct

(D)Neither (A) nor (B) is correct

The escrow amount shall be payable in the following manner :

(i)if the consideration payable does not exceed ₹ 100 crores; 25 per cent of the consideration payable

(ii)if the consideration payable exceeds ₹ 100 crores; 25 per cent up to ₹ 100 crores and 10 per cent thereafter

(iii)if the consideration payable does not exceed ₹ 10 crores; 25 per cent of the consideration payable

(iv)if the consideration payable exceeds ₹ 100 crores; 5 per cent up to ₹ 100 crores and 2.5 per cent thereafter

(A)(i)

(B)(i) and (ii)

(C)(i), (ii) and (iii)

(D)(i), (ii), (iii) and (iv)

PQR factory produces two units of a commodity in one standard hours. Actual production during a particular year is 34,000 units and budgeted production for the year is 40,000 units. Actual hours are 16,000. Activity ratio is ..................

(A)40%

(B)80%

(C)85%

(D)106.25%

Using the information from Q. No. 69 , Capacity ratio is .....................

(A)40%

(B)80%

(C)85%

(D)106.25%

Using the information from Q. No. 69 , Efficiency ratio is ................

(A)40%

(B)80%

(C)85%

(D)106.25%

From the following information, calculate debtor’s turnover ratio :

Closing debtors ₹ 2,00,000, Cash sales 25% of credit sales;

Excess of closing debtors over opening debtors ₹ 80,000, Total sales ₹ 12,00,000

(A)3 times

(B)4 times

(C)6 times

(D)5 times

Using the information in Q. No. 76 , calculate average collection period.

(A)3 times

(B)2 times

(C)1 time

(D)4 times

D Ltd. has the following details :

Return on equity : 10%

Expected earnings per share : ₹ 10

Pay-out ratio : 30%

Required rate of return : 5% per annum

Price of share of D Ltd. is ..................

(A)₹ 37.5

(B)₹ 87.5

(C)₹ 125

(D)₹ 140

An increase in earnings per share or a reduction in loss per share resulting from the assumption that convertible instruments are converted, that options or warrants are exercised or that ordinary shares are issued upon the satisfaction of specified conditions is..............................

(A)Diluted earnings per share

(B)Anti-diluted earnings per share

(C)Weighted earning per share

(D)Basic earnings per share

The relevant details of the company are :

Equity share capital : ₹ 25,00,000; Face value of shares : ₹ 100; Profit for equity shareholders : ₹ 5,15,000; Dividend payout ratio : 40%; P/E ratio : 30.

Calculate Earnings Per Share (EPS).

(A)₹ 20.60

(B)₹ 2.06

(C)₹ 3.06

(D)₹ 13.60

Equity share capital : ₹ 25,00,000;Face value of shares : ₹ 100; Profit for equity shareholders : 5,15,000; Dividend pay-out ratio : 40%; P/E ratio : 30.

The dividend per share is .............. .

(A)₹ 4.59

(B)₹ 8.24

(C)₹ 26.60

(D)₹ 30.24

Efficiency of production operations and the relationship between production cost and selling price is resulting of :

(A)Net profit before taxes

(B)Net profit before taxes and deferred expenses

(C)Gross profit margin

(D)Gross profit plus realization from production wastages

Benefit cost ratio (BCR) is unviable when it is :

(A)Less than one

(B)Equal to one

(C)More than one

(D)More than five

When return on investment is equal to the market capitalization rate, the optimum payout ratio would be :

(A)Zero

(B)100%

(C)50%

(D)All the payout ratios would be optimum

If a company is using constant payout ratio policy of dividend, the amount of dividend would:

(A)decrease with an increase in income

(B)increase with an increase in income

(C)remain same

(D)can’t be determined

Which of the following is not a requirement for an efficient security market ?

(A)Taxes are assumed to have no noticeable effect on investment policy

(B)Investors are rational

(C)Transaction costs of securities are considered

(D)Every investor has similar access to investible funds at the same terms and conditions

Declaration of solvency in relation to buy back of shares has to be filed in .............

(A)Form SH-6

(B)Form SH-9

(C)Form SH-4

(D)Form SH-8

Declared dividend must be paid within .......... of declaration.

(A)5 days

(B)10 days

(C)30 days

(D)60 days

The following information is pertaining to A Ltd.

Find out the value of Inventory.

(A)₹ 62 Lakh

(B)₹ 43 Lakh

(C)₹ 37.2 Lakh

(D)₹ 105.4 Lakh

P Ltd. furnished the following information :

If the net profit margin of P Ltd. was 25%, then the gross profit margin was :

(A)55%

(B)60%

(C)40%

(D)50%

Which of the following is classified as liquidity ratio ?

(A)Return on equity

(B)Return on Investment

(C)Acid Test ratio

(D)Debt Equity ratio

A Liquid ratio lower than 1 : 1 shows :

(A)Under trading

(B)Under Investment

(C)Over Trading

(D)Over Investment

If a concern has a very high stock turnover ratio, which of the following statement is False ?

