Financial Analysis and Planning - Ratio Analysis

30 original test MCQs, 2 marks each. Practice and separate-test stems differ. T001-T010 use one shared case below; T011-T030 stand alone.

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.

Not scored yet.

Cedar Manufacturing: shared case for T001-T010

Shared case: Cedar Manufacturing, T001-T010 All financial amounts are Rs lakh. Current assets: inventory 20, receivables 15, cash 5; no prepaids. Current liabilities: trade payables 15 and short bank borrowing 5. Fixed assets 60. Ordinary capital plus reserves 50; long interest debt 30. No preference capital or other items. Assets and funding both total 100. Opening/closing assets and ordinary equity are identical, so use those averages. Annual sales 120 include cash sales 30. COGS 72, operating expenses 24 (including depreciation 6), interest 4, and tax 5. No non-operating items. Opening/closing inventory 16/20; receivables 9/15; payables 9/15. Net credit purchases are independently supplied as 76. Use 360 days. Current/quick ratios include both current liabilities; quick excludes inventory. Inventory turnover uses COGS/average stock; debtors use net credit sales/average receivables; creditors use net credit purchases/average payables. Ordinary ROE uses PAT/average ordinary equity. These are case conventions, not regulatory minimums or guarantees of cash payment. Each question is independently scored.

Quarter cash item	Rs lakh
Total assets	100
Current assets	40
Current liabilities	20
Sales	120
COGS	72
Operating expenses	24

FM-C03-T001 · 2 marks

Read shared case

Cedar current ratio?

A. 0.5:1. B. 5:1. C. 2:1. D. 1.5:1.

FM-C03-T002 · 2 marks

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Cedar quick ratio?

A. 1:1. B. 0.25:1. C. 1.3333:1 excluding short bank. D. 2:1.

FM-C03-T003 · 2 marks

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Conventional working capital?

A. Rs 60 lakh. B. Rs 20 lakh. C. Rs 25 lakh unlabelled bank-exclusion variant. D. Rs 40 lakh.

FM-C03-T004 · 2 marks

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Annual EBIT?

A. Rs 20 lakh. B. Rs 15 lakh. C. Rs 48 lakh. D. Rs 24 lakh.

FM-C03-T005 · 2 marks

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Annual PAT?

A. Rs 15 lakh. B. Rs 24 lakh. C. Rs 20 lakh. D. Rs 19 lakh.

FM-C03-T006 · 2 marks

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Interest coverage?

A. A cash guarantee of six instalments. B. 6 times. C. 5 times. D. 3.75 times.

FM-C03-T007 · 2 marks

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Inventory turnover on specified average-cost basis?

A. 6.6667 times from sales. B. 3.6 times from closing stock. C. 8 times. D. 4 times.

FM-C03-T008 · 2 marks

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Average collection period?

A. 36 days from all sales. B. 60 days from closing debtors. C. 30 days. D. 48 days.

FM-C03-T009 · 2 marks

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Average creditor payment period?

A. About 56.84 days. B. 48 days. C. 71.05 days using closing payables. D. 60 days using COGS.

FM-C03-T010 · 2 marks

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Ordinary ROE?

A. 20%. B. 15%. C. 48%. D. 30%.

FM-C03-T011 · 2 marks

A 2:1 current ratio dominated by slow stock/receivables proves which conclusion?

A. No guaranteed ability to meet every scheduled payment. B. All payments are safe. C. Every asset converts immediately. D. No cash forecast is needed.

FM-C03-T012 · 2 marks

CA 40, CL 20. Pay 10 of current liability using cash. New current ratio?

A. 1.5:1. B. 2:1. C. 3:1. D. 1:1.

FM-C03-T013 · 2 marks

Outside liabilities 60 include interest debt 40; ordinary equity 80. Outside/equity and interest-debt/equity?

A. 0.75 and 0.5 respectively. B. 1.3333 and 2. C. Both 0.5. D. Both 0.75.

FM-C03-T014 · 2 marks

Assets 150, all current liabilities 30. Case capital employed=assets-CL. Amount?

