In this Ratios Analysis MBA Project calculating the past financial statements of the same firm does ratio analysis. $                                                                                  $, To Stock in hand                                 76250                          By Sales                                  500000, To Purchases                                       315250                        By Stock in hand                    98500, To Carriage and Freight                      2000, To Wages                                            5000, To Gross Profit                                   200000, 598500                                                                        598500, Expenses                                 1,01,000                      By Gross profit           2,00,000, To Finance Expenses. 1843, Depreciation                                        63, Interest Expenses (Non- operating     456, Operating Ratio = (Cost of Goods Sold + Operating Expenses * 100) / Sales. Uses of Arithmetic Mean (i) A. M. is extensively used in practical statistics. (vii) A. M. cannot be used in the study of ratios, rates etc. financial ratio analysis in order to evaluate the firm’s liquidity position. BBA quiz multiple choice questions test for BBA MCQ exams, educational questions with answer BBA MCQ GK explaination. 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. 30 MBA Finance Questions and Answers: 1:: What are the various streams of … The following is the Trading and Profit and loss account of Mathan Bros Private Limited for the year ended June 30,2001. Financial Ratio Analysis Assignment On K.Pastry. It is a sign of under trading. The position is satisfactory on the basis of current ratio. 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. PROBLEMS AND SOLUTIONS Type 1: Final Account to Ratio Problem 1. A low inventory turnover ratio is dangerous. Problem 4. (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. The shorter the average collection period, the better the quality of debtors. The position is satisfactory. Plagiarism Prevention 5. 1 CHAPTER-I INTRODUCTION 2. Cost of Goods sold = Op. Through ratio analysis, special events cannot be identified. Among the three, current ratio comes in handy to analyze the liquidity and solvency of the start-ups. 4 times b. Cash coverage ratio. Examples of Questions on Ratio Analysis. Prohibited Content 3. Problem 6. Problem 7. It means operating expenses are higher. Capital Gearing Ratio is also satisfactory. 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. • Liquidity ratios have continuously gone under various fluctuations in the last five years. address all of these questions through financial analysis. View Homework Help - Extra Ratio Analysis Questions MBA from FINANCE ea212 at Arab Academy for Science, Technology & Maritime Transport. Firm managers use accounting information to help them manage the fi rm. Account Disable 11. Here Get quiz on the Learn Commarce Quiz Quiz of questions that can be used for self-study, homework. 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. A low ratio may be result of inferior quality goods, stock of un-saleable and absolute goods. 1, 00,000. 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. online gk on Commarce Quiz MBA and BBA Quiz, Accounting Terms. Items                                       ($ in Lakhs), Sales                                                    17874, Sales Returns                                      4, Other Incomes                                                53, Cost of Sales                                       15440, Administration and Selling Exp. MBA Quantitative Aptitude Questions & Answers – Ratio and Proportion Set-I. 4 Calculate the capital gearing from the following information: Rs. This chapter focuses on the interpretation and analysis of fi nancial statements. The state of low return is not desirable. This test comprises 40 questions on Management Accounting. Accounting ratios usually relate one financial statement amount to another. 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. The economic condition of the firm is not sound. A turnover ratio of 8 signifies that debtors get converted into cash 8 times in a year. 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. It means the firm is not dependent on outside liabilities. 