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Year 11 Exam  >  Year 11 Tests  >  Test: Analysis and Interpretation - Year 11 MCQ

Test: Analysis and Interpretation - Year 11 MCQ


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10 Questions MCQ Test - Test: Analysis and Interpretation

Test: Analysis and Interpretation for Year 11 2024 is part of Year 11 preparation. The Test: Analysis and Interpretation questions and answers have been prepared according to the Year 11 exam syllabus.The Test: Analysis and Interpretation MCQs are made for Year 11 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Analysis and Interpretation below.
Solutions of Test: Analysis and Interpretation questions in English are available as part of our course for Year 11 & Test: Analysis and Interpretation solutions in Hindi for Year 11 course. Download more important topics, notes, lectures and mock test series for Year 11 Exam by signing up for free. Attempt Test: Analysis and Interpretation | 10 questions in 20 minutes | Mock test for Year 11 preparation | Free important questions MCQ to study for Year 11 Exam | Download free PDF with solutions
Test: Analysis and Interpretation - Question 1
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What does the Current Ratio assess in a business?

Detailed Solution for Test: Analysis and Interpretation - Question 1
The Current Ratio, or Working Capital Ratio, evaluates the liquidity of a business by comparing its current assets to its current liabilities. It indicates the ability to meet short-term debts.
Test: Analysis and Interpretation - Question 2
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Which formula correctly calculates the Quick Ratio?

Detailed Solution for Test: Analysis and Interpretation - Question 2
The Quick Ratio, also known as the Acid-Test Ratio, excludes inventory from current assets to assess immediate liquidity. It is calculated as Quick Ratio = (Current Assets - Inventory) / Current Liabilities.
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Test: Analysis and Interpretation - Question 3
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What does the Return on $100 of Sales measure?

Detailed Solution for Test: Analysis and Interpretation - Question 3
Return on $100 of Sales reflects how efficiently expenses are managed to generate returns, indicating profitability through expense control.
Test: Analysis and Interpretation - Question 4
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How is the Rate of Inventory Turnover calculated?
Detailed Solution for Test: Analysis and Interpretation - Question 4
The Rate of Inventory Turnover measures how quickly inventory is sold and replaced, calculated as Cost of Sales / Average Inventory.
Test: Analysis and Interpretation - Question 5
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What does the Trade Receivables to Sales Ratio indicate?
Detailed Solution for Test: Analysis and Interpretation - Question 5
The Trade Receivables to Sales Ratio measures the efficiency of credit sales by indicating how much of sales remain as receivables.
Test: Analysis and Interpretation - Question 6
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What is the purpose of the Capital Employed ratio?
Detailed Solution for Test: Analysis and Interpretation - Question 6
The Capital Employed ratio evaluates the efficiency of capital utilization by expressing net profit as a percentage of capital employed.
Test: Analysis and Interpretation - Question 7
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Why is a Current Ratio of 1.5:1 to 2:1 considered satisfactory?
Detailed Solution for Test: Analysis and Interpretation - Question 7
A Current Ratio between 1.5:1 to 2:1 is considered satisfactory as it shows the business can meet its short-term debts promptly.
Test: Analysis and Interpretation - Question 8
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Which action can worsen the Quick Ratio?
Detailed Solution for Test: Analysis and Interpretation - Question 8
Acquiring additional non-current assets can worsen the Quick Ratio by tying up funds that could otherwise be used for liquidity.
Test: Analysis and Interpretation - Question 9
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What does the Rate of Inventory Turnover indicate with a faster rate?
Detailed Solution for Test: Analysis and Interpretation - Question 9
A faster Rate of Inventory Turnover indicates reduced funds tied up in inventory, suggesting efficient management of inventory.
Test: Analysis and Interpretation - Question 10
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How does the Average Collection Period impact a business?
Detailed Solution for Test: Analysis and Interpretation - Question 10
The Average Collection Period impacts cash flow management by indicating how efficiently debtors settle their accounts, affecting liquidity.
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