(A)Stock Velocity Ration is Low

(B)Stock has many fast moving items

(C)There is under trading

(D)Funds blocked in working capital are less

................... examine the policy of the company regarding of dividend and retain earning.

(A)Earnings Per Share (EPS)

(B)Price Earnings Ratio

(C)Dividend Payout Ratio

(D)Return on Investment

Earnings Per Share (EPS) is equal to :

(A)Profit before tax/No. of shares in authorized capital

(B)Profit after tax/No. of shares in issued capital

(C)Profit after tax/Net Worth

(D)Profit before tax/Net Worth

Interest coverage ratio = 6, indicates :

(A)Sales are 6 times of interest

(B)Profit after tax is 6 times of interest

(C)EBIT is 6 times of interest

(D)Interest is 6 times after tax

Debtors turnover ratio reflects :

(A)Collection period

(B)Number of times debtors against credit sales

(C)Aging of the debtors

(D)Number of times debtors against total sales

XYZ. Ltd. books of accounts show profit from operation (EBDIT) at 500 Lakh. It paid 12% on a debt of 1,000 Lakh. Depreciation is ₹ 100 Lakh and Tax is 35%, PAT will be :

(A)₹ 184 Lakh

(B)₹ 182 Lakh

(C)₹ 178 Lakh

(D)₹ 180 Lakh

A Company shall disclose by way of notes, additional information regarding aggregate expenditure and income on any item of income or expenditure which exceeds :

(A)1% of the revenue from operations or ₹ 1,00,000, whichever is higher

(B)1% of the revenue from operations or ₹ 1,00,000, whichever is lower

(C)1% of the revenue from operations or ₹ 10,00,000, whichever is higher

(D)1% of the revenue from operations or ₹ 10,00,000, whichever is lower

Public Interest Committee (PIC) established by IPSASB consists of individuals from the :

(A)International Monetary Fund

(B)International Organization of Supreme Audit Institutions

(C)Organization for Economic Cooperation and Development and the World Bank Group

(D)All of the above

Which of the following is also known as working capital ratio ?

(A)Current ratio

(B)Liquid ratio

(C)Debtor turnover ratio

(D)Cash reserve ratio

Current ratio is 2.5 : 1 and Liquid ratio is 1 : 1. Stock is ? 60,000. Calculate current liability::

(A)₹ 40,000

(B)₹ 60,000

(C)₹ 1,00,000

(D)Cannot be determined

Earnings per share can be calculated as :

(A)Use the income statement to determine earnings after taxes (net income) and divide by the previous period’s earnings after taxes. Then subtract 1 from the previously calculated value.

(B)Use the income statement to determine earnings after taxes (net income) and divide by the number of common shares outstanding if no preference shares are outstanding.

(C)Use the income statement to determine earnings after taxes (net income) and divide by the number of common and preferred shares outstanding.

(D)Use the income statement to determine earnings after taxes (net income) and divide by the forecasted period’s earnings after taxes. Then subtract 1 from the previously calculated value.

JP Limited has earned 10% return on total assets of ₹ 18,00,000 and has a net profit ratio of 8%. Find out sales of the company.

(A)₹ 14,40,000

(B)₹ 25,00,000

(C)₹ 27,50,000

(D)₹ 22,50,000

In G Ltd., there is one whole-time director and three part-time directors. The maximum rate of remuneration payable to all directors will be :

(A)11%

(B)8%

(C)6%

(D)10%

When the effective capital of a company is ₹ 100 crore and above but less than ₹ 250 crore, the maximum remuneration payable as per Part-II of Schedule V of the Companies Act, 2013, by the company to its managerial personnel when the company has no profits or inadequate profits, will be :

(A)₹ 42 Lakh

(B)₹ 84 Lakh

(C)₹ 120 Lakh

(D)₹ 120 Lakh plus 0.01% of the effective capital in excess of ₹ 150 Lakh

A company’s purchases are ₹ 385 Lakh, Sales ₹ 510 Lakh and closing stock ₹ 58 Lakh. If the rate of gross profit is 25% on cost, then Stock Turnover Ratio will be:

(A)5.32 times

(B)7.34 times

(C)5.54 times

(D)5.87 times

Mahi Ltd. has closing stock ₹ 648 Lakh and prepaid expenses ₹ 32 Lakh. Total liquid assets were ₹ 1,830 Lakh. If the liquid ratio is 1.5 : 1, then working capital will be :

(A)₹ 836.67 Lakh

(B)₹ 1,290 Lakh

(C)₹ 1,258 Lakh

(D)₹ 1,150 Lakh

Which of the following is not included in the activity ratios ?

