What is the gross profit margin for a business with a gross profit of £50,000 and revenue of £200,000?
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C 20%: Gross profit margin is calculated as (Gross Profit / Revenue) * 100. (50,000 / 200,000) * 100 = 25%. The best distractor is 25% because it is a common miscalculation.
A company has a profit for the year of £30,000 and revenue of £150,000. What is the profit margin?
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B 20%: Profit margin is calculated as (Profit for the Year / Revenue) * 100. (30,000 / 150,000) * 100 = 20%. The best distractor is 25% because it is a common overestimation.
If a business has a profit before interest of £40,000 and capital employed of £200,000, what is the Return on Capital Employed (ROCE)?
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B 20%: ROCE is calculated as (Profit before Interest / Capital Employed) * 100. (40,000 / 200,000) * 100 = 20%. The best distractor is 25% because it is a common overestimation.
A business has current assets of £80,000 and inventory of £30,000. What is the current ratio?
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C 2.67:1: The current ratio is calculated as Current Assets / Current Liabilities. (80,000 / 30,000) = 2.67. The best distractor is 1.67:1 because it is a common miscalculation.
If a company has current assets of £100,000 and inventory of £20,000, what is the acid test ratio?
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D 4:1: The acid test ratio is calculated as (Current Assets - Inventory) / Current Liabilities. (100,000 - 20,000) / 20,000 = 4. The best distractor is 1.5:1 because it is a common miscalculation.
A business has cost of sales of £60,000 and inventory at the beginning of the year of £10,000 and at the end of the year of £15,000. What is the rate of inventory turnover (times)?
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B 6 times: The rate of inventory turnover is calculated as Cost of Sales / Average Inventory. (60,000 / ((10,000 + 15,000) / 2)) = 6. The best distractor is 5 times because it is a common miscalculation.
If a company has inventory at the beginning of the year of £12,000, inventory at the end of the year of £18,000, and cost of sales of £72,000, what is the inventory turnover (days)?
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B 68.3 days: Inventory turnover (days) is calculated as (Average Inventory / Cost of Sales) * 365. ((12,000 + 18,000) / 2) / 72,000 * 365 = 68.3. The best distractor is 60.8 days because it is a common miscalculation.
A business has credit sales of £120,000 and trade receivables at the beginning of the year of £15,000 and at the end of the year of £20,000. What is the trade receivables turnover (days)?
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A 46.8 days: Trade receivables turnover (days) is calculated as (Average Trade Receivables / Credit Sales) * 365. ((15,000 + 20,000) / 2) / 120,000 * 365 = 46.8. The best distractor is 54.0 days because it is a common miscalculation.
If a company has credit purchases of £90,000 and trade payables at the beginning of the year of £10,000 and at the end of the year of £15,000, what is the trade payables turnover (days)?
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A 54.0 days: Trade payables turnover (days) is calculated as (Average Trade Payables / Credit Purchases) * 365. ((10,000 + 15,000) / 2) / 90,000 * 365 = 54.0. The best distractor is 60.8 days because it is a common miscalculation.
What is the gross profit margin for a business with a gross profit of £40,000 and revenue of £200,000?
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B 20%: Gross profit margin is calculated as (Gross Profit / Revenue) * 100. (40,000 / 200,000) * 100 = 20%. The best distractor is 25% because it is a common overestimation.
A company has a profit for the year of £25,000 and revenue of £100,000. What is the profit margin?
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B 25%: Profit margin is calculated as (Profit for the Year / Revenue) * 100. (25,000 / 100,000) * 100 = 25%. The best distractor is 20% because it is a common underestimation.
If a business has a profit before interest of £35,000 and capital employed of £175,000, what is the Return on Capital Employed (ROCE)?
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B 20%: ROCE is calculated as (Profit before Interest / Capital Employed) * 100. (35,000 / 175,000) * 100 = 20%. The best distractor is 25% because it is a common overestimation.
A business has current assets of £70,000 and inventory of £25,000. What is the current ratio?
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B 2.8:1: The current ratio is calculated as Current Assets / Current Liabilities. (70,000 / 25,000) = 2.8. The best distractor is 1.8:1 because it is a common miscalculation.
If a company has current assets of £90,000 and inventory of £15,000, what is the acid test ratio?
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D 4.6:1: The acid test ratio is calculated as (Current Assets - Inventory) / Current Liabilities. (90,000 - 15,000) / 15,000 = 4.6. The best distractor is 1.6:1 because it is a common miscalculation.
A business has cost of sales of £50,000 and inventory at the beginning of the year of £8,000 and at the end of the year of £12,000. What is the rate of inventory turnover (times)?
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B 5 times: The rate of inventory turnover is calculated as Cost of Sales / Average Inventory. (50,000 / ((8,000 + 12,000) / 2)) = 5. The best distractor is 4 times because it is a common miscalculation.