Q.1. Which of the following transactions and events would result in a deterioration in Price to earnings ratio?

A.issuing shares for cash

B. acquiring cash proceeds from a 10-year reducing balance loan

C. purchasing inventory on credit

D. A and B only

E. A and C only

F. B and C only

G. All of the above

H. None of the above


Q.2. which of the following transactions and events would result in a deterioration in Days Purchases Outstanding?

A. the receipt of cash for dividends from other entities

B. acquiring cash proceeds from a 10-year reducing balance loan

C. the purchase of machinery financed entirely by a reducing-balance bank loan

D. A and B only

E. A and C only

F. B and C only

G. All of the above

H. None of the above

Q.3. which of the following transactions and events would result in an improvement in Interest Coverage Ratio?

A. purchasing inventory for cash

B. a payment to a supplier for amounts owing on inventory previously purchased on credit

C.receiving cash for interest revenue previously accrued

D. A and B only

E. A and C only

F. B and C only

G. All of the above

None of the above

Q.4. which of the following transactions and events would result in a deterioration in Gross Profit Margin ?

A. payment to acquire shares in another business as a long-term investment

B. the payment of a dividend to the entity’s shareholders

C. an adjustment for accrued interest on a loan at the end of the period

D. A and B only

E. A and C only

F. B and C only

G. All of the above

H. None of the above

Q.5. which of the following transactions and events would result in an improvement in Quick Ratio?

A. making a payment of principal and annual interest on a reducing balance loan

B. issuing shares for cash

C. an adjustment for wages owing at the end of the period

D. A and B only

D. A and C only

E. B and C only

F. All of the above

G. None of the above