I Interpretation of financial statements

Written by Fahad Mirza (ACCA)

ACCA · Financial Accounting · 6 questions

Name: ____________________   Date: ____________

1. Trade receivables are $18,000 and credit sales are $150,000. What is the receivables collection period?

   • A 12.0 days
   • B 43.8 days
   • C 8.3 days
   • D 43.2 days

2. Current assets are $70,000 including inventories of $25,000. Current liabilities are $35,000. What is the quick ratio?

   • A 0.71:1
   • B 1.29:1
   • C 0.64:1
   • D 2.00:1

3. Profit before financing and income taxes is $45,000. Total assets are $400,000 and current liabilities $100,000. What is the return on capital employed?

   • A 45%
   • B 12%
   • C 11.2%
   • D 15%

4. Which ratio measures how efficiently an entity uses its resources?

   • A Interest cover
   • B Inventory holding period
   • C Quick ratio
   • D Gearing

5. A longer receivables collection period compared with last year most likely suggests:

   • A Lower inventory levels
   • B Slower collection from customers or more generous credit terms
   • C A fall in credit sales only
   • D Faster collection from customers

6. Debt is $200,000 and equity is $300,000. Gearing is calculated as debt / (debt + equity). What is it?

   • A 150%
   • B 40%
   • C 67%
   • D 60%