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Question 1 of 20
1. Question
Which decision is primarily a financing decision?
Correct
Financing decisions determine how a firm raises funds and the appropriate mix of debt, equity and other capital. The factory selection is an investment decision.
Incorrect
Financing decisions determine how a firm raises funds and the appropriate mix of debt, equity and other capital. The factory selection is an investment decision.
Unattempted
Financing decisions determine how a firm raises funds and the appropriate mix of debt, equity and other capital. The factory selection is an investment decision.
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Question 2 of 20
2. Question
Quick assets are ₹3,60,000 and current liabilities ₹2,40,000. The quick ratio is:
Correct
Quick ratio = quick assets ÷ current liabilities = ₹3,60,000 ÷ ₹2,40,000 = 1.5:1. Quick assets normally exclude inventory and other less-liquid current assets, according to the definition used.
Incorrect
Quick ratio = quick assets ÷ current liabilities = ₹3,60,000 ÷ ₹2,40,000 = 1.5:1. Quick assets normally exclude inventory and other less-liquid current assets, according to the definition used.
Unattempted
Quick ratio = quick assets ÷ current liabilities = ₹3,60,000 ÷ ₹2,40,000 = 1.5:1. Quick assets normally exclude inventory and other less-liquid current assets, according to the definition used.
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Question 3 of 20
3. Question
Net profit margin is calculated as:
Correct
Net profit margin measures the proportion of sales remaining as net profit after relevant expenses and taxes, depending on the profit measure selected.
Incorrect
Net profit margin measures the proportion of sales remaining as net profit after relevant expenses and taxes, depending on the profit measure selected.
Unattempted
Net profit margin measures the proportion of sales remaining as net profit after relevant expenses and taxes, depending on the profit measure selected.
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Question 4 of 20
4. Question
An annuity is best described as:
Correct
An annuity is a stream of equal payments or receipts occurring at regular intervals. Ordinary annuity payments occur at period-end; annuity-due payments occur at period-beginning.
Incorrect
An annuity is a stream of equal payments or receipts occurring at regular intervals. Ordinary annuity payments occur at period-end; annuity-due payments occur at period-beginning.
Unattempted
An annuity is a stream of equal payments or receipts occurring at regular intervals. Ordinary annuity payments occur at period-end; annuity-due payments occur at period-beginning.
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Question 5 of 20
5. Question
In a direct quotation from an Indian resident’s perspective, the exchange rate is expressed as:
Correct
A direct quote in India is generally expressed as the domestic currency price of one unit of foreign currency, e.g. ₹ per US dollar. Quote conventions should be read from the stated market perspective.
Incorrect
A direct quote in India is generally expressed as the domestic currency price of one unit of foreign currency, e.g. ₹ per US dollar. Quote conventions should be read from the stated market perspective.
Unattempted
A direct quote in India is generally expressed as the domestic currency price of one unit of foreign currency, e.g. ₹ per US dollar. Quote conventions should be read from the stated market perspective.
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Question 6 of 20
6. Question
Which capital budgeting method explicitly recognises the time value of money and directly estimates value added?
Correct
NPV discounts future cash flows and measures the amount by which a project is expected to increase value at the chosen discount rate. It is generally preferred for value-maximisation decisions.
Incorrect
NPV discounts future cash flows and measures the amount by which a project is expected to increase value at the chosen discount rate. It is generally preferred for value-maximisation decisions.
Unattempted
NPV discounts future cash flows and measures the amount by which a project is expected to increase value at the chosen discount rate. It is generally preferred for value-maximisation decisions.
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Question 7 of 20
7. Question
If inventory holding period is 50 days, receivables collection period 35 days and payables deferral period 25 days, the cash conversion cycle is:
Correct
Cash conversion cycle = inventory days + receivable days − payable days = 50 + 35 − 25 = 60 days.
Incorrect
Cash conversion cycle = inventory days + receivable days − payable days = 50 + 35 − 25 = 60 days.
Unattempted
Cash conversion cycle = inventory days + receivable days − payable days = 50 + 35 − 25 = 60 days.
