Financial Analysis and Planning - Ratio Analysis

30 original practice MCQs, 2 marks each. Practice and separate-test stems differ. Standalone drills across the chapter, with a separate case-based test pack.

Original practice, not official ICAI questions or suggested answers. Scores are temporary and not synced to Study Hub. Contract/current-rule/accounting/tax boundaries are included in the review pack.

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FM-C03-P001 · 2 marks

CA 48, CL 24. Current ratio?

A. 72:1. B. 24:1. C. 0.5:1. D. 2:1.

Explanation

Correct answer D: 2:1.

48/24=2.

FM-C03-P002 · 2 marks

CA 60 includes stock 20 and prepaids 4; CL 24. Quick ratio excluding both?

A. 1.5:1. B. 1.6667:1. C. 0.6667:1. D. 2.5:1.

Explanation

Correct answer A: 1.5:1.

(60-20-4)/24=1.5.

FM-C03-P003 · 2 marks

Cash 3, available marketable securities 2, CL 20. Cash ratio?

A. 0.15:1. B. 0.25:1. C. 4:1. D. 1:1.

Explanation

Correct answer B: 0.25:1.

(3+2)/20=.25.

FM-C03-P004 · 2 marks

CA 50, CL 30 including short bank 8. Conventional CA-CL working capital?

A. Rs 28 lakh without labelling a variant. B. Rs 80 lakh. C. Rs 20 lakh. D. Rs 8 lakh.

Explanation

Correct answer C: Rs 20 lakh.

50-30=20; bank exclusion is a distinct requested variant.

FM-C03-P005 · 2 marks

Liquid available assets 15; cash operating cost 0.3 per day. Defense interval?

A. 5 days. B. 45 days. C. 50 days. D. A guaranteed payment holiday of 50 days.

Explanation

Correct answer C: 50 days.

15/.3=50 under stated assumptions.

FM-C03-P006 · 2 marks

Long interest debt 30, short interest debt 10, trade liabilities 15; equity 50. Interest-debt/equity?

A. 1.25:1. B. 0.8:1. C. 1.1:1 using all outside liabilities. D. 0.6:1 using long debt only.

Explanation

Correct answer B: 0.8:1.

(30+10)/50=.8; debt definition explicit.

FM-C03-P007 · 2 marks

Ordinary funds 60, preference 10, assets 100. Proprietary ratio includes both share classes. Result?

A. 10%. B. 60%. C. 143%. D. 70%.

Explanation

Correct answer D: 70%.

(60+10)/100=70%.

FM-C03-P008 · 2 marks

Preference 10, interest debt 30, ordinary funds 80. Case gearing=(preference+interest debt)/ordinary funds?

A. 2:1. B. 0.375:1. C. 0.125:1. D. 0.5:1.

Explanation

Correct answer D: 0.5:1.

40/80=.5.

FM-C03-P009 · 2 marks

EBIT 24 and interest 6. Times interest earned?

A. 0.25. B. 4. C. 30. D. 3 from EBT/interest.

Explanation

Correct answer B: 4.

24/6=4; principal not covered by this ratio alone.

FM-C03-P010 · 2 marks

Case DSCR=(PAT 12+depreciation 4+interest 2)/(interest 2+principal 4). Result?

A. A guarantee of cash available. B. 3 times. C. 2 times from PAT only. D. 9 times ignoring principal.

Explanation

Correct answer B: 3 times.

18/6=3 on defined proxy.

FM-C03-P011 · 2 marks

Opening/closing stock 8/12; COGS 80. COGS/average inventory turnover?

A. 10 using opening only. B. 0.125 times. C. 6.6667 using closing only. D. 8 times.

Explanation

Correct answer D: 8 times.

Average 10; 80/10=8.

FM-C03-P012 · 2 marks

Inventory turnover 8 times, 360-day year. Stock period?

A. 2880 days. B. 8 days. C. 45 days. D. 40 days.

Explanation

Correct answer C: 45 days.

360/8=45.

FM-C03-P013 · 2 marks

Sales 120 include cash sales 30; average debtors 15. Net-credit-sales debtor turnover?

A. 0.1667 times. B. 2 from cash sales. C. 8 from all sales. D. 6 times.

Explanation

Correct answer D: 6 times.

(120-30)/15=6.

FM-C03-P014 · 2 marks

Credit sales 90, average debtors 15, 360-day year. Collection period?

A. 5400 days. B. 6 days. C. 60 days. D. 45 days.

Explanation

Correct answer C: 60 days.

15/90 x 360=60.

FM-C03-P015 · 2 marks

COGS 75, opening stock 10, closing 15; all purchases credit/no adjustments. Purchases?

A. Rs 80 lakh. B. Rs 70 lakh. C. Rs 100 lakh. D. Rs 75 lakh.

Explanation

Correct answer A: Rs 80 lakh.

