Podcast
Questions and Answers
What is the primary purpose of financial ratio analysis?
What is the primary purpose of financial ratio analysis?
- To analyze non-financial matters and priorities
- To provide legal protection against copying creations or inventions
- To determine the return on investments (correct)
- To reveal the historical accounts of a firm
Which financial ratio measures a business's profitability based on direct costs?
Which financial ratio measures a business's profitability based on direct costs?
- GPM = gross profit/sales revenue *100 (correct)
- Current ratio
- Return on investments ratio
- NPM = NPBIT/sales revenue*100
What are the limitations of final accounts mentioned in the text?
What are the limitations of final accounts mentioned in the text?
- They provide legal protection against copying creations or inventions
- They do not reveal anything about the firm's non-financial matters or priorities
- They reflect the current year or future performance of the firm
- Human resource is not considered in the analysis (correct)
Why is net profit margin (NPM) calculated before interest and tax?
Why is net profit margin (NPM) calculated before interest and tax?
What is the main advantage of using the future value formula for investment appraisal?
What is the main advantage of using the future value formula for investment appraisal?
What is the limitation of using the future value formula for investment appraisal?
What is the limitation of using the future value formula for investment appraisal?
What is the purpose of using a discount factor in investment appraisal?
What is the purpose of using a discount factor in investment appraisal?
In investment appraisal, what does a positive net present value (NPV) indicate?
In investment appraisal, what does a positive net present value (NPV) indicate?
Why is budgeting important for Quay’s Hair Salon Inc based on the given information?
Why is budgeting important for Quay’s Hair Salon Inc based on the given information?
What is the purpose of preparing financial statements for businesses?
What is the purpose of preparing financial statements for businesses?
What does investment appraisal refer to based on the given information?
What does investment appraisal refer to based on the given information?
Why do businesses adjust the value of assets at the end of their operations?
Why do businesses adjust the value of assets at the end of their operations?
