All Courses
Get the App Signup / Login
Sign in Open App
B Com Exam  >  B Com Tests  >  Test: Profitability Analysis - B Com MCQ

Test: Profitability Analysis - B Com MCQ


Test Description

10 Questions MCQ Test - Test: Profitability Analysis

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

Price is one of the key profit drivers for most businesses. Why does an increase in price have a greater impact on profit compared to other drivers?

Detailed Solution for Test: Profitability Analysis - Question 1
An increase in price directly adds to the bottom line profit because every additional dollar earned from a price increase goes straight to profit. This is due to the fact that the increase in price doesn't lead to additional costs. On the other hand, other drivers such as an increase in sales volume may come with increased variable costs, and reducing fixed costs doesn't directly impact revenue. Therefore, price is the most impactful profit driver.
Test: Profitability Analysis - Question 2
Save

Which of the following profit drivers is typically represented by the "cost of sales"?

Detailed Solution for Test: Profitability Analysis - Question 2
Variable costs are costs that vary in direct proportion to revenue. These costs are commonly referred to as the "cost of sales" because they directly relate to producing the goods or services being sold. Variable costs include expenses like raw materials, labor, and production-related expenses.
1 Crore+ students have signed up on EduRev. Have you? Download the App
Test: Profitability Analysis - Question 3
Save

If a company raises its prices by 10% and loses 25% of its customers, what impact could this have on its profitability?

Detailed Solution for Test: Profitability Analysis - Question 3
Increasing prices by 10% and losing 25% of customers could potentially lead to an increase in profitability. This is because the increased revenue from the price hike might outweigh the revenue lost from the reduced customer base. This scenario emphasizes the importance of pricing strategies and the potential benefits of focusing on value-driven customers rather than price-sensitive ones.
Test: Profitability Analysis - Question 4
Save
What is the significance of Return on Invested Capital (ROIC) for investors?
Detailed Solution for Test: Profitability Analysis - Question 4
Return on Invested Capital (ROIC) measures how effectively a company generates profit from the capital (both debt and equity) that investors have provided. It's a crucial metric for investors to evaluate a company's profitability and its ability to turn investor capital into profits.
Test: Profitability Analysis - Question 5
Save
Which profit driver is least likely to impact overall revenue directly?
Detailed Solution for Test: Profitability Analysis - Question 5
Fixed costs, often referred to as overhead, are costs that remain relatively constant regardless of changes in sales volume. Since fixed costs don't vary with revenue, changes in these costs won't have a direct impact on overall revenue. Instead, they influence the company's cost structure and can affect profitability.
Test: Profitability Analysis - Question 6
Save
What is the key factor that makes Return on Invested Capital (ROIC) an excellent indicator of a company's competitive advantage?
Detailed Solution for Test: Profitability Analysis - Question 6
Consistent high ROIC year after year indicates that a company has developed an effective method for turning investor capital into profits. This suggests that the company has a strong competitive advantage or "moat" that enables it to consistently generate higher returns compared to its invested capital.
Test: Profitability Analysis - Question 7
Save
Which profit driver has the potential to impact revenue positively without incurring additional costs?
Detailed Solution for Test: Profitability Analysis - Question 7
Price is the profit driver that has the potential to impact revenue positively without incurring additional costs. Increasing the price directly adds to revenue and profit, assuming no significant change in sales volume or variable costs.
Test: Profitability Analysis - Question 8
Save
Which income measure is recommended as the numerator when calculating ROIC for a company with diverse and one-time income sources?
Detailed Solution for Test: Profitability Analysis - Question 8
When a company's net income includes diverse and one-time income sources, it's more accurate to use a measure called Net Operating Profits After Tax (NOPAT) as the numerator when calculating ROIC. NOPAT focuses on the core business operations' profitability and provides a clearer picture of the return generated from those operations.
Test: Profitability Analysis - Question 9
Save
Why is it essential for companies to focus on their core business operations when calculating ROIC?
Detailed Solution for Test: Profitability Analysis - Question 9
ROIC is most meaningful when calculated based on the returns generated by a company's core business operations. It provides insight into the company's ability to generate consistent profitability from its primary activities, without being influenced by one-time events, foreign currency fluctuations, or other non-recurring factors.
Test: Profitability Analysis - Question 10
Save
Which profit driver has the most significant impact on profit, especially due to the direct relationship between additional revenue and increased profit?
Detailed Solution for Test: Profitability Analysis - Question 10
Price has the most significant impact on profit due to the direct relationship between increased revenue from higher prices and increased profit. Each additional dollar earned from a price increase goes directly to profit, making price a powerful profit driver compared to other factors like variable costs, fixed costs, and sales volume.
Information about Test: Profitability Analysis Page
In this test you can find the Exam questions for Test: Profitability Analysis solved & explained in the simplest way possible. Besides giving Questions and answers for Test: Profitability Analysis, EduRev gives you an ample number of Online tests for practice
Download as PDF

Important Questions for Profitability Analysis

Find all the important questions for Profitability Analysis at EduRev.Get fully prepared for Profitability Analysis with EduRev's comprehensive question bank and test resources. Our platform offers a diverse range of question papers covering various topics within the Profitability Analysis syllabus. Whether you need to review specific subjects or assess your overall readiness, EduRev has you covered. The questions are designed to challenge you and help you gain confidence in tackling the actual exam. Maximize your chances of success by utilizing EduRev's extensive collection of Profitability Analysis resources.

Profitability Analysis MCQs with Answers

Prepare for the Profitability Analysis within the B Com exam with comprehensive MCQs and answers at EduRev. Our platform offers a wide range of practice papers, question papers, and mock tests to familiarize you with the exam pattern and syllabus. Access the best books, study materials, and notes curated by toppers to enhance your preparation. Stay updated with the exam date and receive expert preparation tips and paper analysis. Visit EduRev's official website today and access a wealth of videos and coaching resources to excel in your exam.

Online Tests for Profitability Analysis

Practice with a wide array of question papers that follow the exam pattern and syllabus. Our platform offers a user-friendly interface, allowing you to track your progress and identify areas for improvement. Access detailed solutions and explanations for each test to enhance your understanding of concepts. With EduRev's Online Tests, you can build confidence, boost your performance, and ace Profitability Analysis with ease. Join thousands of successful students who have benefited from our trusted online resources.
© EduRev
Education Revolution
Signup to see your scores go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup