JAIIB Exam 2025 – AFM Important Questions MCQs Quiz-20

04/04/2025

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JAIIB Exam 2025 AFM Important Questions MCQs Quiz-20

JAIIB Exam Quiz 2025: The JAIIB exam is scheduled for 2025 by IIBF. Here, we are providing JAIIB AFM MCQ-based quizzes on a regular basis. You can attempt the quizzes regularly to prepare for the upcoming JAIIB exam. The quizzes will be provided module-wise and unit-wise. You can attempt the JAIIB AFM quizzes from the links below and improve your preparation by practicing regularly. These quizzes will help you boost your score in the JAIIB exam and guide you to clear the exam on your first attempt.

Q.1 A company has a net profit after tax and preference dividend of ₹10,00,000. It has 2,00,000 equity shares outstanding. What is the Earnings Per Share (EPS)?
A) ₹2
B) ₹5
C) ₹10
D) ₹20

Q.2 A company’s market price per share is ₹250, and its Earnings Per Share (EPS) is ₹25. What is the Price-to-Earnings (P/E) Ratio?
A) 5
B) 10
C) 15
D) 20

Q 3 A company has gross profit of ₹4,00,000 and net sales of ₹10,00,000. What is the Gross Profit Ratio?
A) 20%
B) 30%
C) 40%
D) 50%

Q.4 A company has an operating profit of ₹5,00,000 and a capital employed of ₹25,00,000. What is the Overall Profitability Ratio (ROI)?
A) 10%
B) 15%
C) 20%
D) 25%

Q.5 Which of the following statements about Return on Investment (ROI) is true?
A) ROI only considers equity capital while measuring profitability.
B) ROI helps compare the efficiency of different departments, companies, and industries.
C) ROI is calculated after deducting interest, income tax, and dividends from profits.
D) ROI is an unreliable measure of business efficiency.

Q.6 Which of the following is a Short-term Solvency Ratio (Liquidity Ratio)?
A) Debt-to-Equity Ratio
B) Current Ratio
C) Interest Coverage Ratio
D) Debt Ratio

Q.7 Which of the following is NOT a use of accounting ratios?
A) Simplifying financial statements
B) Facilitating inter-firm and intra-firm comparisons
C) Guaranteeing future profits
D) Helping in planning and forecasting

Q.8 A company has a net operating profit of ₹3,00,000 and net sales of ₹12,00,000. What is the Net Profit Ratio?
A) 15%
B) 20%
C) 25%
D) 30%

Q.9 A company’s financial stability depends on its ability to meet long-term obligations. The Fixed Assets Ratio is a key indicator of this stability. If a company has fixed assets worth ₹15,00,000 and long-term funds of ₹12,00,000, which of the following interpretations is most accurate based on its Fixed Assets Ratio?
A) The company has over-invested in fixed assets, which may lead to liquidity issues.
B) The company has an ideal balance of fixed assets and long-term funds.
C) The company is under-utilizing its long-term funds, which may indicate inefficiency.
D) The company is at risk of insolvency due to insufficient fixed assets.

Q.10 A company’s total external debt amounts to ₹30,00,000, while its shareholder’s equity (internal equity) is ₹20,00,000. What is the Debt-Equity Ratio, and what does it indicate about the company’s financial risk?
A) 1.5 – The company has a balanced capital structure with moderate financial risk.
B) 0.75 – The company is primarily funded by internal equity, reducing financial risk.
C) 2.0 – The company relies heavily on debt, increasing financial risk.
D) 1.0 – The company has an equal mix of debt and equity, indicating stability

Q.11 A company reports the following financial figures:
•Cash & Bank Balance: ₹2,00,000
•Accounts Receivable: ₹3,00,000
•Inventory: ₹5,00,000
•Short-term Loans Payable: ₹2,50,000
•Accounts Payable: ₹1,50,000
What is the Current Ratio, and what does it indicate?
A) 2.5 – The firm has a strong liquidity position.
B) 3.0 – The firm has an excessively high liquidity level.
C) 1.5 – The firm has a balanced liquidity position.
D) 2.0 – The firm has optimal liquidity to meet short-term obligations.

Q.12 A company provides the following financial details:
•Cash & Bank Balance: ₹1,50,000
•Accounts Receivable: ₹2,50,000
•Inventory: ₹3,00,000
•Prepaid Expenses: ₹50,000
•Current Liabilities: ₹3,00,000
What is the Quick Ratio, and what does it indicate about the company’s short-term financial position?
A) 1.0 – The company has just enough liquid assets to cover current liabilities.
B) 1.2 – The company has a satisfactory liquidity position.
C) 0.8 – The company may face difficulties in meeting short-term obligations.
D) 1.5 – The company has excess liquidity, which may indicate inefficiency

Q.13 company’s financial data for the year is as follows:
•Cost of Goods Sold (COGS): ₹12,00,000
•Opening Inventory: ₹2,00,000
•Closing Inventory: ₹4,00,000
What is the Stock Turnover Ratio, and what does it indicate about inventory efficiency?
A) 3 times – The company is efficiently utilizing its inventory.
B) 4 times – The company has an optimal stock turnover rate.
C) 6 times – The company is turning over inventory at a very high rate.
D) 2 times – The company may be holding excessive inventory.

Q.14 A company has the following financial details:
•Total Credit Sales during the year: ₹18,00,000
•Opening Accounts Receivable: ₹3,00,000
•Closing Accounts Receivable: ₹5,00,000
What is the Debtors’ Turnover Ratio, and what does it indicate about the company’s receivables management?
A) 3 times – The company is collecting payments at a slow pace.
B) 4 times – The company has a moderate receivables turnover rate.
C) 5 times – The company efficiently converts receivables into cash.
D) 6 times – The company is collecting payments at a very fast pace

Q.15 A company has the following financial data:
•Total Credit Sales during the year: ₹24,00,000
•Average Accounts Receivable: ₹4,00,000
Using 360 days in a year, what is the Debt Collection Period Ratio, and what does it indicate about the company’s receivables management?
A) 30 days – The company collects payments efficiently within a short period.
B) 45 days – The company has a moderate collection period.
C) 60 days – The company may need to improve its collection efficiency.
D) 75 days – The company is facing delays in collecting receivables

Q.16 A company reports the following financial data:
•Income Before Interest and Tax (EBIT): ₹9,00,000
•Interest Expense: ₹1,50,000
What is the Fixed Charges Cover Ratio, and what does it indicate about the company’s ability to meet its interest obligations?
A) 4 times – The company has a strong ability to cover its fixed charges.
B) 5 times – The company is in a stable position to pay interest.
C) 6 times – The company has a very high interest coverage, indicating low financial risk.
D) 3 times – The company may struggle to cover interest payments.