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Test: Expanded Analysis - B Com MCQ


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10 Questions MCQ Test - Test: Expanded Analysis

Test: Expanded Analysis for B Com 2024 is part of B Com preparation. The Test: Expanded Analysis questions and answers have been prepared according to the B Com exam syllabus.The Test: Expanded Analysis MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Expanded Analysis below.
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Test: Expanded Analysis - Question 1

What is the purpose of an annual report's financial statements in relation to shareholders?

Detailed Solution for Test: Expanded Analysis - Question 1
The primary purpose of an annual report's financial statements is to communicate the company's past performance and future direction to its shareholders. These statements provide insights into the company's financial health, allowing shareholders to make informed decisions about their investments.
Test: Expanded Analysis - Question 2

Which financial ratio indicates the efficiency of a company's utilization of its assets to generate sales revenue?

Detailed Solution for Test: Expanded Analysis - Question 2
The Capital Turnover ratio measures the efficiency of a company's use of its assets to generate sales. It indicates how effectively the company is utilizing its capital investments to drive revenue.
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Test: Expanded Analysis - Question 3

What does the Debt Equity Ratio reveal about a company's financial status?

Detailed Solution for Test: Expanded Analysis - Question 3
The Debt Equity Ratio provides insights into a company's financial leverage, showing the proportion of its financing that comes from debt compared to equity. A higher ratio indicates a higher level of financial risk due to increased reliance on debt.
Test: Expanded Analysis - Question 4
Which financial ratio represents the percentage of each sales dollar that represents profit after accounting for all expenses?
Detailed Solution for Test: Expanded Analysis - Question 4
Net Margin % measures the portion of each sales dollar that remains as profit after accounting for all expenses. It's a key indicator of a company's profitability.
Test: Expanded Analysis - Question 5
If a company has a Current Ratio of 2:1, what does this ratio value indicate?
Detailed Solution for Test: Expanded Analysis - Question 5
A Current Ratio of 2:1 indicates that the company has twice as many current assets as current liabilities, suggesting that it has sufficient short-term liquidity to cover its short-term obligations.
Test: Expanded Analysis - Question 6
What financial ratio reflects the company's net income for each outstanding share of its stock?
Detailed Solution for Test: Expanded Analysis - Question 6
Earnings Per Share (EPS) is a financial ratio that represents a company's net income for each outstanding share of its stock. It's a measure of the company's profitability on a per-share basis.
Test: Expanded Analysis - Question 7
Which financial ratio assesses the company's ability to meet its long-term financial obligations?
Detailed Solution for Test: Expanded Analysis - Question 7
The Debt Equity Ratio evaluates a company's ability to meet its long-term financial obligations by comparing its total debt to its equity. A lower ratio indicates lower financial risk.
Test: Expanded Analysis - Question 8
What does the Stock Turnover ratio indicate about a company's performance?
Detailed Solution for Test: Expanded Analysis - Question 8
The Stock Turnover ratio reflects a company's efficiency in selling its inventory. A higher ratio suggests that inventory is being sold quickly, which can be an indicator of effective operations.
Test: Expanded Analysis - Question 9
How is the Return on Equity (ROE) calculated and what does it measure?
Detailed Solution for Test: Expanded Analysis - Question 9
The Return on Equity (ROE) is calculated by dividing Net Income by Shareholders' Equity. It measures how efficiently a company is generating profits from the equity invested by its shareholders.
Test: Expanded Analysis - Question 10
What information does the Book Value provide about a company?
Detailed Solution for Test: Expanded Analysis - Question 10
The Book Value represents the value of a company's assets after deducting its liabilities. It provides insights into the net worth of the company based on its accounting records.
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