Plant-Economics Quiz 2

1 / 40

The inventory of raw materials included in the working capital is usually about _______ month?s supply of raw materials valued at delivery prices?

Three

Six

One

Twelve

2 / 40

Relative cost of chemical process plants in India is about _______ percent more than the similar plants in U.S.A ?

3 / 40

Which of the following is not a component of working capital ?

Finished products in stock

Transportation facilities

Raw materials is stock

Semi-finished products in the process

4 / 40

The payback method for the measurement of return on investment_____?

Gives a correct picture of profitability

Takes into account the cash inflows after the recovery of investments

Underemphasises liquidity

Does not measure the discounted rate of return

5 / 40

The _______ of a chemical company can be obtained directly from the balance sheet as the difference between current assets and current liabilities ?

Net working capital

Current ratio

Liquids assets

Cash ratio

6 / 40

The total investment in a project is Rs. 10 lakhs and the annual profit is 1.5 lakhs. If the project life is 10 years, then the simple rate of return on investment is___________?

1.50%

150%

15%

10%

7 / 40

Which of the following is the costliest material of construction used in pressure vessel construction ?

Titanium

Low alloy steel

High alloy steel

Lead

8 / 40

Utilities cost in the operation of chemical process plant comes under the ?

Fixed charges

General expenses

Plant overhead cost

Direct production cost

9 / 40

The ratio of gross annual sales to the fixed capital investment is termed as the _________ ratio?

Investment

Capital

Cash reserve

Turnover

10 / 40

Which of the following is not a component of the working capital for a chemical process plant ?

Minimum cash reserve

Product inventory

Storage facilities

In-process inventory

11 / 40

Pick out the wrong statement?

Net worth means paid up share capital and reserve & surplus (i.e. shareholders equity)

Working capital turnover ratio = sales/net working capital

Return on equity = profit after tax/net worth

Total cost of production is more than net sales realisation (NSR) at breakeven point

12 / 40

With increase in the discounted cash flow rate of return, the ratio of the total present value to the initial investment of a given project ?

Decreases

Remain constant

Increases linearly

Increases

13 / 40

The depreciation during the year ?n?, in diminishing balance method of depreciation calculation, is calculated by multiplying a fixed percentage ?N? to the ?

Book value at the end of (n ? 1)th year

Difference between initial cost and salvage value

Initial cost

Depreciation during the (n ? 1)th year

14 / 40

The ratio of working capital to total capital investment for most chemical plants (except for non-seasonal based products) is in the range of ______ percent ?

0.1 to 1

10 to 20

50 to 60

1 to 2

15 / 40

The ?total capital investment? for a chemical process plant comprises of the fixed capital investment and the__________?

Overhead cost

Indirect production cost

Working capital

Direct production cost

16 / 40

Pick out the wrong statement ?

Debt-equity ratio of a chemical company describes the lenders contribution for each rupee of owner?s contribution i.e., debt-equity ratio = total debt/net worth

Turn over = opening stock + production closing stock

Return on investment (ROI) is the ratio of profit before interest & tax and capital employed (i.e. net worth + total debt)

Working capital = current assets + current liability

17 / 40

Operating profit of a chemical plant is equal to_____?

Profit after tax

Profit before interest and tax i.e., net profit + interest + tax

Net profit + tax

Profit after tax plus depreciation

18 / 40

Which of the following methods of depreciation calculations results in book values greater than those obtained with straight line method ?

Sinking fund method

Sum of the years digit method

Multiple straight line method

Declining balance method

19 / 40

Pick out the wrong statement?

Net profit = Gross margin ? depreciation ? interest

At breakeven point, NSR is more than the total production cost

Net sales realisation (NSR) = Gross sales ? selling expenses

Gross margin = net income ? net expenditure

20 / 40

Optimum number of effects in a multiple effect evaporator is decided by the______?

