Plant-Economics Quiz 2

1 / 40

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

Minimum cash reserve

Storage facilities

Product inventory

In-process inventory

2 / 40

Pick out the wrong statement?

Return on equity = profit after tax/net worth

Working capital turnover ratio = sales/net working capital

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

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

3 / 40

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

Product distribution

Opportunities

Economics

Competition from other manufactures

4 / 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 ?

50 to 60

0.1 to 1

10 to 20

1 to 2

5 / 40

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

Advertising

Warehousing

Legal fees

Customer service

6 / 40

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

Intalox saddles

Pall rings

Raschig rings

Berl saddles

7 / 40

The payback method for the measurement of return on investment_____?

Takes into account the cash inflows after the recovery of investments

Underemphasises liquidity

Does not measure the discounted rate of return

Gives a correct picture of profitability

8 / 40

Scheduling provides information about the__________?

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

Proper utilisation of machines

Means to minimise idle time for machines

Time of completion of job

9 / 40

Payback period______?

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

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

All A, B. and C

And economic life of a project are the same

10 / 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

11 / 40

Pick out the wrong statement ?

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

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

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

12 / 40

Pick out the wrong statement ?

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

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

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

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

13 / 40

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

45 to 60

20 to 40

65 to 75

10 to 20

14 / 40

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

Diminishing balance

Straight line

Sinking fund

Sum of the years digit

15 / 40

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

Evaporation capacity required

Terminal parameters

Cost benefit analysis

Floor area availability

16 / 40

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

Inventories

Marketable securities

Chemical equipments

None of these

17 / 40

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

Cost estimation

Equipment design

Product evaluation

Equipment selection

18 / 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___________?

15%

10%

1.50%

150%

19 / 40

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

One

Three

Twelve

Six

20 / 40

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

Cash reserve

Turnover

Investment

Capital

21 / 40

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

Raw materials inventory

Utilities plants

Process equipment

Emergency facilities

22 / 40

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

p(1 + in)

p(1 ? i)n

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

p(1 + i)n

23 / 40

Pick out the correct statement ?

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

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

24 / 40

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

Sum of the years digit method

Multiple straight line method

Declining balance method

Sinking fund method

25 / 40

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

Current ratio

Net working capital

Cash ratio

Liquids assets

26 / 40

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

27 / 40

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

Much more

Almost equal

Only slightly more

Slightly less

28 / 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

29 / 40

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

Plant overhead cost

General expenses

Direct production cost

Fixed charges

30 / 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

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

Turn over = opening stock + production closing stock

31 / 40

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

Finished products in stock

Raw materials is stock

Transportation facilities

Semi-finished products in the process

32 / 40

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

Discounted cash flow based on full life performance

Rate of return on investment

Cash reserve

Payout period

33 / 40

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

Market survey

Depreciation, property tax and insurance

Overhead and utilities

Operating labour, supervision and supplies

34 / 40

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

Titanium

Low alloy steel

High alloy steel

Lead

35 / 40

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

Initial cost

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

Depreciation during the (n ? 1)th year

Difference between initial cost and salvage value

36 / 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.i.n.

p(1 + i.n)

p(1 + i)n

p(1 ? i.n)

37 / 40

Pick out the wrong statement?

Net profit = Gross margin ? depreciation ? interest

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

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

Gross margin = net income ? net expenditure

38 / 40

Optimum economic pipe diameter for fluid is determined by the_____?

Viscosity of the fluid

Density of the fluid

None of these

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

39 / 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

Increases linearly

40 / 40

Operating profit of a chemical plant is equal to_____?

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

Net profit + tax

Profit after tax

Profit after tax plus depreciation

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