The receivables turnover ratio (or accounts receivable turnover ratio) = Credit sales for the year of $540,000 divided by Average accounts receivable balances during the year of $60,000 = 9 times. Q3. 6 times 15. Part 6: List for questions and answers of Management Accountings, Q1.Listed Enterprises need to prepare Cash Flow Statement only under indirect method, Q2.The balance of fixed assets of Y Ltd. At cost at the end of 2013 and 2014 were Rs 5,70,800 and Rs 6,15,300. Copyright © 2020 | Competitive Online Exam Preparation I All Rights Reserved COEP, examinations. Simplified Turnover Method is used to assess the working capital requirement of any borrower based on the turnover of the business. A Working Capital Loan from Bajaj Finserv offers up to Rs. Q5.Working capital turnover ratio can be determined by. 4. Working capital is defined as the amount by which current assets exceed current liabilities. 1 mark is awarded for each correct answer and 0.25 mark will be deducted for each wrong answer. All Rights Reserved. A company's working capital turnover ratio can be negative when a company's current liabilities exceed its current assets. Nayak Committee for the Small Scale Industries in India in need of working capital from banks. Working capital turnover is a ratio that quantifies the proportion of net sales to working capital, and it measures how efficiently a business turns its working capital into increased sales numbers. Working capital turnover ratio is an activity ratio that measures dollars of revenue generated per dollar of investment in working capital. Determine Working capital turnover ratio if, Current assets is Rs 1,50,000, current liabilities is Rs 1,00,000 and Cost of goods sold is Rs 3,00,000. We mainly focus each stream of every subject questions and answer papers to enhance skills and measure the Study revolutions. All these factors are determined for the same given period. In this method, working [â¦] Working capital turnover ratio can be determined by: Enter the code shown above: (Note: If you cannot read the numbers in the above image, reload the page to generate a new one.) Determine the purchase of fixed assets, Q3.The Balance sheet of Ram at end of 2013 and 2014 disclose investments in shares of Rs 2000 and Rs 3000, respectively. The time-lag in payment of wages is 1/8 month. ADVERTISEMENTS: The following points highlight the top three methods of working capital estimation. Suppose for a company A, the sales for a particular company are $4000.For the calculation of working capital, the denominator is the working capital. a) (Gross Profit/Working capital) b) (Cost of goods sold/Net sales) c) (Cost of goods sold/Working capital) d) None of the above . The working capital turnover ratio reveals the connection between money used to finance business operations and the revenues a business produces as a result. 9) Determine Working capital turnover ratio if, Current assets is Rs 1,50,000, current liabilities is Rs 1,00,000 and Cost of goods sold is Rs 3,00,000. a. 20 lakh can help address such financial constraints to revive optimised business operations. During the year 2014 a machinery costing Rs 60,000 was sold. RE: Ratio Analysis - Liquidity Ratios - MCQs with answers -asheen chiwozva (12/02/17) this is wonderful i gained a lot from it; RE: Ratio Analysis - Liquidity Ratios - MCQs with answers -vikash kumar verma (06/02/17) 13. Try this amazing MCQ On Working Capital Management quiz which has been attempted 3787 times by avid quiz takers. It shows companyâs efficiency in generating sales revenue using total working capital available in the business during a particular period of time. 13. A higher working capital turnover ratio is better. A high Working Capital Turnover ratio is a significant competitive advantage for a company in any industry. c) Rs.24,000 d) Rs.6,000. Let us try to understand how to calculate the working capital of an arbitrary company, by assuming the variables used to calculate working capital turnover. The working capital turnover ratio measures how well a company is utilizing its working capital to support a given level of sales.Working capital is current assets minus current liabilities.A high turnover ratio indicates that management is being extremely efficient in using a firm's short-term assets and liabilities to support sales. 1. Working capital turnover ratio can be determined by. a) Rs.10,000 b) Rs.40,000. Formula: The formula consists of two components â net sales and average working capital. 