Grade 12 06.12.2024 Digital Accounting

What was Pacific Furniture Ltd.'s Gearing Ratio in 2024?

• 2.0

• 3.0

• 1.5

• 4.0

What was Pacific Furniture Ltd.'s ROE in 2023?

• 125%

• 133.33%

• 41.67%

• 66.67%

What was Pacific Furniture Ltd.'s ROA in 2024?

• 41.67%

• 66.67%

• 25%

• 20.83%

How did Pacific Furniture Ltd.'s Profit Margin change from 2023 to 2024?

• Increased to 30%

• Stayed constant at 25%

• Decreased to 20.83%

• Decreased to 18%

What does a Gearing Ratio of 3.0 indicate about Pacific Furniture Ltd.'s financial strategy?

• The company relies equally on equity and debt financing.

• The company relies more on debt than equity financing.

• The company has eliminated debt.

• The company has stopped using equity financing.

What was Pacific Furniture Ltd.'s Net Profit in 2024?

• $200,000

• $250,000

• $300,000

• $150,000

Which financial ratio measures how effectively the company uses its assets to generate profit?

• Profit Margin

• Return on Assets (ROA)

• Gearing Ratio

• Return on Equity (ROE)

What does the decline in ROA from 66.67% in 2023 to 41.67% in 2024 indicate?

• Improved asset efficiency

• Reduced asset efficiency in generating profits

• Increased reliance on equity

• Lower operating expenses

What is a potential risk of increased reliance on debt financing (higher Gearing Ratio)?

• Reduced interest costs

• Greater financial vulnerability if profits decline

• Increased equity returns regardless of profitability

• Improved Profit Margin automatically

Why did Pacific Furniture Ltd.'s ROE remain strong at 125% in 2024?

• Improved Profit Margin and lower COGS

• Increased leverage (Gearing Ratio)

• Lower operating expenses

• Reduced reliance on debt financing