30 Questions
What is the first step for a management team to achieve results through the efforts of others?
Set the strategic direction
Why must a company's management plan for unexpected events even if they are unlikely to occur?
Many improbable unexpected events can have a significant effect on the business operations
Which organisational structure can inhibit management's ability to take decisions thus adversely affecting the company's performance and credit risk?
A centralised decision-making process
Which element in the development of a business plan would indicate a high degree of management risk?
Reports on progress implementation are often late
How does the income from a partnership firm differ from LLP income?
Partnership firm income stays within the firm, while LLP income is personal income for the partners
Which of the following is NOT a reason why a company's management must plan for unexpected events?
To ensure the company can easily meet its business objectives
What happens to a partnership firm when a partner dies?
The partnership firm continues to exist.
Which of the following statements about LLPs and partnership firms is correct?
An LLP is a separate legal entity, but a partnership firm is not.
Which Act governs the operations of an LLP?
The Limited Liability Partnership Act
What is the short-term financing gap for a company with 47 trade receivables days, 68 inventory days, and 63 trade payables days?
52 days
Which is the first step for a management team to achieve results through the efforts of others?
Set the strategic direction
Which non-fund-based lending facility guarantees a one-time payment for a buyer of goods and services?
Letter of credit
What is the definition of Common Equity Capital?
The highest quality component of capital
Which statement concerning the impact of foreign competition on debt repayment is most accurate?
High foreign competition leads to decreased cash flow and decreased ability to repay debt as scheduled.
Which item would be correctly classified as a current asset?
A receivable due from a customer in 9 months
In the corporate governance process, who is responsible for determining overall business strategy by hiring managers and staff to help operate the business?
Board of directors
What determines the number of operating cycles that a business will have?
The nature of the business
Which of the following ratios compares liabilities to capital?
The debt-to-equity ratio
What can be inferred about a company with positive cash flow from operations that is borrowing and investing?
It is in the growth stage, expanding operations
If a company's net sales were INR 1,25,00,885 for FYE 1, INR 1,37,45,473 for FYE 2, and INR 1,40,25,992 for FYE 3, what was the sales growth for FYE 3 compared to FYE 2?
2.04%
Which action by a borrower's management could adversely affect its cash flow and ability to meet obligations?
Increasing the rate of depreciation, reducing net income
What is the impact of low market entry barriers on competition within an industry and the financial performance of businesses operating within it?
Increased competition, decreased cash flow
Which of the following ratios can be reviewed in an initial analysis of a company's financial statements to uncover opportunities and potential risk flags?
Net income and return on equity
What is the significance of a company adopting a conservative financing strategy?
It implies a cautious approach to managing debt and financial risk
What is the calculation to determine EBITDA?
Gross profit - selling, general & administrative expenses + depreciation + amortization
If a company has sales of $5,000,000, cost of goods sold of $2,600,000, operating expenses of $1,400,000, and interest expense of $60,000, what is its operating profit?
$940,000
After how many days is a bank account considered 'out of order' if it continuously exceeds its sanctioned limit?
90 days
What is the primary reason for a lender to review external information about a company?
To evaluate opportunities and threats
For which loan products does the Reserve Bank of India regulate interest rates?
Commercial loans above $3,000
A current ratio of 1.33 indicates that:
Some current assets are funded by long-term sources
This quiz explores the distinctions between a partnership firm and a Limited Liability Partnership (LLP) including legal entity status, governing laws, and treatment of income. Test your knowledge on key differences between these two types of business structures.
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