A. Rs 120 lakh. B. Rs 30 lakh. C. Rs 180 lakh. D. Rs 150 lakh.

FM-C03-T015 · 2 marks

Specified numerator is PAT+depreciation+interest. Tax is separately shown. What should not be done?

A. Use specified numerator. B. Assess cash conversion. C. Add tax without changing/disclosing the specified convention. D. Include principal due in denominator.

FM-C03-T016 · 2 marks

Sales 200 include cash 80; debtors average 20. Net-credit debtor turnover?

A. 0.1 times. B. 4 times. C. 6 times. D. 10 times.

FM-C03-T017 · 2 marks

Debtor turnover 5, exercise 365-day year. Collection days?

A. 1825. B. 72 using 360 without disclosure. C. 73. D. 5.

FM-C03-T018 · 2 marks

Raw consumption 36, average raw stock 6. Turnover?

A. Use finished sales regardless. B. 0.1667 days. C. 36 times. D. 6 times.

FM-C03-T019 · 2 marks

A ratio uses sales/working capital but working capital is zero. What fits?

A. A safe 1:1 ratio. B. Best possible efficiency. C. Do not fabricate a finite turnover; explain undefined base and assess context. D. Turnover zero.

FM-C03-T020 · 2 marks

Sales 80, COGS 60, operating expenses 12. Gross and EBIT margins?

A. 10% and 25%. B. 25% and 10%. C. Both 25%. D. 75% and 15%.

FM-C03-T021 · 2 marks

EBIT 30, tax rate 20%, average capital 120. Specified post-tax unlevered ROCE?

A. 20%. B. 30%. C. 6%. D. 25%.

FM-C03-T022 · 2 marks

A:margin 10%, turnover 1, multiplier 2. B:5%, 2, 2. Correct comparison?

A. B automatically better investment. B. Both ROE 20%, with different margin/turnover drivers. C. Identical businesses and riskguaranteed. D. A 40%, B 10%.

FM-C03-T023 · 2 marks

Removing multiplier from PAT-based DuPont is claimed to show guaranteed debt-free ROE. Error?

A. All PAT isbefore interest. B. Changing finance can change interest/tax/PAT; unchanged PAT is not a proven debt-free counterfactual. C. Multiplier never matters. D. Asset turnover is interest expense.

FM-C03-T024 · 2 marks

100000 shares full year plus 100000 for last 3 months; ordinary earnings 10 lakh. Case weighted EPS?

A. Rs 12.5. B. Rs 8. C. Rs 10 ignoring new shares. D. Rs 5 from closing shares.

FM-C03-T025 · 2 marks

Buy 40, sell 44, dividend 2. Total holding return ignoring tax/cost?

A. 10% total return. B. 46%. C. 15%, notpure dividendyield. D. 5% total return.

FM-C03-T026 · 2 marks

Ordinary net worth 60 lakh, 300000 shares, price Rs 50. Market/book?

A. 0.4 times. B. Rs 150 lakh/share. C. A guaranteed overvaluation sell rule. D. 2.5 times.

FM-C03-T027 · 2 marks

Q 1.4 on supplied market/replacement-costbase establishes?

A. All accounting assets worth 1.4 times cash. B. Certain future profit. C. Certain overvaluation. D. Market measure exceeds that replacement estimate, not conclusive mispricing.

FM-C03-T028 · 2 marks

Sales rise 20% but operating profit falls 10%. What is justified?

A. All costs must fall. B. Investigate costs/mix/margins rather than call every aspect improved. C. Sales growth guarantees profit improvement. D. Permanent insolvency is proved.

FM-C03-T029 · 2 marks

Old depreciated assets produce a higher sales/net-fixed asset ratio than new assets. Which claim is unsafe?

A. Compare consistent bases. B. Inspect capacity and performance. C. Operating efficiency must be superior solely from that ratio. D. Asset age/measurement matter.

FM-C03-T030 · 2 marks

A supplier gets only P/E while payment timing data are absent. Appropriate next evidence?

A. Only one additional share price tick. B. No evidence because P/E settles all claims. C. A guaranteed P/E safe threshold. D. Liquidity, collection/payable timing and payment history.