BUSINESS MATH SUMMATIVE ASSESSMENT

1. What is main component of operating expense?

Wrong answer: selling expenses
Other answer: Production expenses, Distribution expenses, none of given
2. Felton Farm Supplies, Inc , has an 8 percent return on total assets of 300,000 and a
net profit margin of 5 percent. What are its sales?
Wrong answer: $3,750,000
Other answer: $300,000 / $480,000 / $1,500,000
3. It is one of the tools used to analyze and measure the profitability of the company
if changes were introduced in the form of pricing and production volume and
launching of new products and the like
Wrong answer: Profitability ratio analysis
Other answer: Break-even analysis, Income Analysis, Financial Statement
4. Analysis and interpretations of the financial statement will reveal _______
Correct answer: Both
5. The gross profit margin is unchanged but the net profit margin declined over the
same period. This could have happened if
Wrong answer: cost of goods sold increased to relative to sales
Other answers: sales increased relative to expenses, the Congress increased the tax
rate, dividends were decreased
6. Paul Mabait’s report from sales of car accessories and spare parts for the month
of April was P168,234.50, cost of goods sold P118,097.12 sales returned P5,596,
salaries P8,960.35, rental P15,000, light and water bills P14,950.20, and
miscellaneous expenses P12,680.36. Find the gross profit and net profit or loss.
Correct answer: P50,137.38, P(7,049.50)
7. Find the rate of discount for a snowboards listed at P280.00 with discount of
P67.20
Wrong answer: 24%
Other answer: 0.24 / 24.00% / all of these
8. It is used to quantify various characteristics of a company’s performance such as
efficiency and profitability
Correct answer: Financial ratio
9. When all is said and done, the question is how well did the business do, the real
score is found on
Wrong answer: Cash Flow Statement
Other answer: Balance Sheet, All of the given answer, Income Statement or Profit
and Loss Statement
10. Alia Beauty Center has gross profit of P850,00 and net sales of P1,500,000.00.
Her gross profit margin is
Wrong answer: 56%
Other answer: 56.67% / 50% / 57%
11. _______ is an agreement that shows the order in which the basic math
operations should be performed
Wrong answer: Basic standard operation
Other answer: Needed basic operation, Standard order of operations, all of these
12. A manufacturer can cover the its cost and make a reasonable profit it it sells an
article for P63.70. At what price should the article be listed so that a discount of 30%
can be allowed?
Wrong answer: P19.11
Other answer: P91 / P90 / P82.81
13. Compucorp brought an electronic calculators for resale. It costs P42.00 and sells
for P56.00. Determine the mark up, operating expenses and profit.
Correct answer: P14.50, P10.08, P4.42
14. Which of the following statements (in general) is correct?
Wrong answer: An increase in net profit margin with no change in sales or assests
means a poor ROI
Other answers: The higher the tax rate for a firm the lower the interest coverage
ratio, A low receivables turnover is desirable, The lower the total debt-to-equity-
ratio, the lower the financial risk for a firm
15. _____pay is the amount the worker takes home after all deductions
Correct answer: Net
16. Retained earnings for the “base year” equals 100.0 percent. You must be looking
at
Correct answer: an indexed balance sheet
17. Kanji Company had sales last year of $265 million, including cash sales of $25
million. If its average collection period was 36 days, its ending accounts receivable
balance is closest to (Assume a 365-days year)
Wrong answer: $18.7 million
Other answer: $7.4 million / $23.7 million / $26.1 million
18. Which profit margin measures the overall operating efficiency of the firm?
Wrong answer: Net profit margin
Other answer: Gross profit margin, Return on equity, Operating profit margin
19. Net profit ratio shows the relation between net profits and ______
Correct answer: Net sales
20. Calculate the value according to the accounting equation. Assets P659,250.00,
Liabilities P212,752 00 Owner’s Equity _______
Correct Answer: P446,488.00
21. The technique of converting figures into percentage in some common base is
called
Wrong answer: Common size statement analysis
Other Answer: Ratio analysis, price discounts, Trend percentages
22. Which of the following is technique of financial statement analysis?
Correct answer: All of the above
23. A company can improve (lower) its debt-to-total assets ratio by doing which of
the following?
Wrong answer: Shift short-term to long-term debt
Other answer: Borrow more, Shift long-term to short-term debt, Sell common stock
24. The comparative income statement shows the increase or decrease of______
over the previous year
Correct answer: all the above
25. Determine a firm’s total asset turnover (TAT) if its net profit margin (NPM) is
percent, total assets are $8million, and ROI is 8 percent
Correct answer: 1.60
26. What is the most widely used liquidity ratio?
Correct answer: current ratio
27. ABC Company has Operating expenses of P318,500, Earning before taxes is
P529,600 00 Net sales is P1,500,000. Find the Operation expense margin.
