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B Com Exam  >  B Com Tests  >  Entrepreneurship & Small Businesses  >  Test: Start-up Issues - 2 - B Com MCQ

Test: Start-up Issues - 2 - B Com MCQ


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10 Questions MCQ Test Entrepreneurship & Small Businesses - Test: Start-up Issues - 2

Test: Start-up Issues - 2 for B Com 2024 is part of Entrepreneurship & Small Businesses preparation. The Test: Start-up Issues - 2 questions and answers have been prepared according to the B Com exam syllabus.The Test: Start-up Issues - 2 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Start-up Issues - 2 below.
Solutions of Test: Start-up Issues - 2 questions in English are available as part of our Entrepreneurship & Small Businesses for B Com & Test: Start-up Issues - 2 solutions in Hindi for Entrepreneurship & Small Businesses course. Download more important topics, notes, lectures and mock test series for B Com Exam by signing up for free. Attempt Test: Start-up Issues - 2 | 10 questions in 10 minutes | Mock test for B Com preparation | Free important questions MCQ to study Entrepreneurship & Small Businesses for B Com Exam | Download free PDF with solutions
Test: Start-up Issues - 2 - Question 1
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What is one method commonly used for financial analysis?

Detailed Solution for Test: Start-up Issues - 2 - Question 1
Ratio analysis is a commonly used method for financial analysis. It involves calculating various ratios to monitor the financial status of a business and compare them to industry averages. This helps identify problem areas and provides insights into how the business is faring relative to others in the same industry.
Test: Start-up Issues - 2 - Question 2
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What does the average collection period ratio measure?

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The average collection period ratio measures how long the money in a business is tied up in credit sales. It is calculated by dividing accounts and notes receivable by annual credit sales and multiplying the result by the number of days in a year. This ratio helps assess the efficiency of a business in collecting payments from its customers.
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Test: Start-up Issues - 2 - Question 3
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Which ratio indicates the efficiency of inventory management in a company?

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The inventory turnover ratio gives an indication of the efficiency of inventory management in a company. It is calculated by dividing the cost of goods sold by the average inventory. A high ratio may indicate a high level of efficiency or too low a level of inventory, while a low ratio suggests slow-moving inventory.
Test: Start-up Issues - 2 - Question 4
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Which ratio excludes inventories when calculating the ability of a firm to pay its debts within one year?
Detailed Solution for Test: Start-up Issues - 2 - Question 4
The quick ratio, also known as the quick asset ratio, is similar to the current ratio but excludes inventories from the calculation. This ratio provides a better picture of a firm's ability to meet its short-term debts as inventories are considered less liquid than other current assets.
Test: Start-up Issues - 2 - Question 5
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What does the debt to equity ratio indicate?
Detailed Solution for Test: Start-up Issues - 2 - Question 5
The debt to equity ratio indicates the investment of the lender in relation to the investment of the owners. A high ratio indicates that the business is financed mostly through borrowed funds, while a low ratio indicates that the owners have invested a larger amount required to finance the business. This ratio provides insights into the financing structure of a company.
Test: Start-up Issues - 2 - Question 6
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What is a fundamental aspect of starting a new business?
Detailed Solution for Test: Start-up Issues - 2 - Question 6
A fundamental aspect of starting a new business is risk assessment. Entrepreneurs must acknowledge and embrace risk as they take on the challenge of starting a new venture. Anticipating failure and assessing the risks associated with the business are crucial steps in risk management and maximizing the chances of success.
Test: Start-up Issues - 2 - Question 7
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What are some major risks that can impact a startup business?
Detailed Solution for Test: Start-up Issues - 2 - Question 7
Some major risks that can impact a startup business include financial risks, legal risks, and operational risks. Financial risks involve factors such as cash flow shortages and customers defaulting on payments. Legal risks can arise from breaches in contracts or non-compliance with regulations. Operational risks relate to issues with key employees, equipment breakdowns, or natural disasters. It is important for entrepreneurs to identify and manage these risks to ensure the success and survival of their business.
Test: Start-up Issues - 2 - Question 8
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What is the process of developing new products?
Detailed Solution for Test: Start-up Issues - 2 - Question 8
The process of developing new products is called new product development. It involves a series of stages, starting with generating ideas and progressing to marketing completed products. These stages include evaluating and screening product ideas, protecting intellectual property, conducting research and development, and promoting and marketing the product. New product development is essential for the growth and success of a company, as it allows for innovation and meeting customer needs.
Test: Start-up Issues - 2 - Question 9
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Which ratio measures the ability of a firm to pay its debts within one year?
Detailed Solution for Test: Start-up Issues - 2 - Question 9
The current ratio measures the liquid assets available to meet all debts falling due within one year's time. It is calculated by dividing current assets by current liabilities. A higher current ratio indicates a greater ability of the firm to pay its bills.
Test: Start-up Issues - 2 - Question 10
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What does the turnover of working capital ratio measure?
Detailed Solution for Test: Start-up Issues - 2 - Question 10
The turnover of working capital ratio measures how actively working capital in a business is functioning in terms of sales. Working capital is the difference between current assets and current liabilities. A low ratio usually means that working capital is not being used efficiently, while a high ratio suggests vulnerability to creditors.
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