Multiplying profit margin by asset turnover and by the equity multiplier gives which ratio?
Correct answer A. Return on equity
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Finance MCQs
Page 20 of Finance multiple-choice questions with answers. Tap an option to check yourself.
Page 20 of 25
On an NPV profile graph, what does the point where the curve crosses the horizontal axis indicate?
Correct answer A. Internal rate of return
Which method should be used to evaluate mutually exclusive projects that differ in scale of production or time of completion?
Correct answer D. Net present value method
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When a company has low earning power and high interest costs, what effect does this have?
Correct answer C. Low return on assets
When evaluating independent projects, what do the internal rate of return and net present value methods lead to?
Correct answer B. Same decisions
Dividing the price per share by earnings per share gives which ratio?
Correct answer D. Price-earnings ratio
Dividing total assets by common equity gives which measure?
Correct answer B. Equity multiplier
What are companies that help set benchmarks classified as?
Correct answer D. Benchmark companies
Which techniques are used to identify trends in financial statements?
Correct answer D. Both A and B
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What is calculated by dividing the price per share by the cash flow per share?
Correct answer D. Price to cash flow ratio
Dividing net income available to common stockholders by total assets gives which measure?
Correct answer B. Return on total assets
If the price per share is $30 and earnings per share are $3.5, what is the price-earnings ratio?
Correct answer A. 8.57 times
If net income available to stockholders is $125 and the equity base used is $1,096, what is the return on common equity?
Correct answer C. 11.40%
Which technique is used in comparative analysis of financial statements?
Correct answer D. Common size analysis
What does the Capital Asset Pricing Model calculate?
Correct answer C. Return
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What is the full form of BCCI?
Correct answer B. Bank of Credit and Commerce International
Which formula expresses the Rule of 72 as a shortcut method?
Correct answer A. 72 divided by the annual interest rate
In a sample of 100 students, the standard deviation of examination results is 14. How could the standard error be calculated?
Correct answer A. Dividing the standard deviation by the square root of the number of items in the sample
If a company revalues its fixed assets, what happens to its current ratio?
Correct answer B. It remains unaffected
How is an asset best described?
Correct answer C. Use of funds