The IIT Madras BS Business Data Management (BDM) Quiz 2 paper sat on 16 Aug 2026, in the May 2026 term: 24 questions for 50 marks in 120 minutes. Every question is below with its answer. Take it as a timed mock test to be marked, or read it through first.
Which of the following options correctly describe what a Capital Reserve is?
Money owed to suppliers for raw materials.
The amount of cash in the register at the end of the day.
Profits set aside for general safety from daily operations.
Profit earned from non-regular activities, such as selling land.
Correct answer
Profit earned from non-regular activities, such as selling land.
If a cafe buys ₹10,000 worth of a coffee beans machine on credit, what is the immediate impact on the accounting equation?
Assets increase and Equity increases.
Liabilities increase and Equity decreases.
One Asset increases while another Asset decreases.
Assets increase and Liabilities increase.
Correct answer
Assets increase and Liabilities increase.
An account is defined as the fundamental building block of the accounting system. Which of the following options best describes its purpose?
A specialized record used to track and summarize all transactions related to a specific item.
A chronological diary of every event that happens on a business day.
A statutory document filed with government authorities for tax assessment.
A set of rules used to determine the market value of a business's brand.
Correct answer
A specialized record used to track and summarize all transactions related to a specific item.
Which of the following is the correct fundamental accounting equation?
Liabilities = Assets + Equity
Assets + Liabilities = Equity
Equity = Liabilities - Assets
Assets = Liabilities + Equity
Correct answer
Assets = Liabilities + Equity
Which specific section of the statutory financial statements would you examine for determining the 'Gross Profit' of a company?
The Profit & Loss Account section of the Income Statement.
The Assets side of the Balance Sheet.
The Trading Account section of the Income Statement.
The Operating Activities section of the Cash Flow Statement.
Correct answer
The Trading Account section of the Income Statement.
If a company's Debtors Turnover Ratio increases from 6 times to 10 times, what is the most likely implication for its operations?
The company has improved its efficiency in converting credit sales into cash.
The company is extending more credit to its customers to boost sales.
The company is taking longer to collect cash from its customers.
The company's sales have dropped significantly while debtors remained constant.
Correct answer
The company has improved its efficiency in converting credit sales into cash.
If a customer buys a burger from a burger shop and promises to pay the shop owner in a week, but the customer goes bankrupt and cannot pay the shop owner, how is this recorded in the accounts?
As a Prepaid Expense
As a 'Write-off' and treated as an expense
As a Capital Reserve
As a Long-term Liability
Correct answer
As a 'Write-off' and treated as an expense
A business bought land for ₹200,000 twelve years ago. Today, the land's market value is ₹1,200,000. The company sells exactly half of the land for ₹600,000. According to the Measurement (Cost) Principle, what is the 'Capital Reserve' profit recorded from this non-regular activity?
₹500,000
₹20
₹400,000
₹1,000,000
Correct answer
₹500,000
Based on the Income Statement provided in the material, if Sales Revenue is ₹1,000,000, Cost of Goods Sold is ₹400,000, Operating Expenses are ₹300,000, and Depreciation is ₹50,000, what is the Operating Income (EBIT)?
₹600,000
₹250,000
₹230,000
₹300,000
Correct answer
₹250,000
Calculate the 'Net Cash from Investing Activities' if a business purchases ₹100,000 of equipment and sells land for ₹40,000.
₹140,000
₹ (60,000)
₹60,000
₹(140,000)
Correct answer
₹ (60,000)
A business uses the First-In, First-Out (FIFO) method for inventory valuation. What is the core logic of this method?
The cost of the oldest items in stock is assigned to the goods sold first.
Inventory is always valued at its current market replacement cost.
Inventory is valued based on the average cost of all units available.
The cost of the most recently purchased items is assigned to the goods sold first.
Correct answer
The cost of the oldest items in stock is assigned to the goods sold first.
Why might a lender prefer to look at the Interest Coverage Ratio (ICR) instead of just the total Net Profit?
Because Net Profit includes non-operating income that cannot be used for interest.
Because ICR specifically measures the ability to service debt from operating liquidity.
Because Net Profit is always higher than ICR.
Because ICR excludes depreciation, making it a more conservative measure of profit.
Correct answer
Because ICR specifically measures the ability to service debt from operating liquidity.
If a firm has ₹133 in current assets and ₹100 in current liabilities, but ₹80 of those assets are 'Inventory', what is the Quick Ratio?
0.53 :1
0.80 :1
1:1
1.33 :1
Correct answer
0.53 :1
A stock is trading at ₹120 per share. The company reports a Profit After Tax of ₹5,00,000 with 50,000 outstanding equity shares. What is the P/E Ratio?
12
10
24
0.08
Correct answer
12
Alpha Consulting begins with an initial cash investment of ₹50,000. The company then purchases ₹10,000 in equipment on credit. Later, they generate ₹15,000 in revenue (with ₹7,500 received in cash and ₹7,500 on credit), incur ₹8,000 in cash expenses, and pay a ₹2,000 cash dividend to owners. What is the final value of Owners' Equity?