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Question 8 of 20
8. Question
The buyer of a futures contract generally benefits when:
Correct
A long futures position gains when the futures price rises and loses when it falls, subject to contract specifications, daily mark-to-market and basis effects.
Incorrect
A long futures position gains when the futures price rises and loses when it falls, subject to contract specifications, daily mark-to-market and basis effects.
Unattempted
A long futures position gains when the futures price rises and loses when it falls, subject to contract specifications, daily mark-to-market and basis effects.
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Question 9 of 20
9. Question
If sales are ₹15 lakh and average total assets are ₹5 lakh, asset turnover is:
Correct
Asset turnover = ₹15 lakh ÷ ₹5 lakh = 3 times.
Incorrect
Asset turnover = ₹15 lakh ÷ ₹5 lakh = 3 times.
Unattempted
Asset turnover = ₹15 lakh ÷ ₹5 lakh = 3 times.
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Question 10 of 20
10. Question
A project’s profitability index is generally calculated as:
Correct
Profitability index (PI) compares the present value of future cash inflows with the initial investment. A PI above 1 indicates positive NPV for a conventional project with the same assumptions.
Incorrect
Profitability index (PI) compares the present value of future cash inflows with the initial investment. A PI above 1 indicates positive NPV for a conventional project with the same assumptions.
Unattempted
Profitability index (PI) compares the present value of future cash inflows with the initial investment. A PI above 1 indicates positive NPV for a conventional project with the same assumptions.
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Question 11 of 20
11. Question
An annuity due payment occurs:
Correct
Annuity-due payments occur at the beginning of each period, so each payment is invested or discounted for one additional period relative to an ordinary annuity.
Incorrect
Annuity-due payments occur at the beginning of each period, so each payment is invested or discounted for one additional period relative to an ordinary annuity.
Unattempted
Annuity-due payments occur at the beginning of each period, so each payment is invested or discounted for one additional period relative to an ordinary annuity.
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Question 12 of 20
12. Question
Which user is most likely to focus on return on equity and earnings per share?
Correct
Equity investors assess profitability and returns attributable to shareholders, including ROE and earnings per share, along with valuation, risk and cash flow.
Incorrect
Equity investors assess profitability and returns attributable to shareholders, including ROE and earnings per share, along with valuation, risk and cash flow.
Unattempted
Equity investors assess profitability and returns attributable to shareholders, including ROE and earnings per share, along with valuation, risk and cash flow.
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Question 13 of 20
13. Question
₹26,000 is invested at 9% compounded annually for 1 year(s). What is its maturity value (nearest rupee)?
Correct
Compound maturity value = Principal × (1 + rate)^years = ₹26,000 × (1 + 9/100)^1 ≈ ₹28,340. Simple interest would produce a different result.
Incorrect
Compound maturity value = Principal × (1 + rate)^years = ₹26,000 × (1 + 9/100)^1 ≈ ₹28,340. Simple interest would produce a different result.
Unattempted
Compound maturity value = Principal × (1 + rate)^years = ₹26,000 × (1 + 9/100)^1 ≈ ₹28,340. Simple interest would produce a different result.
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Question 14 of 20
14. Question
A firm reports current assets of ₹270,000 and current liabilities of ₹135,000. What is its current ratio (approximately)?
Correct
Current ratio = current assets ÷ current liabilities = ₹270,000 ÷ ₹135,000 ≈ 2.00:1. It measures short-term coverage but not the liquidity quality of each asset.
Incorrect
Current ratio = current assets ÷ current liabilities = ₹270,000 ÷ ₹135,000 ≈ 2.00:1. It measures short-term coverage but not the liquidity quality of each asset.
Unattempted
Current ratio = current assets ÷ current liabilities = ₹270,000 ÷ ₹135,000 ≈ 2.00:1. It measures short-term coverage but not the liquidity quality of each asset.
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Question 15 of 20
15. Question
Cost of goods sold is ₹880,000 and average inventory is ₹340,000. Inventory turnover is approximately:
Correct
Inventory turnover = cost of goods sold ÷ average inventory = ₹880,000 ÷ ₹340,000 ≈ 2.59 times. Interpret it against industry norms and stock availability.
