Classical

Financial Accounting - Financial Accounting MCQ

26:  

A risk-free stock has a beta value equals

A.

- 1

B.

Zero

C.

0.5

D.

1

 
 

Option: B

Explanation :


27:  
The degree of financial leverage reflects the responsiveness of
A.

Operating income to change in total revenue

B.

EPS to change in EBIT

C.

·EPS to change in total revenue

D.

None of the above.

 
 

Option: B

Explanation :


28:  
Which one of the following is correct.
(i) Liquidity ratios measure's long term solvency of a concern.
(ii) Inventory is a part of liquidity assets.
(iii) Rule of thumb for acid test ratio is 2 : 1
(iv) The amount of gross assets is equal to net capital employed.
A.

(i), (ii) and (iv)

B.

(ii), (iii) and (iv)

C.

(i), (ii), (iii) and (iv)

D.

None of the above

 
 

Option: D

Explanation :


29:  
Accounting rate of return is the ratio of average value of
A.
profit after tax to salvage value of the investment.
B.
profit before tax to present value of the investment.
C.

profit after tax to book value of the investment.

D.
profit after tax to present value of the investment.
 
 

Option: C

Explanation :


30:  
Which of the following statement(s) regarding IRR is true?
A.
If IRR is less than the firm's cost of capital, the project should be rejected.
B.
A project can have multiple IRRs depending on the cash flow streams.
C.

A project can have only one IRR.

D.

Both (A) and (B)

 
 

Option: D

Explanation :




Suggest an improvement