₹57,000
₹65,000
₹55,000
₹61,000
Correct answer
₹55,000
A tech shop, SmartTech , reports the following: Cash (₹10L), Inventory (₹5L),Accounts Receivable (₹2L), Patents (₹3L), and Land (₹20L). Its liabilities include Creditors (₹4L) and a Long-term Bank Loan (₹10L). Calculate the company's Working Capital.
₹26L
₹13L
₹3L
₹16L
Correct answer
₹13L
A company starts the period with 100 units of inventory at a cost of ₹5 each. It then purchases 200 units at ₹7 each. During the period, it sells 150 units for ₹15 each. What is the difference in Gross Profit if the company switches from the LIFO method to the FIFO method of inventory valuation?
₹200
₹300
₹0
₹150
Correct answer
₹200
At the beginning of the year, a firm has Total Assets of ₹500,000 and Total Liabilities of ₹200,000. During the month, the owner sells goods for ₹50,000 cash (which cost ₹30,000 to make) and purchases a delivery truck for ₹100,000 by paying ₹40,000 in cash and taking a loan for the remaining ₹60,000. What is the new total of the Assets side of the Balance Sheet?
₹580,000
₹620,000
₹650,000
₹520,000
Correct answer
₹580,000
An asset with an original cost of ₹21,000 and a salvage value of ₹1,000 has an estimated useful life of 5 years. If the company chooses to use the Straight-Line method (SLM) for depreciation, how much higher or lower will the Book Value be at the end of Year 2 compared to using a WDV rate of 20%?
₹0
₹440 lower
₹440 higher
₹1,000 lower
Correct answer
₹440 lower
SmartTech issues 100,000 equity shares with a face value of ₹10 at an issue price of ₹50 per share. During the year, the company earns ₹10L in profit. It distributes ₹2L as dividends and transfers ₹3L to a General Reserve. What is the total value of 'Reserves and Surplus' reported in Equity at year-end?
₹45L
₹40L
₹48L
₹58L
Correct answer
₹48L
Directions: Read the following simplified financial data for X Robotics Ltd. carefully and answer the given subquestions. Show your mathematical reasoning. All formulas and concepts required are based strictly on the provided financial analysis case study framework.
Company Overview & Financial Data (Figures in Millions of Rupees):
X Robotics Ltd. is an industrial automation manufacturer. Below is a snapshot of their simplified financial position for the fiscal year ending March 31, 2025 (FY 2025), along with select figures from FY 2024.
Simplified Profit & Loss Statement Data (FY 2025):
● Revenue from Operations: ₹500 ● Cost of Materials and Services: ₹300 ● Employee Benefits & Other Expenses: ₹100 ● Depreciation: ₹20 ● Finance Costs (Interest): ₹10 ● Tax Rate: 30% flat on Profit Before Tax (PBT) ● (Note: For FY 2024, Revenue from Operations was ₹400).
Simplified Balance Sheet Data (As of March 31, 2025):
● Total Assets: ₹400 ● Shareholder's Equity (Net Worth): ₹200 ● Total Debt (Borrowings): ₹100 (Note: The company pays a flat 10% interest rate on its debt) ● Average Inventory: ₹60 ● Average Debtors (Trade Receivables): ₹50
Market Data:
● Shares Outstanding: 10 million shares ● Market Price per Share: ₹73.50 ● Total Dividends Paid: ₹24.5 million
Calculate the Debt-Equity Ratio and the Interest Earned Ratio for FY 2025.
Debt-Equity Ratio: 2.00x, Interest Earned Ratio: 7.00 times
Debt-Equity Ratio: 0.50x, Interest Earned Ratio: 10.00 times
Debt-Equity Ratio: 0.25x, Interest Earned Ratio: 10.00 times
Debt-Equity Ratio: 0.50x, Interest Earned Ratio: 4.90 times
Correct answer
Debt-Equity Ratio: 0.50x, Interest Earned Ratio: 10.00 times
Directions: Read the following simplified financial data for X Robotics Ltd. carefully and answer the given subquestions. Show your mathematical reasoning. All formulas and concepts required are based strictly on the provided financial analysis case study framework.
Company Overview & Financial Data (Figures in Millions of Rupees):
X Robotics Ltd. is an industrial automation manufacturer. Below is a snapshot of their simplified financial position for the fiscal year ending March 31, 2025 (FY 2025), along with select figures from FY 2024.
Simplified Profit & Loss Statement Data (FY 2025):
● Revenue from Operations: ₹500 ● Cost of Materials and Services: ₹300 ● Employee Benefits & Other Expenses: ₹100 ● Depreciation: ₹20 ● Finance Costs (Interest): ₹10 ● Tax Rate: 30% flat on Profit Before Tax (PBT) ● (Note: For FY 2024, Revenue from Operations was ₹400).