Incorrect
Inventory turnover = cost of goods sold ÷ average inventory = ₹880,000 ÷ ₹340,000 ≈ 2.59 times. Interpret it against industry norms and stock availability.
Unattempted
Inventory turnover = cost of goods sold ÷ average inventory = ₹880,000 ÷ ₹340,000 ≈ 2.59 times. Interpret it against industry norms and stock availability.
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Question 16 of 20
16. Question
A company has debt of ₹1,150,000 and equity of ₹840,000. What is its debt-equity ratio?
Correct
Debt-equity ratio = debt ÷ equity = ₹1,150,000 ÷ ₹840,000 ≈ 1.37:1. Use a consistent definition of debt when comparing companies.
Incorrect
Debt-equity ratio = debt ÷ equity = ₹1,150,000 ÷ ₹840,000 ≈ 1.37:1. Use a consistent definition of debt when comparing companies.
Unattempted
Debt-equity ratio = debt ÷ equity = ₹1,150,000 ÷ ₹840,000 ≈ 1.37:1. Use a consistent definition of debt when comparing companies.
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Question 17 of 20
17. Question
A bond pays annual coupon interest of ₹104 and trades at ₹1020. Its current yield is approximately:
Correct
Current yield = annual coupon ÷ current market price × 100 = ₹104 ÷ ₹1020 × 100 ≈ 10.20%. It excludes any capital gain or loss at redemption.
Incorrect
Current yield = annual coupon ÷ current market price × 100 = ₹104 ÷ ₹1020 × 100 ≈ 10.20%. It excludes any capital gain or loss at redemption.
Unattempted
Current yield = annual coupon ÷ current market price × 100 = ₹104 ÷ ₹1020 × 100 ≈ 10.20%. It excludes any capital gain or loss at redemption.
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Question 18 of 20
18. Question
A project costs ₹370,000 and generates ₹89,000 at each year-end for 3 years. At a 10% discount rate, NPV is closest to:
Correct
NPV = −₹370,000 + ₹89,000/1.10 + ₹89,000/1.10² + ₹89,000/1.10³ ≈ ₹-148,670. A positive NPV indicates value creation under the stated assumptions.
Incorrect
NPV = −₹370,000 + ₹89,000/1.10 + ₹89,000/1.10² + ₹89,000/1.10³ ≈ ₹-148,670. A positive NPV indicates value creation under the stated assumptions.
Unattempted
NPV = −₹370,000 + ₹89,000/1.10 + ₹89,000/1.10² + ₹89,000/1.10³ ≈ ₹-148,670. A positive NPV indicates value creation under the stated assumptions.
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Question 19 of 20
19. Question
A firm reports net profit of ₹220,000 on sales of ₹1,560,000. Its net profit margin is approximately:
Correct
Net profit margin = net profit ÷ net sales × 100 = ₹220,000 ÷ ₹1,560,000 × 100 ≈ 14.10%. Check whether the profit measure is before or after tax when comparing ratios.
Incorrect
Net profit margin = net profit ÷ net sales × 100 = ₹220,000 ÷ ₹1,560,000 × 100 ≈ 14.10%. Check whether the profit measure is before or after tax when comparing ratios.
Unattempted
Net profit margin = net profit ÷ net sales × 100 = ₹220,000 ÷ ₹1,560,000 × 100 ≈ 14.10%. Check whether the profit measure is before or after tax when comparing ratios.
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Question 20 of 20
20. Question
Annual credit sales are ₹4,700,000 and average trade receivables are ₹470,000. Receivables turnover is:
Correct
Receivables turnover = annual credit sales ÷ average receivables = ₹4,700,000 ÷ ₹470,000 ≈ 10.00 times. Faster turnover may indicate stronger collection, subject to credit policy and industry norms.
Incorrect
Receivables turnover = annual credit sales ÷ average receivables = ₹4,700,000 ÷ ₹470,000 ≈ 10.00 times. Faster turnover may indicate stronger collection, subject to credit policy and industry norms.
Unattempted
Receivables turnover = annual credit sales ÷ average receivables = ₹4,700,000 ÷ ₹470,000 ≈ 10.00 times. Faster turnover may indicate stronger collection, subject to credit policy and industry norms.