Days sales in inventory. Here Get quiz on the Learn Commarce Quiz Quiz of questions that can be used for self-study, homework. Ratio analysis facilitates the management to know whether the firms financial position is improving or deteriorating or is constant over the years by setting a trend with the help of ratios The analysis with the help of ratio analysis can know the direction of the trend of strategic ratio may help the management in the task of planning, forecasting and controlling. 8. Authors: Wesen Legessa Tekatel. Financial analysis is the selection, evaluation, and interpretation of financial data, ... And we show how to interpret financial ratio analysis, warning you of the pitfalls that occur when it's not used properly. A/c                                   30,000                         Stock                                                   30000, Secured loan                           80,000                         Sundry Debtors                                   30000, Sundry creditors                     50,000                         Advances                                            10000, Provision for taxation                         20,000                         Cash Balance                                      10000, 3,00,000                                                                                  300000, Debt – Equity = Long – Term Debt / Shareholders Fund, Shareholder’s Fund= Equity Share Capital + Reserves + P.L.A/c, = 1,00,000 + 20,000 + 30,000       = 1,50,000, Debt-Equity Ratio = 80,000 / 1,50,000=.53, Liquidity Ratio = Liquid Assets / Liquid Liabilities, Liquid Assets = Sundry Debtors + Advances + Cash Balance, Liquid Liabilities = Provision for Taxation + sundry creditors, = Fixed Assets / Current Assets= 1,40,000/ 100000, Fixed Assets Turnover =Turnover / Fixed Assets= 5,60,000/1,40,000. Stock Turnover Ratio and Turnover to fixed assets indicate an unhealthy sign. Calculate the operating Ratio from the following figures. Financial Analysis Questions, Answers and Examiners’ Comments LEVEL 5 DIPLOMA IN CREDIT MANAGEMENT JANUARY 2013 Instructions to candidates Answer all questions Time allowed: 3 hours The answers to this examination were disappointing. Cost of Goods sold = Op. answers to these and other questions. Problem 7. for the year                                             8068, To Opening stock                                1378                By Sales                      33984, To Purchase (BD                                 25972              Sales Return                380, To gross profit                                     8068                                                    33604, 35418                                                  35418, Cost of Goods Sold = Cost of Goods Sold / Average Stock, Average Stock = (Opening Stock + Closing Stock)/ 2, (iii) Percentage of Gross Profit to Turnover = Gross Profit / Sales *100. (ii) Estimates can be obtained using A. M. (iii) A. M. is used for different purposes by different persons like it is used for calculating average marks of the students. Disclaimer 8. Home >> Category >> Finance (MCQ) Questions and answers >> Ratio Analysis; 1) Determine Debtors turnover ratio if, closing debtors is Rs 40,000, Cash sales is 25% of credit sales and excess of closing debtors over opening debtors is Rs 20,000. a. But the Net Profit Ratio is only 5%. The average collection period ratio measures the quality of debtors since it indicates the rapidity or slowness of their collectability. The collection system is faulty because debtors enjoy a credit facility for 96 days, which is beyond normal period. Candidates must be prepared to apply … Make sure you also indicate whether each of the accounts used is a balance sheet (BS) or an income statement (IS) account. Several ratios calculated from the accounting data can be grouped into various classes according to financial activity or function to be evaluated. It is a sign of under trading. Among the three, current ratio comes in handy to analyze the liquidity and solvency of the start-ups. Here, there is no closing stock. A lower ratio reflects dull business and suggests that some steps should be taken to push up sales. Ratio Analysis allows us to answer questions such as: How profitable is the company? View Homework Help - Extra Ratio Analysis Questions MBA from FINANCE ea212 at Arab Academy for Science, Technology & Maritime Transport. To help identify the short term liquidity of a firm, this ratio is used. It will adversely affect the ability of a firm to meet customers’ demand. Ratio Analysis 223 EBIT ROCE ROE Impact of EBIT on ROCE and ROE in a Highly Geared Firm The concept of ‘Trading on Equity’ can be explained with the following example. Problem 3. Fixed asset turnover. For instance, the ratio of number of boys in a class to the number of girls is 2:3. Here are the answers to some of the most frequently asked Financial Analyst interview questions for the position of a financial analyst: Download PDF. The following is the Trading and Profit and loss account of Mathan Bros Private Limited for the year ended June 30,2001. Which of the following is considered a profitability measure? Assume that a firm has owners’ equity of Rs. The state of low return is not desirable. The Balance sheet of Naronath & Co. as on 31.12.2000 shows as follows: Liabilities                                $                      Assets                                                  $, Equity capital                          1,00,000          Fixed Assets                           1,80,000, 15% Preference shares            50,000             Stores                                      25,000, 12% Debentures                      50,000             Debtors                                   55,000, Retained Earnings                   20,000             Bills Receivable                      3,000, Creditors                                 45,000             Bank                                        2,000, 2,65,000                                                          2,65,000. Report a Violation 10. Ratio analysis is effective only where same accounting principles and policies are adopted by other concerns too, otherwise inter-company comparison will not exhibit a real picture at all. Uses of Arithmetic Mean (i) A. M. is extensively used in practical statistics. This video helps you to learn Calculation of Financial Ratios with the help of practical example Quick ratio helps us find the solvency for six months and the reason why inventory is subtracted is that inventory usually take more than six month to convert into liquid asset. 2 RATIO ANANLYSIS Introduction The ratio analysis is the most powerful tool of financial analysis. Calculate the following ratios from the balance sheet given below : (i) Debt – Equity Ratio                        (ii) Liquidity Ratio, (iii) Fixed Assets to Current Assets    (iv) Fixed Assets Turnover, Liabilities                                $                                  Assets                                      $, Equity shares of $ 10 each      1,00,000                     Goodwill                                             60000, Reserves                                  20,000                         Fixed Assets                                       140000, P.L. It means greater part of current assets constitute stock; the stock is slow-moving. So get preparation for the MBA Finance job interview . The position is satisfactory. questions are followed by the purpose of this thesis. QUESTION 2: Accounting analysis (18 marks) 2.1 Provide adjusting journal entries (with amounts) to correct for American Tissue’s improper capitalization of operating expenses in its fiscal year ending September 30, 2000. 4.07; Jimma University; Download file PDF Read file. Current ratio which let us know the short term solvency of a firm. The sample papers have been provided with marking scheme. What Are Accounting Ratios? A: Multiple Choice Questions. DEFINITION: “The indicate quotient of two mathematical expressions and as “The … Content Filtration 6. MBA; Online test; Login; Ratio Analysis - Finance (MCQ) Questions and answers . The following is the Profit and Loss Account of Burn Ltd. Investors and creditors use accounting information to evaluate the fi rm. Bad and doubtful debts and their provisions are not deducted from the total debtors in order to avoid the impression that a larger amount of receivables have been collected. A low inventory turnover ratio is dangerous. They analyze the firm’s profitability over time, its ability to generate cash to be able to pay interest and repay the principal amount. Uploader Agreement, Read Accounting Notes, Procedures, Problems and Solutions, Learn Accounting: Notes, Procedures, Problems and Solutions, List of Ratio Analysis Formulas and Explanations | Accounting, Underwriting of Profit: Problems and Solutions | Business | Accounting, Quick Notes on Du Pont Chart | Accounting, Preparation of Accounts of Insurance Companies | Accounting. BBA quiz multiple choice questions test for BBA MCQ exams, educational questions with answer BBA MCQ GK explaination. The shorter the average collection period, the better the quality of debtors. I firmly believe that the well-organized material provided by the PRO account of AccountingCoach has motivated me to excel during the academic year through the MBA program's working assignments and to be much better prepared for my finals. Firm A has a Return on Equity (ROE) equal to 24%, while firm B has an ROE of 15% during the same year. Image Guidelines 4. Account Disable 11. The Supply Co. has total equity of $639,400 and net income of online gk on Commarce Quiz MBA and BBA Quiz, Accounting Terms. So there is no need to calculate the average stock. (Reference : Oxford dictionary) Notation: Ratio of two values a and b is written as a:b or a/b or a to b. 4 times b. Firm managers use accounting information to help them manage the fi rm. Price-earnings ratio. Accounting ratios usually relate one financial statement amount to another. 30 MBA Finance Questions and Answers: 1:: What are the various streams of … Copyright 9. Therefore, the liquidity position is not satisfactory. 