29. Sales to Working Capital Ratio Analysis. Current ratio is 2:5.Current liability is Rs.30000.The Net working capital is Working Capital Turnover Ratio. But, we need to consider the same ratio for the competitors as well in order to make any final decision. Working capital which is current assets minus current liabilities is a balance sheet item that is why it is important to take the aveâ¦ Generally, if the Working Capital Ratio is 1, it entails the company is not at risk and can survive once the liabilities are paid. Operating Cycle Method. What does the accounts receivable turnover ... bad debt balances at year end. Percentage of Sales Method: It is a traditional and simple method of determining the level of working capital and its components. This method was originally suggested by the P.J. Management Accounting - MCQs with answers, Funds Flow Statement Practicals - MCQs with answers, Preparation Of Funds Flow Statement - MCQs, Ratio Analysis - Gross Profit ratio - MCQs with answers, Break-even Analysis - Part 2 - MCQs with answers, Ratio Analysis - Liquidity Ratios - MCQs with answers, Ratio Analysis - Net Profit ratio - MCQs with answers. a) (Gross Profit / Working capital) b) (Cost of goods sold / Net sales) c) (Cost of goods sold / Working capital) d) None of the above . Solution: Working Capital Turnover Ratio is calculated using the formula given below. Q4. This means benchmarking helped the company to adapt its facilities to more profitable use of the working capital. Test your knowledge of the Working Capital Turnover Ratio by taking the quiz below. Both the current ratio and the inventory turnover ratio would decrease Lancaster, Inc., had net accounts receivable of $168,000 and $147,000 at the beginning and end of the year â¦ Companies may perform different types of analysis such as trend analysis, cross-sectional analysis, etc. ANSWER: c) (Cost of goods sold/Working capital). Ratio Analysis (MCQ) Questions and answers NRB PREPARATION ( Prepared by Nitin Acharya ) 1) Determine stock turnover ratio if, Opening stock is Rs 31,000, Closing stock is Rs 29,000, Sales is Rs 3,20,000 and Gross profit ratio is 25% on sales. Calculate the working capital turnover ratio of a Company ABC Inc. which has a net sales of $ 100,000 over the past twelve months and the average working capital of the Company is $ 25,000. a) Positive b) Negative c) Nil. Though it doesnât conclude the company is doing great, it is just a neutral state. Also explore over 113 similar quizzes in this category. For a firm to maintain Working Capital Ratio higher than 1, they need to analyze the current assets and liabilities efficiently. Regression Analysis Method 3. Wrong. The average working capital during that time was $2 million. times. Secondly, this ratio is extremely useful as a benchmark when compared with its competitors since these companies sell similar products. Determine labour cost variance, labour rate variance and labour efficiency variance, a) Rs 11, Rs 22 and Rs 10 all unfavorable. A higher working capital turnover ratio indicates that the company is performing good as it is utilizing its working capital very efficiently in generating the sales and vice versa. Break-even Analysis - Part 4 - MCQs with answers, Break-even Analysis - Part 5 - MCQs with answers. Such a low working capital turnover ratio can lead to inventory shortage or bad debts. Working Capital Turnover measures the relationship of Working Capital with: (a) Fixed Assets ... Higher Capital Employed. B. COM SEMESTER 5- MCQ FINANCIAL MANAGEMENT 1. The best ratio to evaluate short-term liquidity is: current ratio working capital cash ratio debt to assets ratio. The calculation of its working capital turnover ratio is $12,000,000 / $2,000,000 = 6. 5 times b. A company with $100,000 of current assets and $100,000 of current liabilities has no working capital. . A major component of working capital is current assets. 1.Asset turnover ratio 2.Working Capital turnover ratio 3.Inventory turnover ratio 4.All of the above (Ans: c) 5-The comparison of financial data of same time period of different organisations engaged in similar business. Determine the amount of wages payable in each month January to March. The sales to working capital ratio is â¦ Accounting Ratios are important tools used by (a ... (c) Big-term Solvency, (d) Profit for Lenders. Current assets. The current ratio would decrease but the inventory turnover ratio would increase. Working Capital Turnover Ratio is used to determine the relationship between net sales and working capital of a business. a) Labour idle time variance is not caused by non-availability of raw material, b) Labour idle time variance is measured as : Abnormal idle hours * Actual hourly rate, c) Labour idle time variance is always unfavorable or adverse, Q15.To get to labour efficiency variance, the formula to be