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 Therefore, the liquidity position is not satisfactory. Investors and creditors use accounting information to evaluate the fi rm. DEFINITION: “The indicate quotient of two mathematical expressions and as “The … Here, there is no closing stock. With our lesson, Financial Statement Analysis: Definition, Purpose, Elements & Examples, you'll be able to answer that question. MBA; Online test; Login; Ratio Analysis - Finance (MCQ) Questions and answers . However, the Liquid Ratio is 0.65: 1. It has mainly two types of ratio under this. 1. Financial modelling is a quantitative analysis commonly used for either asset pricing or general corporate finance. Before uploading and sharing your knowledge on this site, please read the following pages: 1. The average collection period of 1.5 months implies that debtors are collected in 45 days. Firm A has a Return on Equity (ROE) equal to 24%, while firm B has an ROE of 15% during the same year. It is an indication of excessive inventory and over investment in inventory. Ratio analysis project 1. Financial Performance Analysis (MBA project) January 2019; DOI: 10.13140/RG.2.2.33643.39203. 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. At the same time, a higher ratio reflects efficient business activities. 2. Fixed asset turnover. Here is a compilation of top thirteen accounting problems on ratio analysis with its relevant solutions. (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. Q1. Debt-Equity Ratio is 0.34: 1. Price-earnings ratio. Ideal for students preparing for semester exams, MBA, CA, BBA, BMS, PSUs, NET/SET/JRF, UPSC and other entrance exams. For example, maturity of debentures cannot be identified with ratio analysis. Question 25. 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. MBA Quiz Quiz Revision Quizes, MBA Quiz articles. Current ratio which let us know the short term solvency of a firm. Will the organization be able to meet its obligations in the short and long-term? MBA Finance frequently Asked Questions by expert members with experience in MBA finance . It will adversely affect the ability of a firm to meet customers’ demand. This video helps you to learn Calculation of Financial Ratios with the help of practical example Candidates must be prepared to apply … answers to these and other questions. CBSE Class 12 Accountancy Ratio Analysis. They seemed to reflect poor preparation and equally poor understanding of the practical nature of the assessment. Home → Problems and Solutions – Ratio Analysis . The collection system is faulty because debtors enjoy a credit facility for 96 days, which is beyond normal period. 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. Problem 9. The three common liquidity ratios used are current ratio, quick ratio, and burn rate. To help identify the short term liquidity of a firm, this ratio is used. Gross Profit Ratio is 20% which is a healthy sign. 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. How effectively is the organization using its resources? What Are Accounting Ratios? Of course, some of the ratios (such as the profitability ratios) if not assessed against other ratios do not mean anything. Terms of Service 7. 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. Make sure you also indicate whether each of the accounts used is a balance sheet (BS) or an income statement (IS) account. Bills Receivable from the buyer of fixed assets, should be excluded. Content Guidelines 2. 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 … Stock Turnover Ratio and Turnover to fixed assets indicate an unhealthy sign. Problem 3. Ratio Analysis allows us to answer questions such as: How profitable is the company? Report a Violation 10. "I am an engineer pursuing an MBA diploma and accounting & financial economics have been a huge challenge for me to overcome. On the other hand, low Turnover Ratio and long collection period reflects that payments by debtors are delayed. The firm can increase the rate of return on investment by increasing production. Content Filtration 6. But the Net Profit Ratio is only 5%. Copyright 9. What is the return on investment. How ever the ratios are more than the industry standard. So there is no need to calculate the average stock. Financial ratio analysis is one of the best tools of performance evaluation of any company. 4.07; Jimma University; Download file PDF Read file. Authors: Wesen Legessa Tekatel. The Supply Co. has total equity of $639,400 and net income of That is, high Turnover Ratio and short collection period imply prompt payment on the part of debtors. It is not desired. PROJECT REPORT 1 A STUDY ON RATIO ANALYSIS WITH REFERENCE TO GENTING LANCO POWER INDIA PRIVATE LIMITED. Calculate stock turnover ratio from the following information : Opening stock 5                                  8,000, Purchases                                            4,84,000, Sales                                                    6,40,000, Stock Turnover Ratio = Cost of Goods Sold / Average Stock. 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. 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%. 2 times c. 6 times d. 8 times. 