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VCE Accounting Unit 4 - Evaluating Performance Flashcards | StudBud
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VCE Accounting Unit 4 - Evaluating Performance
VCE Accounting Unit 4 - Evaluating Performance
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Answers
1
A firm could improve its WCR by
all of the above
1.Make acapital contribution or reduce drawings
improving debtor/creditor turnover and or cash sales
change short term debt to long term debt
2
Return on Assets is a measure of
Profitability
Liquidity
Efficiency
Stability
3
Evaluating profitability is limited by
the use of different accounting methods
the use of averages
all of the above
the use of historical data
4
Return on Owners Investment assesses
expense control
profitability from a managers point of view
long-term stability of the firm
profitability from an owners' perspective
5
If an asset is sold it will affect which of the following ratios?
Improve ROA & WCR
Improve ATO & ROA
Improve ATO & DTO
Worsen ROI & NPM
6
Which of the following is NOT a measure of Profitability
Return on Investment
Net Profit Margin
Creditors Turnover
Return on Assets
7
Which of the following could explain an improvement in Gross Profit Margin
a reduction in stock losses
a reduction in wages
an increase in sales volume
an increase in sales price
8
Which of the following is false?
CTO is heavily dependent on STO & DTO
STO increases when stock levels increase
QAR can be improved by reducing stock levels
DTO can be improved by reducing credit sales
9
The best benchmark for DTO & CTO is
credit terms offered by the seller
budgeted results
last periods results
credit terms offered by the purchaser
10
Which formula explains the relationship between ROA, ATO and NPM
ROA = ATO x NPM
NPM = ROA x ATO
ROA = ATO + NPM
ATO = ROA + NPM
11
"Liquidity " refers to the ability of a business to
the # of times a business can sell its short term assets
the value of cash in a business
meet it's asset commitments with short term debtdebt
meet it's short-term debts as they fall due
12
Which of the following is NOT a benchmark for comparison
budgeted perrmance
performance in previous periods
performance of similar firms
general performance of the economy
13
The Working Capital Ratio measures a firms ability to
provide a return on capital
meet its short term debts with short term assets
meet its debts
cover its cashflow requirements
14
Stock Turnover is a measure of
Efficiency
Liquidity
Stability
Profitability
15
The ratio that will best indicate a firms ability to meet its IMMEDIATE debts is
Cashflow Cover
Working Capital Ratio
Return on Assets
Quick Asset Ratio
16
Which of the following is NOT a non-financial indicator of performance
# of telephone enquiries
value of sales returns
# of sales returns
# of customer complaints
17
State one way of improving GPM without affecting Asset Turnover
improve security to reduce stock losses
spend more on advertising to increase sales
improve the quality of staff to increase sales
find a cheaper supplier to reduce cost price of stock
18
Which of the following is NOT a strategy for following up late payments by debtors?
reminder notices
threats of legal action
withdrawal of credit
offering settlement discounts
19
What is the correct formula for Debtors Turnover
Av Debtors/Credit Sales x 365
Credit Sales/Av Debtors x 365
Av Debtors/Total Sales x 365
Av Debtors/Credit Purchases x 365
20
Cashflow Cover is a measure of a firm's ability to meet its short term obligations with
Current Assets
Total Cashflow
Total Assets
Operating Cashflow