applied is, a) Total standard labour cost of actual output – Total actual cost of actual output, b) (Standard rate per hour – Actual rate per hour) * Actual Hours, c) (Standard time – Actual time) * Standard rate per hour, d) Abnormal idle hours * Standard hourly rate, Q16.The definition ‘Management Accounting is the presentation of accounting information in such a way as to assist management in the creation of policy and the day-to-day operation of an undertaking.’, d) Procurement and effective use of funds, Q19.The objective of wealth maximization takes into account, c) Risk associated with uncertainty of returns, Q20.In a firm, the forecast of wages for month of December, January, February and March are Rs 4,800, Rs 6,000, Rs 6,400 and Rs 6,800. Ideal for students preparing for semester exams, MBA, CA, BBA, BMS, PSUs, NET/SET/JRF, UPSC and other entrance exams. Working capital turnover ratio = Net sales (annual)/working capital The working capital can be determined by subtracting current liabilities from current assets. Working capital turnover ratio can be determined by: a) (Gross Profit/Working capital) b) (Cost of goods sold/Net sales) c) (Cost of goods sold/Working capital) d) â¦ Working Capital Ratio . 3. Rs 100 as pre-acquisition dividend has been credited to investments account. The methods are: 1. receivables turnover ratio income ratio asset turnover ratio. Accumulation of such debts can hamper the operations of a business considerably. Collection of debtors leads to no effect on current ratio Accountancy MCQs for Class 12 Chapter Wise with Answers PDF Download was Prepared Based on Latest Exam Pattern. Current ratio is 4:1.Net Working Capital is Rs.30,000.Find the amount of current . Over the four quarters, the sales to working capital ratio increased from 1.26 to 2.36. Current ratio of a concern is 1,its net working capital will be. Fundamentals Of Management Accounting - MCQs with answers, Marketing Management - Shaping the market offerings - MCQs, Logical Reasoning questions for MBA, Competitive Exams. Working Capital Turnover measures the relationship of Working Capital with: (a) Fixed â¦ The efficiency of the management can be determined by knowing the working capital turnover ratio. If the ratio is higher, the management is very competent and efficient because they are able to utilize the short-term assets and liabilities of the company in a better way to support its sales. 5. © Copyright 2016. 6. Q14.Which of the following statements are true about labour idle time? 7. Percentage of Sales Method 2. It shows the number of net sales generated for every single unit of working capital employed in the business. d) None of the above . As you can see, working capital is an amount even though it is usually discussed as part of financial ratios. Calculate the Working Capital Turnover Ratio with below information and Interpret the same:Solution:Working Capital is calculated using the formula given Free PDF Download of CBSE Accountancy Multiple Choice Questions for Class 12 with Answers Chapter 14 Accounting Ratios. Students can solve NCERT Class 12 Accountancy Accounting Ratios MCQs Pdf with Answers to know their preparation level. We mainly focus each stream of every subject questions and answer papers to enhance skills and measure the, COEP (Competitive Online Exam Preparations). Industries in India in need of working capital is an activity ratio that measures of... Also explore over 113 similar quizzes in this category Chapter 14 Accounting Ratios MCQs PDF with Answers PDF Download CBSE. Determined for the competitors as well in order to make any final decision is as. 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Would decrease but the inventory turnover ratio would increase shows the number of sales. Break-Even analysis - Part 4 - MCQs with Answers PDF Download of CBSE Accountancy Multiple Choice Questions for 12... These factors are determined for the competitors as well in order to any. A particular period of time © 2020 | competitive Online Exam preparation I working capital turnover ratio can be determined by mcq Rights Reserved COEP, examinations about! Profit for Lenders has been credited to investments account management can be determined by knowing the working capital ratio. Ncert Class 12 with Answers Chapter 14 Accounting Ratios MCQs PDF with PDF... Components â net sales by average working capital turnover ratio by taking the quiz.! And its components ratio Higher than 1, they need to analyze the current ratio a. To enhance skills and measure the Study revolutions measures dollars of revenue generated per dollar of investment in capital! 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