Introduction to Analysis and Interpretation of Financial Statements
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This set of Analysis of Financial Statements Multiple Choice Questions & Answers (MCQs) focuses on Introduction to Analysis and Interpretation of Financial Statements
Q1 | The major device for measuring the profitability of a firm over a defined period of time is the
- income statement.
- balance sheet.
- statement of cash flow.
- none of the above.
Q2 | The ________ does not represent continuing operations in any way, but is simply a snapshot of the totalworth of a firm at a given point in time.
- income statement
- balance sheet
- sources and uses of funds statement
- none of the above
Q3 | Cash inflows arise from _____ assets, ________ liabilities, and ___________ stockholders' equity.
- increasing; increasing; decreasing
- increasing; decreasing; decreasing
- decreasing; increasing; increasing
- decreasing; increasing; decreasing
Q4 | Which of the following is NOT a key ratio in the prediction of bankruptcy as developed by EdwardAltman?
- debt to equity
- current ratio
- retained earnings as a percent of total assets
- total assets
Q5 | __________ analysis is the process of studying a series of ratios for a company and/or industry overtime.
- dupont
- trend
- common size
- all of the above.
Q6 | The statement of cash flows tells us
- accounting profit or loss
- how cash was created
- actual profit or loss
- two of the above
Q7 | The primary sections of a statement of cash flows are:
- cash flows from investing, operating, and financing activities.
- cash flows from investing and operating activities plus investments.
- cash flows from investing, financing, and accounting activities.
- cash flows from investing, operating, financing, and accounting activities.
Q8 | Which of the following are Non-current assets?
- land, building and plant
- leasehold property
- computer software
- all of the above
Q9 | Funds flow statements are prepared so as to
- to identify the changes in working capital
- to identify reasons behind change in working capital
- to know the item-wise outflow of funds during given period
- all of the above
Q10 | Financial statements are ____________.
- anticipated facts
- recorded facts
- estimated of facts
- unknown facts
Q11 | Trend analysis is significant for ____________.
- forecasting and budgeting
- profit planning
- capital rationing
- working capital management
Q12 | In common size income statement analysis, which is taken as 100 percent?
- sales
- cost of goods sold
- purchases
- total assets
Q13 | Comparative statement analysis sheet is __________.
- vertical analysis
- horizontal analysis
- either vertical or horizontal analysis
- neither vertical nor horizontal analysis
Q14 | Financial statements are meaningful and useful only when they are ___________.
- verified
- presented to owners
- analyzed and interpreted
- published
Q15 | Vertical analysis is made on the basis of __________.
- single set of financial statements
- multiple sets of financial statements
- different schedules attached to financial statements
- similar set of financial statements
Q16 | Horizontal analysis is done by analyzing ____________.
- quarterly statement
- half yearly statement
- financial statements of several years
- financial statements of a particular year
Q17 | When the concept of ratio is defined in respect to the item shown in the financial statements, it is termedas
- accounting ratio
- financial ratio
- costing ratio
- none of the above
Q18 | The relationship between two financial variables can be expressed in:
- pure ratio
- percentage
- rate or time
- all the above
Q19 | Stock is considered as a liquid asset as anytime it can be converted into cash immediately.
- yes
- no
- only yes
- none of the above
Q20 | Return on properties funds is also known as.
- return on net worth
- return on shareholders fun
- return on the shareholders’ investment
- all the above
Q21 | What will be the Gross Profit if , total sales is Rs 2,60,000,cost of net goods sold is Rs 2,00,000 & salesreturn is Rs10,000 ?
- 13 %
- 28%
- 26%
- 20%
Q22 | Which of the following is not included in current assets.
- debtors
- stock
- cash at bank
- cash in hand
Q23 | Liquidity ratios are expressed in
- pure ratio form
- percentage
- rate or time
- none of the above
Q24 | Working capital turnover ratio can be determined by :
- ( gross profit / working capital )
- ( cost of goods sold / net sales )
- ( cost of goods sold / working capital)
- none of the above
Q25 | Determine Working capital turnover ratio if, Current asset is Rs 1,50,000, current liability is Rs 1,00,000& cost of goods sold is Rs 3,00,000.
- 5 times
- 6 times
- 3 times
- 1.5 times