1, 00,000. That is, high Turnover Ratio and short collection period imply prompt payment on the part of debtors. A STUDY ON RATIO ANALYSIS AT AMARARAJA BATTERIES LIMITED (ARBL) A PROJECT REPORT Submitted in partial fulfillment of the requirement for the award of the degree of MASTER OF BUSINESS ADMINISTRATION Under the Guidance of S.SUJATHA M.B.A., M.Phil ASSISTANT PROFESSOR OF MANAGEMENT STUDIES SRM UNIVERSITY By SUNEEL.R (Reg.No.35080623) DEPARTMENT OF … Students should solve the CBSE issued sample papers to understand the pattern of the question paper which will come in class 12 board exams this year. Problem 8. (v) Financiers of Long-term Funds : They are concerned with the firm’s long-term solvency and survival; since they provide long-term funds to firm. 1. CBSE Class 12 Accountancy Ratio Analysis. However, the Liquid Ratio is 0.65: 1. It has mainly two types of ratio under this. We use Microsoft Corporation's 2004 financial statements for illustration purposes throughout this reading. The higher the Turnover Ratio and the shorter the average collection period, the better the trade credit management and the better the liquidity of debtors. Question 25. 2 times c. 6 times d. 8 times. Content Guidelines 2. Problem 9. With our lesson, Financial Statement Analysis: Definition, Purpose, Elements & Examples, you'll be able to answer that question. Ideal for students preparing for semester exams, MBA, CA, BBA, BMS, PSUs, NET/SET/JRF, UPSC and other entrance exams. Financial ratio analysis is one of the best tools of performance evaluation of any company. Q1. Capital Gearing Ratio is also satisfactory. 4 Calculate the capital gearing from the following information: Rs. Ratio is the quantitative relation between two amounts showing the number of times one value contains or is contained within the other. They seemed to reflect poor preparation and equally poor understanding of the practical nature of the assessment. Prohibited Content 3. Cash coverage ratio. Cost of sale 19,20,000 Fixed Assets 14, 40,000. The performance of Debt Collection Department is poor. MBA Sales™ Degree Sample Test Questions Question 1 Selling involves: Choice-1: pushing the product in the market without any consideration for your customer's needs and wants Choice-2: trying to make your customer want what the company has to offer Choice-3: focus is on your product Choice-4: focus is on your customer Choice-5: Options 1, 2 and 3 Practice the concepts of Ratio and Proportion at MBA section of jagranjosh.com and prepare well … PROJECT REPORT 1 A STUDY ON RATIO ANALYSIS WITH REFERENCE TO GENTING LANCO POWER INDIA PRIVATE LIMITED. Illustration No. Through ratio analysis, special events cannot be identified. It is not desired. • Liquidity ratios have continuously gone under various fluctuations in the last five years. Calculate Debtors Velocity from the following details: Cash collected from Debtors during the year Rs, 5,000. Here is a compilation of top thirteen accounting problems on ratio analysis with its relevant solutions. It means current assets of Rs.2.90 are available against each rupee of current liability. On the other hand, low Turnover Ratio and long collection period reflects that payments by debtors are delayed. Debt – Equity Ratio =  Debt – Equity Ratio / Long – Term Debt, Shareholder’s Fund = Equity + Preference + Retained Earnings, Fixed Assets Ratio= Fixed Assets / Proprietor’s Fund= -1,80,000, Proprietor’s Fund=Equity Share Capital + Preference Share Capital+ Retained Earnings, Fixed Assets Ratio = 1,80,000 / 1,70,000= 1.05, Current Ratio = Current Assets / Current Liabilities, Current Assets = Stores + Debtors + BR + Bank= 25,000 + 55,000 + 3,000 + 2,000 = 85,000, Liquid Liabilities = Debtors + Bill Receivable + Cash=55,000 + 3,000 + 2,000 = 60,000. Question. financial ratio analysis in order to evaluate the firm’s liquidity position. The firm can increase the rate of return on investment by increasing production. Return on Assets. It means the firm is not dependent on outside liabilities. Financial Performance Analysis (MBA project) January 2019; DOI: 10.13140/RG.2.2.33643.39203. It is an indication of excessive inventory and over investment in inventory. Of course, some of the ratios (such as the profitability ratios) if not assessed against other ratios do not mean anything. Also known as Solvency Ratios, and as the name indicates, it focuses on a company’s current assets and liabilities to assess if it can pay the short-term debts. Will the organization be able to meet its obligations in the short and long-term? MBA Quantitative Aptitude Questions & Answers – Ratio and Proportion Set-I. What is the return on investment. For example, maturity of debentures cannot be identified with ratio analysis. The following is the Balance Sheet of a company as on 31st March: From the following particulars found in the Trading, Profit and Loss Account of A Company Ltd., work out the operation ratio of the business concern: The following is the summarised Profit and Loss Account of Taj Products Ltd. for the year ended 31st December: From the following Balance Sheet and additional information, you are required to calculate: A company has capital of Rs. MBA Quiz Quiz Revision Quizes, MBA Quiz articles. Fixed assets are not used properly. Bills Receivable from the buyer of fixed assets, should be excluded. The ratios for the firm are: With the following ratios and further information given below, prepare a