(A)Sales to Capital Employed

(B)Debtors Turnover Ratio

(C)Proprietary Ratio

(D)Working Capital Turnover Ratio

The ideal norm preferred by Banks for current ratio is :

(A)2 : 1

(B)2.2 : 1

(C)1.5 : 1

(D)1.33 : 1

Following are the details of Beta Limited :

₹ in lakh

Dividend Payout Ratio = 70%

Price-Earning (P/E) Ratio = 25

Corporate tax rate = 30% Earnings Per Share (EPS) will be :

(A)₹ 3.52

(B)₹ 2.464

(C)₹ 2.06

(D)₹ 2.40

Decision rules based on Benefit Cost Ratio (BCR) and Net Benefit Cost Ratio (NBCR) criteria implies :

(A)If BCR < 1, accept the project

(B)If NBCR < 0, accept the project

(C)If NBCR > 0, reject the project

(D)If BCR < 1, reject the project

MNC expects its sales to increase by 10% from the current year level of ₹ 5 million. With a Net Profit Margin of 8% and a payout ratio of 30%, what financing for the next year will be available from internal sources ?

(A)₹ 4,40,000

(B)₹ 3,08,000

(C)₹ 0.4 million

(D)₹ 0.404 million

Earnings per share (EPS) is equal to :

(A)Profit after tax/no. of shares in authorized capital

(B)Profit after tax/no. of shares in issued capital

(C)Profit after tax/net worth

(D)Profit before tax/net worth

Interest coverage ratio of 6 indicates :

(A)Sales are 6 times of interest.

(B)Profit after tax is 6 times of interest.

(C)EBIT is 6 times of interest.

(D)Interest is 6 times profit after tax.

Debtors turnover ratio reflects :

(A)Collection period

(B)Debtors in relation to credit sales

(C)Debtors in relation to total sales

(D)Aging of the debtors

If the expected dividend is less than the actual dividend paid, the rational expectation approach suggests that the :

(A)Share price will increase.

(B)Share prices will go down.

(C)Value of the firm will go up.

(D)Both (A) and (C) above.

The Capital Structure of Neel Ltd. is as under :

What should be the approx. Earnings Before Interest and Taxes (EBIT) so that Earnings Per Share (EPS) is 0 (Nil) ? Assume Tax Rate 35%.

(A)₹ 23.00 Lakhs

(B)₹ 24.75 Lakhs

(C)₹ 25.69 Lakhs

(D)₹ 29.30 Lakhs

ABC Limited books of accounts show profit from operation (EBDIT) at ₹ 500 Lakhs, it paid 12% on a debt of ₹ 1,000 Lakhs, Depreciation is ₹ 100 Lakhs and Tax 35%. Profit after Tax will be :

(A)₹ 184 Lakhs

(B)₹ 182 Lakhs

(C)₹ 178 Lakhs

(D)₹ 180 Lakhs

Current ratio is 4 : 1. Net Working Capital is ₹ 30,000. Find the amount of Liquid assets if value of stock is ₹ 8,000.

(A)₹ 10,000

(B)₹ 40,000

(C)₹ 32,000

(D)₹ 2,000

(b)The following information provided by Akul Ltd. for the year ended 31st March, 2018 :

(i)Share Capital :

You are required to find out :

(1)Earnings per equity share

(2)Dividend per equity share

(3)Market price per equity share

(4)Earning yield on equity shares

(5)Dividend yield on equity shares

All items in this statement are expressed as a percentage of the base item. This is a :

(A)Comparative Financial Statement

(B)Common Size Financial Statement

(C)Trend Analysis

(D)Ratio Analysis

Which of the following techniques for analyzing financial statements shows the nature and rate of movement of various financial items ?

(A)Common-size Statement

(B)Trend Analysis

(C)Fund Flow Analysis

(D)All of the above

Following is the comparative information of PQ Ltd. for 2 consecutive years :

Based on the above information, the net cash paid to supplier of inventory during the year ended on 31st March 2021 is :

(A)₹ 90,00,000

(B)₹ 98,00,000

(C)₹ 1,02,00,000

(D)₹ 1,10,00,000

MN Ltd. reported income tax expenses of ₹ 6, 10,000 on its income statement for the year ended on 31st March 2020. The comparative balance sheet of the company showed that income tax payable on 31st March 2019 and 31st March 2020 was ₹ 80,000 and ₹ 1,30,000 respectively. Based on the above information, cash payment for the income tax during the year ended on 31st March 2020 was :

(A)₹ 6,60,000

(B)₹ 6,10,000

(C)₹ 5,60,000

(D)₹ 4,80,000

Match the List-I with items in List-II :

List-I

(a)All items on the statement are expresed as a percentage of the base item

(b)Index number of the movements of the various financial items in the financial statements for a number of periods

(c)A statement of ‘‘Source and Application of Funds’’

(d)A study of different items of financial statements

List-II

(i)Fund Flow Analysis

(ii)Common Size Statement

(iii)Trend Analysis

(iv)Comparative Statement

(a)(b) (c) (d)

(A)(ii) (iv) (i) (iii)

(B)(i) (iv) (ii) (iii)

(C)(ii) (iii) (i) (iv)

(D)(i) (ii) (iv) (iii)