Simplified Balance Sheet Data (As of March 31, 2025):
● Total Assets: ₹400 ● Shareholder's Equity (Net Worth): ₹200 ● Total Debt (Borrowings): ₹100 (Note: The company pays a flat 10% interest rate on its debt) ● Average Inventory: ₹60 ● Average Debtors (Trade Receivables): ₹50
Market Data:
● Shares Outstanding: 10 million shares ● Market Price per Share: ₹73.50 ● Total Dividends Paid: ₹24.5 million
Calculate the Earnings Per Share (EPS), PE Ratio, and Dividend Yield for FY 2025.
EPS: ₹4.90, PE Ratio: 15.00, Dividend Yield: 3.33%
EPS: ₹7.00, PE Ratio: 10.50, Dividend Yield: 3.33%
EPS: ₹4.90, PE Ratio: 15.00, Dividend Yield: 5.00%
EPS: ₹10.00, PE Ratio: 7.35, Dividend Yield: 33.3%
Correct answer
EPS: ₹4.90, PE Ratio: 15.00, Dividend Yield: 3.33%
Directions: Read the following simplified financial data for X Robotics Ltd. carefully and answer the given subquestions. Show your mathematical reasoning. All formulas and concepts required are based strictly on the provided financial analysis case study framework.
Company Overview & Financial Data (Figures in Millions of Rupees):
X Robotics Ltd. is an industrial automation manufacturer. Below is a snapshot of their simplified financial position for the fiscal year ending March 31, 2025 (FY 2025), along with select figures from FY 2024.
Simplified Profit & Loss Statement Data (FY 2025):
● Revenue from Operations: ₹500 ● Cost of Materials and Services: ₹300 ● Employee Benefits & Other Expenses: ₹100 ● Depreciation: ₹20 ● Finance Costs (Interest): ₹10 ● Tax Rate: 30% flat on Profit Before Tax (PBT) ● (Note: For FY 2024, Revenue from Operations was ₹400).
Simplified Balance Sheet Data (As of March 31, 2025):
● Total Assets: ₹400 ● Shareholder's Equity (Net Worth): ₹200 ● Total Debt (Borrowings): ₹100 (Note: The company pays a flat 10% interest rate on its debt) ● Average Inventory: ₹60 ● Average Debtors (Trade Receivables): ₹50
Market Data:
● Shares Outstanding: 10 million shares ● Market Price per Share: ₹73.50 ● Total Dividends Paid: ₹24.5 million
Between FY 2024 and FY 2025, X Robotics saw its revenue increase significantly. If the company maintains the exact same year-over-year revenue growth rate heading into FY 2026, and benefits from softer commodity prices that improve its Profit Margin to 11.00%, what will be the absolute increase in Net Profit (in millions of rupees) from FY 2025 to FY 2026?
₹10.00 million
₹15.50 million
₹19.75 million
₹68.75 million
Correct answer
₹19.75 million
Directions: Read the following simplified financial data for X Robotics Ltd. carefully and answer the given subquestions. Show your mathematical reasoning. All formulas and concepts required are based strictly on the provided financial analysis case study framework.
Company Overview & Financial Data (Figures in Millions of Rupees):
X Robotics Ltd. is an industrial automation manufacturer. Below is a snapshot of their simplified financial position for the fiscal year ending March 31, 2025 (FY 2025), along with select figures from FY 2024.
Simplified Profit & Loss Statement Data (FY 2025):
● Revenue from Operations: ₹500 ● Cost of Materials and Services: ₹300 ● Employee Benefits & Other Expenses: ₹100 ● Depreciation: ₹20 ● Finance Costs (Interest): ₹10 ● Tax Rate: 30% flat on Profit Before Tax (PBT) ● (Note: For FY 2024, Revenue from Operations was ₹400).
Simplified Balance Sheet Data (As of March 31, 2025):
● Total Assets: ₹400 ● Shareholder's Equity (Net Worth): ₹200 ● Total Debt (Borrowings): ₹100 (Note: The company pays a flat 10% interest rate on its debt) ● Average Inventory: ₹60 ● Average Debtors (Trade Receivables): ₹50
Market Data:
● Shares Outstanding: 10 million shares ● Market Price per Share: ₹73.50 ● Total Dividends Paid: ₹24.5 million
Inspired by successful industry peers, the CEO initiates a strict working capital optimization program. By enforcing strict collection efforts and lean supply, they successfully reduce Average Debtors by 20% and Average Inventory by 20%, without affecting Revenue, COGS, or Net Profit. The company takes all the cash freed up from these reductions and immediately uses it to repay Total Debt. What is the company's new Debt-Equity Ratio, and what is its new Return on Assets (ROA)?
New Debt-Equity Ratio: 0.50x, New ROA: 12.25%
New Debt-Equity Ratio: 0.39x, New ROA: 12.25%
New Debt-Equity Ratio: 0.45x, New ROA: 13.50%
New Debt-Equity Ratio: 0.39x, New ROA: 12.96%
Correct answer
New Debt-Equity Ratio: 0.39x, New ROA: 12.96%