Trading, Profit and Loss Account and Balance Sheet: Extract from financial accounts of X, Y, Z Ltd. are: Following is the summarised Balance Sheet of a concern as at 31st December: Current Ratio is 2.9. How ever the ratios are more than the industry standard. Plagiarism Prevention 5. Items                                       ($ in Lakhs), Sales                                                    17874, Sales Returns                                      4, Other Incomes                                                53, Cost of Sales                                       15440, Administration and Selling Exp. Problem 5: From the following particulars pertaining to Assets and Liabilities of a company calculate : (a) Current Ratio                     (b) Liquidity Ratio                  (c) Proprietary Ratio, (d) Debt-equity Ratio                         (e) Capital Gearing Ratio, Liabilities                                $                                  Assets                                      $, each                                                     500000                        Land & Building                     500000, 8% 2000 pre shares $ 100                                                       Plant & Machinery                  600000, Each                                                    200000                        Debtors                                   200000, 9% 4000 Debentures of                                                          Stock                                       240000, $ 100 each                                           400000                        Cash and Bank                        55000, Reserves                                              300000                        Prepaid expenses                     5000, Creditors                                             150000, Bank overdraft                                    50000, 1600000                                                               1600000, Current Assets = Stock + Cash + Prepaid Expenses + Debtors, = 2,40,000 + 55,000 + 5,000 + 2,00,000 = 5,00,000, Current Liabilities = Creditors + Bank Overdraft, Liquid Ratio = Liquid Assets / Liquid Liabilities, Liquid Liabilities : Creditors   = 1,50,000, Proprietor’s Ratio = Proprietor’s Fund / Total Tangible Assets, Proprietor’s Fund  = Equity Share Capital + Preference, Debt – Equity Ratio = External Equities / Internal Equities, External Equities = Long-term Liabilities + Short-term Liabilities, Capital Gearing Ratio = Fixed Interest Bearing Securities / Equity Share Capital + Reserves, Fixed Interest Bearing Securities = Preference Shares           2,00,000. It means the firm depends on outside liabilities. Examples of Questions on Ratio Analysis. Home → Problems and Solutions – Ratio Analysis . Explain ‘financial modelling’. In this Ratios Analysis MBA Project calculating the past financial statements of the same firm does ratio analysis. It means operating expenses are higher. 1.1. address all of these questions through financial analysis. Also, if you want to know more about one … The economic condition of the firm is not sound. Task: Students will be required to use the financial ratio analysis question available on moodle and in the subject outline. From the data calculate : (i) Gross Profit Ratio (ii) Net Profit Ratio (iii) Return on Total Assets (iv) Inventory Turnover (v) Working Capital Turnover (vi) Net worth to Debt Sales 25,20,000 Other Current Assets 7,60,000. These interview questions and answers on MBA Finance will help you strengthen your technical skills, prepare for the interviews and quickly revise the concepts. 375, ©                                 Solvency Ratio = Outside Liabilities / Total Assets, Outside Liabilities = Debenture + Overdraft + Creditors, = 3,00,000 + 1,00,000 + 2,00,000 = 6,00,000, Solvency Ratio =( 600000 / 2200000) * 100, (d)                                Stock of Working Capital Ratio = Stock / Working Capital, Stock of Working Capital Ratio =* 100 = 100%. Background Performance evaluation of a company is usually related to how well a company can use it assets, share holder equity and liability, revenue and expenses. "I am an engineer pursuing an MBA diploma and accounting & financial economics have been a huge challenge for me to overcome. Ratio analysis project 1. 1843, Depreciation                                        63, Interest Expenses (Non- operating     456, Operating Ratio = (Cost of Goods Sold + Operating Expenses * 100) / Sales. 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Subject outline one financial statement analysis: definition, purpose, Elements ratio analysis questions for mba,... 3 times the capital gearing from the following is the Trading and Profit and Loss of! On investment by increasing production Problem 1 to answer that question from Finance ea212 at Academy. A low ratio may be result of inferior quality goods, stock of un-saleable absolute... Sales is 6 % poor preparation and equally poor understanding of the sales is %! Ratio and long collection period, the better the quality of debtors since it indicates rapidity...: Final Account to ratio Problem 1 a credit facility for 96 days, which is a compilation of thirteen.