N. S. Toor Solutions for Chapter: Financial Statements Analysis, Exercise 5: OBJECTIVE TYPE QUESTIONS

A firm's net profit-$30,$ gross profit-$96$ and sales-$2400$:

a. Net profit to Sales ratio is $1.20\%$ and Gross Profit to Sales ratio is $4\%$.

b. Net profit to Sates ratio is $1.25\%$ and Gross Profit to Sales ratio is $4\%$.

c. Net profit to Sales ratio is $1.5\%$ and Gross Profit to Sales ratio is $4.5\%$.

d. Net profit to Sales ratio is $1.25\%$ and Gross Profit to Sales ratio is $5\%$.

Net profit of a firm is 40. Its Tangible net worth is 400 and long term liabilities are 400.

a. Its return on equity is 10%

b. Its return on equity is 20% 

c. Its return on investment is 10%

d. Its return on investment is 5%

A firm's net profit to sales ratio is $5\%$ and Profit is $80$. Its Stock turnover ratio is $20$ times.

a. Its sales are $1600$ and stocks are $80$.

b. Its sales are $2000$ and stocks are $100$.

c. Its sales are $800$ and stocks are $40$.

d. Adequate information not available for calculation of Funds Flow.

When asset is created by a firm, it is:

a. Sources of funds

b. Use of funds

c. Inflow of funds

d. None of the above

Which statement for funds flow is correct:

a. Increase in liability is use of funds.

b. Decrease in liability is a source of funds.

c. Decrease in assets is a source of funds.

d. Increase in assets is a source of funds.

Increase in long term uses during a year is 125% of the increase in long term sources:

a. Improvement in debt equity ratio

b. Increase in current ratio and net working capital.

c. Decline in current ratio and net working capital.

d. Deterioration in debt service coverage ratio.

An increase in long term uses is 75% of the long term sources. Its effect on liquidity would be:
a. Improvement in debt-equity ratio.
b. Improvement in current ratio and net working capital.
c. Decline in current ratio and net working capital.
d. Deterioration in debt service coverage ratio.