Wrong answer: 21%
Other answer: 21.23%, 21.25%, 22%
28. Why is the quick ratio a more rigorous test of short-term solvency than the
current ratio?
Wrong answer: The quick ratio considers only cash and-marketable securities as
current assets
Other answer: The quick ratio eliminates inventories from the numerator,
The quick ratio eliminates prepaid expenses for the numerator, The quick ratio
eliminates prepaid expenses for the denominator.
29. Fixed Cost are those cost incurred regardless of the volume of production.
Examples of fixed cost are
Correct answer: All of the given answer
30. The formula or equation to find operating expenses margin is
Wrong answer: Net Profit= Net Profit/Net sales
Other answer: Operating Profit Margin=Operating Profit/Net Sales
Gross Profit=Gross Profit/Net Sales
Operating Expenses Margin=Operating Expenses/Net sales
31. What level of operating ratio is ideal?
Wrong answer: Low
Other answer: Average, High, Very high
32. When the business opportunities come, it is important to be able to assess them
as good or bad for your firm and the tools to analyze and measure the profitability of
the company if changes occur where there is no loss nor gain in the company’s
operation is called…
Correct answer: Break-even analysis
33. It is the mathematical relationship of financial statement values and used to
quantify various characteristics of a company’s performance such efficiency and
profitability.
Correct answer: Financial Ration
34. Which of the following is technique of financial statement of analysis
False answer: Trend analysis
Other answer: Comparative statement, Common size statement, All of the above
35. Find the net profit margin of XYZ Company given the following Net Sales
P1,500,000 00 Net income P511,111 00
Correct answer: 34.07%
36. Using financial ratios, the owner of ADS Eye Center wants to find out whether or
not the business is doing good. The Gross Profit of the business is P850,000 and the
Net Sales P1,500,000. The Gross Profit Margin is
Correct answer: 56.67%
37. What is the cost of an article selling for P65.00 if the mark up is 30% of selling
price?
Correct answer: P45.50
38. When doing an “index analysis” we should expect that changes in a number of
the firm’s current asset and liabilities accounts(e g, cash, accounts receivable, and
accounts payable) would move roughly together with for a normal, well run
company.
Wrong answer: earnings before interest and taxes (EBIT)
Other answer: earning before taxes(EBT), net sales, cost of good sold
39. In what way the ratio analysis help the management?
Correct answer: All the above
40. Liquidity ratio indicates the ability of the company to meet its_____
Correct answer: Tax liability
41. Which of the following would NOT improve the current ratio?
Correct answer: Borrow short term to finance additional fixed assets
42. The line symbolizes division
Correct answer: Fraction line
43. An item listed at P150 00 is subject to the discount series of 20% 10% and 5%.
Determine the net place
Wrong answer: P105.00
Other answer: P101.00 / P102.60 / 102.00
44. Audio World buys outdoor speakers at a cost of P84.00 each. Operating expenses
of the business are 25% of cost and the owner requires a profit of 10% of cost. How
much should Audio World sell these speakers?
Correct answer: P113.40
45. Palo Alto Industries has a debt to-equity ratio of 1.6 compared with the industry
average of 1.4. This means that the company
Correct answer: has grater than average financial risk when compared to other firms
in its industry
46. The formula or equation to calculate the gross profit margin is
Wrong answer: Operating Expenses Margin=Operating Expenses/Net Sales
Other answer: Net Profit Margin=Net Profit/Net Sales
Gross Profit = Gross Profit/Net Sales
Operating Profit Margin=Operating Profit/Net Sales
47. An item listed at P80.00 is a subject to a trade discount of 25%. What is the
amount of discount and the net price
Wrong answer: P20,P80
Other answer: P30,P60/ P20,P80/ P20, 60
48. What is the selling price of an article costing P72.00 if the markup is 40% of cost?
Wrong answer: P28.90
Other answer: P128.00, P180.00, P100.80
49. Krisle and Kringle’s debt-to-total assets(D/TA) ratio is 4. What is its debt-to-
equity (D/E) ratio?
Wrong answer: 6
Other answer: 667/ 2/ 333
50. Which of the following technique shows the financial condition of a business in a
simplified manner?
Wrong answer: Balance sheet
Other answer: Cash Flow, Ratios, Funds flow