Please answer the following MCQs
'Using the information below find the average inventory turnover for JB Ltd in days." Sales $1,800,000 Cost of sales 1,200,000 Beginning Inventory 360,000 Ending Inventory 312,000. Select one: O A. 94.9 days. O B. 102.2 days. O C. 204.4 days. O D. 68.1 days. "Does knowing the inventory turnover ratio in days for JB help me in managing the inventory of MicroSystems?" Select one: a. No - you should compare MicroSystems' inventory turnover to a benchmark figure of 90 days instead. O b. No - because MicroSystems is a much smaller business, the comparison is not relevant. O c. Yes - inventory turnover is industry specific, so this provides an upper limit for inventory turnover, and MicroSystems should attempt to reduce their average days in inventory as far as possible below this figure. O d. Yes - inventory turnover is industry specific, so this provides a benchmark figure which may help determine if MicroSystems is carrying excessive stock or not enough."If the turnover period for JB's accounts receivable is 8.1 times per annum, the average number of days it takes to collect cash from accounts receivable is:" Select one: O A. 295 days. O B. 60 days. O C. 81 days. O D. 45 days. "I need cash now! How can I manage my accounts receivable better to help with my cash flow?" Select one: O a. By offering longer credit terms and relaxed credit checks to win over more customers. O b. By immediately referring all overdue accounts to a debt collector. c. By promptly invoicing and reminding customers and considering a small discount for early settlement. O d. By only offering cash sales, instead of offering credit.MicroSystems Statement of Financial Performance For the year ended 30th June 2020 Sales revenue 683,750 Less: Cost of sales 429,100 Gross Profit 254,650 Less: Operating expenses: Advertising 11,200 Cleaning expense 1,680 Doubtful debts expense 3,740 Depreciation expense 8,202 Electricity expense 25,080 Insurance expense 4,200 Maintenance 8: repairs 3,300 Rent expense 60,000 Telecommunications expense 10,400 Training expense 1,648 Wages expense 42,750 172,200 Operating prot 82,450 Interest expense 3,600 Net prot 78 850 "What liquidity position is MicroSystems in?" Select one: O a. Poor - close to standard benchmarks, but lower than industry competitor JB O b. Good - close to standard benchmarks, and lower than industry competitor JB O c. Good - close to standard benchmarks, and higher than industry competitor JB O d. Poor - close to standard benchmarks, but higher than industry competitor JBMicroSystems Statement of Financial Position As at 30th June 2020 ASSETS Current assets Accounts receivable Less: Allowance for doubtful debts Prepaid rent Prepaid insurance Inventory Non-current assets Office Equipment Less: Accumulated depreciation Motor vehicles Less: Accumulated depreciation Fixtures 8: fittings Less: Accumulated depreciation Total assets LIABILITIES Current liabilities Bank overdraft Accrued expenses Interest payable Wages payable Accounts payable Non-current liabilities Bank loan Total liabilities Net Assets EQUITY Opening Capital Add: Profit Less: Drawings Total Equity 44,800 3,740 4,650 702 54,000 6,000 12,000 1 500 i 41,060 25,000 4,200 13 942 84,202 3,948 48,000 10 500 62 448 146,650 1,675 3,280 300 3,250 52 000 60,505 40,000 190.505 46.145 24,000 78,850 56 705 46,145 "The ratio that helps to measure the risk involved in financing a business with borrowed funds is the:" Select one: O A. asset turnover ratio. O B. profit margin ratio. O C. interest cover ratio. O D. current ratio. "Financial solvency refers to the ability of an entity to:" Select one: O A. improve sales. O B. meet its long-term obligations. O C. earn a high rate of profit. O D. Both A and B.l l I'Why are there two different liquidity ratios calculated?" Select one: Q a. The acid test ratio provides a more stringent test of liquidity, as it excludes less liquid assets such as inventory. 0 b. The current ratio provides a more stringent test of liquidity, as it includes less liquid assets such as inventory. '0 c. The current ratio provides a more stringent test of liquidity, as it excludes less liquid assets such as inventory. 0 d. The acid test ratio provides a more stringent test of liquidity, as it includes less liquid assets such as inventory. "Why do I need to monitor the liquidity of my business?" Select one: 0 O O O _a. To ensure that sufcient profit is being generated from the business operations. b. To ensure that the business can pay its short-term debts as they become due. .w c. Toensure that the resources of the business are being utilised as efficiently as possible. d. T 0 ensure that the business is not exposed to excessive risk through taking on too much longterm debt. What gearing position is MicroSystems in?" Select one: O a. MicroSystems is highly geared (more debt than equity), but has lower gearing than industry competitor JB O b. MicroSystems is not highly geared (more equity than debt), and still has lower gearing than industry competitor JB O c. MicroSystems is not highly geared (more equity than debt), but still has higher gearing than industry competitor JB O d. MicroSystems is highly geared (more debt than equity) and has higher gearing than industry competitor JB "The ratios that measure the degree of risk associated with borrowing money from outsiders to finance the business are the:" Select one: O A. liquidity ratios. B. efficiency ratios. O C. investment ratios. O D. gearing ratios
