Questionnaire to understand business financial understanding

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There are 20 questions, and each question will have one correct answer. This is mainly to know your understanding on how comprehensively you understand the subject – business finance.

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1. When calculating gross profit, the overheads like rent, salary, utility bills are considered.
*

5 points

True

False

16. When depreciation on an asset is not considered, what will happen? *

5 points

a. Company will have to pay more tax on the profit

b. Company will have to pay less tax on the profit

c. Company will not have to pay any tax

13. Ideally, current assets should be more than current liabilities. *

5 points

True

False

9. The gross profit margin can be increased by... *

5 points

a. Reducing the indirect expenses

b. Giving more discounts to customers

c. Collecting advance payment from customers

d. All of the above

e. None of the above

20. Ideally a company should have more money borrowed from the bank and less money invested by the business partners. *

5 points

True

False

19. It is the sole responsibility of the members of the accounts and finance department to make sure the company is profitable. *

5 points

True

False

18. The retained earnings belongs to ... *

5 points

a. Business owners

b. Business partners

c. Investors

d. Share holders

e. All of the above

f. None of the above

2. If a company is profitable then it has sufficient cash?
*

5 points

True

False

17. Ideally, when buying an equipment for a company one should know... *

5 points

a. If any discount is available

b. If the equipment is going to have a good resale value

c. The present value of the cash flow to be returned by the equipment

d. If bank loan can be availed to purchase the equipment

4. The terms revenue, sales, top line, income are all the same. *

5 points

True

False

14. Ideally, liquid current assets should be less than current liabilities. *

5 points

True

False

7. Ideally, which of the following situation should a company be in? *

5 points

a. When the cash flow is coming from company operations

b. When the operating profit margin is reducing

c. When the operating expenses are increasing

d. When the company is taking more loans at lower interest to fund the operations

3. Ideally when should sales be recorded as sales?
*

5 points

a. When the client confirms the order verbally over the phone or via email?

b. When the contract is signed?

c. When the goods or services are delivered?

d. When the invoice is sent?

e. When the client makes the payment?

12. The limitation of balance sheet and profit & loss statement is *

5 points

a. We will not know the profit margin

b. We will not know when the money came and when it went

c. We will not know how much is the total liabilities

d. We will not know how much assets a company owns

11. The two main headings on a balance sheet are... *

5 points

a. Liabilities & Expenses

b. Liabilities & Assets

c. Liabilities & Incomes

d. Liabilities & Equity

15. Which of the ratio would the banker be interested when approached for a business loan? *

5 points

a. Equity ratio

b. Current ratio

c. Net profit margin ratio

d. Accounts payable in days

10. Generally one should be concerned when... *

5 points

a. The overheads are increasing

b. Operating profit is reducing

c. Customers are delaying payment

d. All of the above

e. None of the above

8. A company can expect more cash when... *

5 points

a. Payment from customers are received before the credit period

b. Gross profit margin increases

c. Operating profit margin increases

d. Net profit margin increases

e. By delaying payment to vendors

5. Which of the financial statements should be referred to know the EBITDA of a company? *

5 points

a. Profit & Loss Statement

b. Income Statement

c. Statement of Earnings

d. All of the above

e. None of the above

6. Ideally, when should the break-even be achieved on a monthly basis? *

5 points

a. After 15th of every month

b. On the 15th of every month

c. Before the 15th of every month

d. It does not really matter

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