75-10+15=80.

FM-C03-P016 · 2 marks

Credit purchases 80, average creditors 10, 360 days. Payment period?

A. 80 days. B. 36 days. C. 45 days. D. 8 days.

Explanation

Correct answer C: 45 days.

10/80 x 360=45.

FM-C03-P017 · 2 marks

Stock 40 days, collection 50, payment 30. Net cash cycle?

A. 10 days. B. 120 days. C. 90 days. D. 60 days.

Explanation

Correct answer D: 60 days.

40+50-30=60.

FM-C03-P018 · 2 marks

Sales 125, markup 25% on cost. Gross profit/sales margin?

A. 25%. B. 20%. C. 31.25%. D. 100%.

Explanation

Correct answer B: 20%.

Cost 100, GP 25; 25/125=20%.

FM-C03-P019 · 2 marks

Sales 100, COGS 60, operating expense 20, interest 5. EBIT?

A. Rs 5 lakh. B. Rs 40 lakh. C. Rs 20 lakh. D. Rs 15 lakh.

Explanation

Correct answer C: Rs 20 lakh.

100-60-20=20 before interest.

FM-C03-P020 · 2 marks

EBIT 20; average capital employed 100. Pre-tax ROCE?

A. 20%. B. 5%. C. 100%. D. A guaranteed return on market investment.

Explanation

Correct answer A: 20%.

20/100=20%; accounting return not promised cash yield.

FM-C03-P021 · 2 marks

EBIT 20, interest 4, tax rate 25% on EBT. Post-tax unlevered EBIT(1-t) numerator?

A. Rs 15 lakh. B. Rs 12 lakh PAT alone. C. Rs 24 lakh. D. Rs 16 lakh from PAT+gross interest.

Explanation

Correct answer A: Rs 15 lakh.

20 x.75=15; PAT 12+after-tax interest 3=15.

FM-C03-P022 · 2 marks

PAT 18, preference dividend 3, ordinary equity 60. Ordinary ROE?

A. 5%. B. 30%. C. 21.4286% with preference capital assumed. D. 25%.

Explanation

Correct answer D: 25%.

(18-3)/60=.25.

FM-C03-P023 · 2 marks

Net margin 8%, asset turnover 1.5, equity multiplier 2. ROE?

A. 24%. B. 16%. C. 12%. D. 3.5%.

Explanation

Correct answer A: 24%.

8% x 1.5 x 2=24%.

FM-C03-P024 · 2 marks

Equal margin/turnover but a higher equity multiplier yields higher arithmetic ROE. What is unsupported?

A. Same ROE can conceal different components. B. Operating efficiency necessarily improved. C. Risk/interest need review. D. Multiplier drives the stated difference.

Explanation

Correct answer B: Operating efficiency necessarily improved.

Leverage is not itself margin/asset efficiency.

FM-C03-P025 · 2 marks

PAT 12 lakh, preference dividend 2 lakh, 200000 weighted shares. EPS?

A. Rs 5. B. Rs 0.5. C. Rs 10. D. Rs 6.

Explanation

Correct answer A: Rs 5.

1000000/200000=5.

FM-C03-P026 · 2 marks

EPS Rs 8, DPS Rs 3.2. Payout?

A. 60%. B. 2.5 times payout. C. 40%. D. 25%.

Explanation

Correct answer C: 40%.

3.2/8=.4.

FM-C03-P027 · 2 marks

Price Rs 48, EPS Rs 6. P/E?

A. Rs 288. B. 8 times, not guaranteed cash payback. C. A guaranteed 8-year recovery. D. 12.5%.

Explanation

Correct answer B: 8 times, not guaranteed cash payback.

48/6=8; future cash/dividends/price are not guaranteed.

FM-C03-P028 · 2 marks

DPS 2, current price 40, initial price 30. Pure current-price dividend yield?

A. 5%. B. 40% including price gain. C. 6.6667% based on a different price. D. 20%.

Explanation

Correct answer A: 5%.

2/40=5%; total holding return is distinct.

FM-C03-P029 · 2 marks

EPS zero and positive price. P/E treatment?

A. 1. B. Not meaningful as a finite ratio; do not label zero or cheap. C. Automatically infinite investment profit. D. 0.

Explanation

Correct answer B: Not meaningful as a finite ratio; do not label zero or cheap.

Division by zero is not a valid finite multiple.

FM-C03-P030 · 2 marks

Verified annual time-weighted stock average is much greater than opening/closing mean. What fits?

A. Disclose representative averages and compare consistent bases. B. Use boundary mean as guaranteed typical stock. C. Ignore all seasonal information. D. Higher turnover is always optimal.

Explanation

Correct answer A: Disclose representative averages and compare consistent bases.

Closing figures can distort exposure.