Operating Cycle Multiple Choice Questions (MCQs) PDF Download - 28

Manufacturing companies break-down the manufacturing process into different operational steps to complete the process. The operating cycle consists of

1. Raw material, work in progress, finished goods, sales
2. Cash, raw material, work in process, finished goods, sales, cash
3. Raw material, work in process, finished goods
4. Cash, raw material, work in process, finished goods, sales

The standard industry rate for comparison while using acid-test ratio is

1. (1:1)
2. (1:3)
3. (2:1)
4. (3:2)

Excess or redundant working capital in a company is considered bad because

1. Share value may fall due to low return on the investments
2. Banks will be hesitant in providing loans
3. The assets will be less utilized
4. All of the above

Major financial ratios which are generally used to understand the overall performance of the entity are

1. Liquidity ratios, profitability ratios, debt ratios, operating performance ratios, cashflow ratios,
2. Liquidity ratios, profit ratios, debt ratios, Asset ratios, cashflow ratios, growth ratios
3. Liquidity ratios, debt ratios, cash ratios, performance ratios
4. Liquidity ratios, profitability ratios, debt ratios, cash ratios, inflation ratios

Ratios are helpful in assessing different aspects of a company's performance. Financial ratio is defined as a comparison of

1. Budgeted value with the actual value
2. Actual value with the estimated value
3. Financial data of the company with similar industry's values
4. One financial bit to another