Cost benefit analysis

Evaporation capacity required

Floor area availability

Terminal parameters

21 / 40

The amount of simple interest during ?n? interest period is (where, i = interest rate based on the length of one interest period, p = principal) ?

p(1 + i.n)

p(1 ? i.n)

p(1 + i)n

p.i.n.

22 / 40

Purchased cost of equipments for a chemical process plant ranges from ______ percent of the fixed capital investment?

45 to 60

10 to 20

20 to 40

65 to 75

23 / 40

Which of the following is not a component of the fixed capital for a chemical plant facility ?

Emergency facilities

Raw materials inventory

Utilities plants

Process equipment

24 / 40

Which of the following elements is not included in the scope of market analysis ?

Opportunities

Product distribution

Economics

Competition from other manufactures

25 / 40

Scheduling provides information about the__________?

Means to minimise idle time for machines

Proper utilisation of machines

Time of completion of job

Time of starting of job and also about how much work should be completed during a particular period

26 / 40

Total product cost of a chemical plant does not include the _______ cost?

Depreciation, property tax and insurance

Operating labour, supervision and supplies

Overhead and utilities

Market survey

27 / 40

Optimum economic pipe diameter for fluid is determined by the_____?

None of these

Viscosity of the fluid

Density of the fluid

Total cost considerations (pumping cost plus fixed cost of the pipe)

28 / 40

Which of the following ceramic packing materials is the costliest of all ?

Intalox saddles

Pall rings

Raschig rings

Berl saddles

29 / 40

Pick out the wrong statement ?

The annual depreciation rate for machinery and equipments in a chemical process plant is about 10% of the fixed capital investment

Insurance rates on annual basis in a chemical plant may be about 1% of the fixed capital investment

In a chemical industry, research and development cost amounts to about 15% of net sales realisation (NSR)

Annual depreciation rate of buildings in a chemical plant is about 3% of its initial cost

30 / 40

Out of the following, the depreciation calculated by the ______ method is the maximum?

Sum of the years digit

Diminishing balance

Sinking fund

Straight line

31 / 40

The amount of compounded interest during ?n? interest periods is__________?

p[(1+i)n ? 1)]

p(1 + i)n

p(1 ? i)n

p(1 + in)

32 / 40

Personnel working in the market research group is responsible for the job of___________?

Product evaluation

Equipment selection

Cost estimation

Equipment design

33 / 40

Which of the following is not a component of depreciation cost ?

Repairs and maintenance cost

Loss due to obsolescence of the equipment

Loss due to decrease in the demand of product

Loss due to accident/breakdown in the machinery

34 / 40

Which of the following does not come under the sales expenses for a product of a chemical plant ?

Customer service

Legal fees

Advertising

Warehousing

35 / 40

Which of the following is not a mathematical method for evaluation of profitability of a chemical process plant ?

Rate of return on investment

Discounted cash flow based on full life performance

Cash reserve

Payout period

36 / 40

The economic life of a large chemical process plant as compared to a small chemical plant is________?

Only slightly more

Almost equal

Much more

Slightly less

37 / 40

Pick out the wrong statement ?

The ratio of immediately available cash to the total current liabilities is known as the cash ratio

Net revenue is the total profit remaining after deducting all costs excluding taxes

Consolidated income statement based on a given time period indicates surplus capital and shows the relationship among total income, costs & profit over the time interval

Gross revenue is that total amount of capital received as a result of the sale of goods or service

38 / 40

Payback period______?

Is the length of time over which the earnings on a project equals the investment

All A, B. and C

Is affected by the variation in earnings after the recovery of the investment

And economic life of a project are the same

39 / 40

Pick out the correct statement ?

Difference between income and expense is termed as gross revenue

Sum-of-the-years-digits methods of depreciation calculation accounts for the interest on the investment

Unamortised cost is the difference between the original cost of a property and all the depreciation charges made to date

Scrap value is the net amount of money obtainable from the sale of used property over and above any charges involved in its removal & sale

40 / 40

Which of the following is not a current asset of a chemical company ?

Chemical equipments

Marketable securities

Inventories

None of these

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