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Test: Saving and Financial Intermediation - B Com MCQ


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10 Questions MCQ Test - Test: Saving and Financial Intermediation

Test: Saving and Financial Intermediation for B Com 2024 is part of B Com preparation. The Test: Saving and Financial Intermediation questions and answers have been prepared according to the B Com exam syllabus.The Test: Saving and Financial Intermediation MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Saving and Financial Intermediation below.
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Test: Saving and Financial Intermediation - Question 1
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According to the information provided, which of the following is NOT considered a source of domestic savings in an economy?

Detailed Solution for Test: Saving and Financial Intermediation - Question 1
In the given text, the sources of domestic savings are listed as households (families), government administration, and the private corporate sector. Foreign investments are not mentioned as one of the sources of domestic savings in the provided information. Domestic savings are derived from within the country itself, whereas foreign investments involve capital coming from outside the country.
Test: Saving and Financial Intermediation - Question 2
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What is the primary reason behind the decline in government savings mentioned in the text?

Detailed Solution for Test: Saving and Financial Intermediation - Question 2
The text states that the decline in government savings can be attributed to factors such as the deterioration in the overall tax GDP ratio and the increasing losses made by public sector utilities like state Electricity and Water Boards, State Road transport Corporation, and the Railways. This suggests that the correct answer is Option C.
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Test: Saving and Financial Intermediation - Question 3
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What does the debt ratio measure?

Detailed Solution for Test: Saving and Financial Intermediation - Question 3
The debt ratio compares a company's total debt (long-term plus short-term) with its total assets. It provides an idea of the proportion of a company's assets that are funded by debt. The correct answer is Option C.
Test: Saving and Financial Intermediation - Question 4
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According to the text, which factor is NOT considered an influence on Indian household savings?
Detailed Solution for Test: Saving and Financial Intermediation - Question 4
The text mentions that a number of factors affect Indian household savings, and it dismisses the capacity of other variable quantities like inflation rate, rate of interest, and tax rates to have a significant impact on savings. However, it emphasizes that earnings or income is the principal causal factor of saving. Thus, the correct answer is Option A.
Test: Saving and Financial Intermediation - Question 5
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Which sector contributes the largest proportion of domestic savings in most countries, including India?
Detailed Solution for Test: Saving and Financial Intermediation - Question 5
As per the information provided, in most countries, including India, the household sector contributes the bulk of domestic savings—more than two-thirds of the total savings. The government sector and the private corporate sector contribute the remaining portion. This indicates that the correct answer is Option D.
Test: Saving and Financial Intermediation - Question 6
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Which ratio compares a company's earnings before interest and taxes (EBIT) to its interest expenses?
Detailed Solution for Test: Saving and Financial Intermediation - Question 6
The ratio that compares a company's EBIT to its interest expenses is the Interest Coverage Ratio. It indicates how well a company's operating income can cover its interest payments. The correct answer is Option D.
Test: Saving and Financial Intermediation - Question 7
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What does the quick ratio measure?
Detailed Solution for Test: Saving and Financial Intermediation - Question 7
The quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets, excluding inventories. It gives an indication of whether a company can quickly cover its short-term liabilities using its most readily available resources. The correct answer is Option A.
Test: Saving and Financial Intermediation - Question 8
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Which of the following companies is likely to be considered more financially favorable based on debt analysis?
Detailed Solution for Test: Saving and Financial Intermediation - Question 8
The text mentions that companies with high levels of debt and declining cash flow are facing financial challenges, which can make them less favorable for investment. On the other hand, companies with low debt and healthy cash reserves are likely to be more financially favorable. The correct answer is Option B.
Test: Saving and Financial Intermediation - Question 9
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What is the purpose of the interest coverage ratio?
Detailed Solution for Test: Saving and Financial Intermediation - Question 9
The interest coverage ratio is used to assess a company's ability to pay its debt obligations using its operating income. It indicates whether a company's operating income is sufficient to cover its interest payments. The correct answer is Option D.
Test: Saving and Financial Intermediation - Question 10
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Which ratio specifically compares the long term debt and the total capitalization of a company?
Detailed Solution for Test: Saving and Financial Intermediation - Question 10
The ratio that specifically compares the long-term debt and the total capitalization (long-term debt plus shareholders' equity) of a company is the Capitalization Ratio. It gives insights into the company's leverage and capital structure. The correct answer is Option B.
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