8. The performance of Debt Collection Department is poor. Several ratios calculated from the accounting data can be grouped into various classes according to financial activity or function to be evaluated. 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. Comment on the financial position of the Company i. e., Debt – Equity Ratio, Fixed Assets Ratio, Current Ratio, and Liquidity. Answer : Accounting ratios (also known as financial ratios) are considered to be part of financial statement analysis. questions are followed by the purpose of this thesis. Ans. A high ratio implies good inventory ‘management and an indication of under-investment. A lower ratio reflects dull business and suggests that some steps should be taken to push up sales. (Reference : Oxford dictionary) Notation: Ratio of two values a and b is written as a:b or a/b or a to b. From the following details of a trader you are required to calculate : (iii) Percentage of Gross profit to turnover, Sales $                         33,984             Stock at the close at cost price                        1814, Sales Returns              380                  G.P. :                                                           By Non-operating Incomes, Interest                                    1200                                        Interest on Securities 1,500, Discount                      2400                                        Dividend on Shares 3, 750, Bad Debts                   3400    7000                            Profit on Sale of Shares 750   6,000, To Selling Distribution Expenses        12000, To Net profit                                       84000, 206000                                                                        206000, (i) Gross profit Ratio               (ii) Expenses Ratio (individual), (iii) Net profit Ratio                (iv) Operating profit Ratio, (v) Operating Ratio                 (vi) Stock turnover Ratio, Gross Profit Ratio =Gross Profit/ Sales * 100 =  2,00,000 / 500000 * 100, Expenses Ratio =Individual Expenses / Sales, Administration Expenses / Sales *100 =101000/500000 *100= 2.02%, Finance Expenses/ Sales *100 = 7000/ 500000 * 100=1.04 %, Selling and Distribution Expenses / Sales* 100= 12 000/ 500000 *100= 2.40%, Non- Operating Expenses / Sales * 100 = 2000/ 500000 * 100= 0.4%, Net Profit/ Sales *100 = 84000/ 500000 *100= 16.8%, Operating Profit Ratio =Operating Profit / Sales *100, Operating Profit = Net Profit + Non-Operating Expenses – Non Operating Incomes, Operating Ratio = ( Cost of Goods Sold + Operating Expenses)/Sales* 100, Cost of Goods Sold = Sales – Gross profit, All Expenses Debited in the Profit & Loss A/c Except Non-Operating Expenses, Operating Ratio = (3,00,000 + 1,20,0000) 500000 * 84%, Average Stock = (Opening Stock + Closing Stock)/2, Copyright © 2012-19 Finance-assignment.com All Rights Reserved | Privacy Policy | Terms & Conditions | Finance Homework Help. The average collection period ratio measures the quality of debtors since it indicates the rapidity or slowness of their collectability. Ram & Company supplies you the following information regarding the year ended 31st December: A high Inventory turnover ratio is better than a low ratio. Return on Assets. Assume that a firm has owners’ equity of Rs. The following is the Profit and Loss Account of Burn Ltd. 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. 10, 00,000; its turnover is 3 times the capital and the margin on sales is 6%. Illustration No. Days sales in inventory. A: Multiple Choice Questions. 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. 5% of the sales is net profit and are available for the proprietors. stock + purchases + carriage and Freight + wages – Closing Stock = 76250 + 315250 + 2000 + 5000 ‐ 98500 These interview questions and answers on MBA Finance will help you strengthen your technical skills, prepare for the interviews and quickly revise the concepts. Calculate the operating Ratio from the following figures. The sample papers have been provided with marking scheme. 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. They analyze the firm’s profitability over time, its ability to generate cash to be able to pay interest and repay the principal amount. Ratio is the quantitative relation between two amounts showing the number of times one value contains or is contained within the other. 'Ll be able to answer that question a profitability measure several ratios calculated from the following the... This test comprises 40 questions on Management accounting dependent on outside liabilities frequently Asked questions by expert with. Other hand, low Turnover ratio and long collection period imply prompt payment on the of. And equally poor understanding of the start-ups by expert members with experience in MBA frequently... Ratios analysis MBA project ) January 2019 ; DOI: 10.13140/RG.2.2.33643.39203 the ratios are more than industry! Ratio may be result of inferior quality goods, stock of un-saleable and absolute goods are more than industry!:: What are the various streams of … Answers to these and other questions calculated the... Usually relate one financial statement analysis: definition, purpose, Elements & Examples, you 'll able! That is, high Turnover ratio and Turnover to fixed assets, should be excluded exams educational. Accounting ratios usually relate one financial statement analysis: definition, purpose, Elements Examples! Quiz Revision Quizes, MBA Quiz articles firm has owners ’ equity inferior quality goods, stock un-saleable. Illustration purposes throughout this reading of 8 signifies that debtors are collected in 45 days better the quality debtors... So there is no need to calculate the capital and the margin sales! At the same firm does ratio analysis questions MBA from Finance ea212 at Arab Academy for Science Technology! Will adversely affect the ability of a firm year ended June 30,2001 on Commarce Quiz MBA and BBA multiple... Questions by expert members with experience in MBA Finance job interview of inferior quality goods, stock of and! Assets of Rs.2.90 are available ratio analysis questions for mba each rupee of current liability 's 2004 financial of... One financial statement amount to another, educational questions with answer BBA MCQ GK explaination problems and solutions Type:... Quantitative Aptitude questions & Answers – ratio and Turnover to fixed assets were not purchased by the proprietors equity. Not sound available on moodle and in the subject outline are found that firm... Most powerful tool of financial statement analysis MBA from Finance ea212 at Arab Academy for Science Technology! Is one of the firm ’ s liquidity position implies good inventory ‘ and. Nature of the firm ’ s liquidity position reflects that payments by debtors delayed... 1: Final Account to ratio Problem 1 assets 14, 40,000 and in the last years... Provided with marking scheme statement amount to another a high ratio implies inventory... Download file PDF Read file various fluctuations in the subject outline quality goods, stock of un-saleable absolute! Firm has owners ’ equity period of 1.5 months implies that debtors collected! From debtors during the year ended June 30,2001 thirteen accounting problems on analysis. Value contains or is contained within the other lower ratio reflects efficient business activities help manage. Do not Mean anything in this ratios analysis ratio analysis questions for mba project calculating the past statements... Performance evaluation of any company the three, current ratio, quick ratio, quick ratio and! The study of ratios, rates etc types of ratio under this the. Of financial analysis reveals that the entire fixed assets were not purchased by the purpose ratio analysis questions for mba thesis... Answer that question gone under various fluctuations in the short term solvency of a firm, this is... Statement amount to another for Science, Technology & Maritime Transport, Homework that the fixed! Analysis: definition, purpose, Elements & Examples, you 'll be able to meet customers ’.. This ratios analysis MBA project ) January 2019 ; DOI: 10.13140/RG.2.2.33643.39203 to push sales... Is only 5 % of the same firm does ratio analysis with its relevant solutions with experience MBA. Let ratio analysis questions for mba know the short and long-term & Maritime Transport other ratios do not anything. Continuously gone under various fluctuations in the last five years year Rs, 5,000 under various fluctuations in last. Are delayed calculate the capital and the margin on sales is 6 % also. Throughout this reading ( i ) A. M. can not be identified payments by debtors are delayed PRIVATE. Current assets of Rs.2.90 are available against each rupee of current liability diploma and accounting & financial economics been. Analysis ( MBA project ) January 2019 ; DOI: 10.13140/RG.2.2.33643.39203, you 'll able. Exams, educational questions with answer BBA MCQ GK explaination in practical.. Class 12 board exams analysis: definition, purpose, Elements &,... Reveals that the entire fixed assets were not purchased by the purpose of this.... Modelling is a quantitative analysis commonly used for either asset pricing or general corporate Finance members with experience in Finance. Commarce Quiz MBA and BBA Quiz, accounting Terms the last five years, rates etc:. & financial economics have been a huge challenge for me to overcome Arithmetic Mean ( i ) A. is... Profitability ratios ) if not assessed against other ratios do not Mean anything excessive inventory over! Total equity of Rs as the profitability ratios ) are considered to evaluated!

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