If Prayag International Ltd. is an all equity company, it will definitely mean that: A. O Fixed assets + Working Capital = Capital Employed B. ONet Worth = Capital Employed Onone of the mentioned options D. O the current liabilities are greater than the current assets
Answers
Multiple Choice Questions
Select the best alternate and check your answer with the answers given at the end of the book.
(A) Liquidity Ratios
1. Two basic measures of liquidity are :
(A) Inventory turnover and Current ratio
(B) Current ratio and Quick ratio
(C) Gross Profit ratio and Operating ratio
(D) Current ratio and Average Collection period
Answer
2. Current Ratio is :
(A) Solvency Ratio
(B) Liquidity Ratio
(C) Activity Ratio
(D) Profitability Ratio
Answer
3. Current Ratio is :
(A) Liquid Assets/Current Assets
(B) Fixed Assets/Current Assets
(C) Current Assets/Current Liabilities
(D) Liquid Assets/Current Liabilities
Answer
4. Liquid Assets do not include :
(A) Bills Receivable
(B) Debtors
(C) Inventory
(D) Bank Balance
Answer
5. Ideal Current Ratio is :
(A) 1 : 1
(B) 1 : 2
(C) 1 : 3
(D) 2 : 1
Answer
6. Working Capital is the :
(A) Cash and Bank Balance
(B) Capital borrowed from the Banks
(C) Difference between Current Assets and Current Liabilities
(D) Difference between Current Assets and Fixed Assets
Answer
7. Current assets include only those assets which are expected to be realised within ……………………..
(A) 3 months
(B) 6 months
(C) 1 year
(D) 2 years
Answer
8. The ………………… of a business firm is measured by its ability to satisfy its short term obligations as they become due.
(A) Activity
(B) Liquidity
(C) Debt
(D) Profitability
Answer
9. Ideal Quick Ratio is :
(A) 1 : 1
(B) 1 : 2
(C) 1 : 3
(D) 2 : 1
Answer
10. Quick Assets do not include
(A) Cash in hand
(B) Prepaid Expenses
(C) Marketable Securities
(D) Trade Receivables
Answer
11. Current Assets do not include :
(A) Prepaid Expenses
(B) Inventory
(C) Goodwill
(D) Bills Receivable
Answer
12. Quick Ratio is also known as :
(A) Liquid Ratio
(B) Current Ratio
(C) Working Capital Ratio
(D) None of the Above
Answer
13. Liquid Assets include :
(A) Debtors
(B) Bills Receivable
(C) Bank Balance
(D) All of the Above
Answer
14. Liquid Ratio is equal to liquid assets divided by :
(A) Non-Current Liabilities
(B) Current Liabilities
(C) Total Liabilities
(D) Contingent Liabilities
Answer
15. Patents and Copyrights fall under the category of:
(A) Current Assets
(B) Liquid Assets
(C) Intangible Assets
(D) None of Above