Lesson 3.7.2

3.7.2 Analysing internal position: financial ratio analysis Quiz: AQA Business, Unit 7

20 questions

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Lesson 3.7.2, Analysing internal position: financial ratio analysis: 20 multiple choice questions for the AQA Business (7132), Unit 7: Analysing the strategic position of a business, written with Revision Ninja.

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The 20 questions

  1. Which ratio compares operating profit to the long-term capital invested in a business?

    • ROCE
    • Gearing ratio
    • Current ratio
    • Inventory turnover
  2. Which ratio is used to measure the short-term liquidity of a business?

    • Payables days
    • Current ratio
    • ROCE
    • Gearing ratio
  3. Which ratio measures the proportion of long-term capital provided by debt?

    • Inventory turnover
    • ROCE
    • Gearing ratio
    • Current ratio
  4. Which factor is measured by the receivables days ratio?

    • Customer payment time
    • Supplier payment time
    • Order lead time
    • Stock holding duration
  5. Which factor is measured by the payables days ratio?

    • Supplier payment time
    • Customer payment time
    • Stock holding time
    • Debt repayment time
  6. Which ratio shows how many times stock is sold and replaced annually?

    • Inventory turnover
    • Receivables days
    • Current ratio
    • Payables days
  7. A business has operating profit of 180,000 pounds and capital employed of 1,200,000 pounds. What is its ROCE?

    • 15%
    • 6.7%
    • 150%
    • 22%
  8. A business has current assets of 450,000 pounds and current liabilities of 300,000 pounds. What is its current ratio?

    • 150
    • 2.5
    • 1.5
    • 0.67
  9. Revenue is 900,000 pounds and trade receivables are 60,000 pounds. What are the receivables days?

    • 24.3 days
    • 54 days
    • 365 days
    • 6.7 days
  10. Cost of sales is 540,000 pounds and trade payables are 45,000 pounds. What are the payables days?

    • 30.4 days
    • 12 days
    • 540 days
    • 83.3 days
  11. Cost of sales is 600,000 pounds and average inventory is 75,000 pounds. What is the inventory turnover?

    • 525,000 times
    • 0.125 times
    • 12 times
    • 8 times
  12. Long-term loans are 400,000 pounds and capital employed is 1,600,000 pounds. What is the gearing ratio?

    • 400%
    • 25%
    • 40%
    • 4%
  13. What is the primary risk if a firm's current ratio falls from 2.0 to 0.8?

    • Over-trading
    • Liquidity shortage
    • Falling profit margins
    • Higher interest costs
  14. What is the main consequence of a firm's receivables days rising from 30 to 55?

    • Increased credit limit
    • Lower sales costs
    • Cash flow pressure
    • Higher inventory costs
  15. What is the primary financial risk associated with a high gearing ratio?

    • Lower customer payments
    • Increased interest burden
    • Reduced dividend caps
    • Lower inventory turnover
  16. Which factor represents a major limitation of financial ratio analysis?

    • Uses balance sheets
    • Ignores qualitative factors
    • Cannot show trends
    • Requires complex maths
  17. What causes a firm's ROCE to fall while operating profit increases?

    • Operating expenses decreased
    • Revenue growth accelerated
    • Non-current liabilities fell
    • Capital employed increased
  18. Why might a very high current ratio of 4.0 be considered inefficient?

    • Excessive borrowing
    • Excess idle cash
    • High interest costs
    • Low gross profit
  19. What happens to shareholder returns if borrowed capital at 8% yields a 15% ROCE?

    • Returns stay unchanged
    • Returns decrease
    • Returns increase
    • Dividends drop
  20. What risk increases when a firm's inventory turnover falls from 8 to 4 times?

    • Stock obsolescence
    • Faster payment terms
    • Higher sales volume
    • Lower holding costs

All AQA Business quizzes