Analysis & interpretation of financial statement Set 1
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This set of Management Accounting Multiple Choice Questions & Answers (MCQs) focuses on Analysis & interpretation of financial statement Set 1
Q1 | The dividend is related to the market value of shares in .
- interest cover ratio.
- fixed dividend cover ratio.
- debt service coverage ratio.
- dividend yield ratio.
Q2 | Turnover ratio is also known as .
- activity ratios.
- solvency ratios.
- liquidity ratios.
- profitability ratios.
Q3 | Inventory or stock turnover ratio is also called .
- stock velocity ratio.
- debtors velocity ratio.
- creditors velocity ratio.
- working capital turnover ratio.
Q4 | Which ratio is calculated to ascertain the efficiency of inventory managementin terms of capital investment?
- stock velocity ratio.
- debtors velocity ratio.
- creditors velocity ratio.
- working capital turnover ratio.
Q5 | The ratio which measures the relationship between the cost of goods sold andthe amount of average inventory is
- stock turnover ratio.
- debtors velocity ratio.
- creditors velocity ratio.
- working capital turnover ratio.
Q6 | Sales – Gross Profit = .
- net profit.
- administrative expenses.
- cost of production.
- cost of goods sold.
Q7 | Opening stock + purchases + direct expenses – closing stock =
- net profit.
- cost of production
- administrative expenses.
- cost of goods sold
Q8 | Debtors turnover ratio is also called .
- stock turnover ratio.
- debtors velocity ratio.
- creditors velocity ratio.
- working capital turnover ratio
Q9 | Creditors turnover ratio is also called .
- stock turnover ratio.
- debtors velocity ratio.
- accounts payables ratio.
- working capital turnover ratio.
Q10 | Which of the following shows details and results of the company's profitrelated activities for a period of time?
- balance sheet
- income statement
- statement of cash flows
- statement of financial position
Q11 | Which of the following financial statements is also known as a statement offinancial position?
- balance sheet
- statement of cash flows
- income statement
- none of the above
Q12 | A firm has Capital of Rs. 10,00,000; Sales of Rs. 5,00,000; Gross Profit of Rs.2,00,000 and Expenses of Rs.1,00,000. What is the Net Profit Ratio?
- 20%,
- 50%,
- 10%,
- 40%
Q13 | Which technique used for figures of two or more periods are placed side byside to facilitate easy and meaningful comparisons?
- comparative statement
- common?size statement
- trend analysis
- none
Q14 | Which of the following are techniques, tools or methods of analysis andinterpretation of financial statements?
- ratio analysis
- average analysis
- trend analysis
- all of the above
Q15 | Which of the following is NOT a key ratio in the prediction of bankruptcy asdeveloped by Edward Altman?
- debt to equity
- current ratio
- retained earnings as a percent of total assets
- total assets
Q16 | _______________ ratios measure the ability of a firm to earn an adequatereturn on sales, total assets and invested capital.
- asset utilization
- liquidity
- profitability
- debt utilization
Q17 | The ________ ratios help determines the degree of financial risk and earningsvolatility present in a firm.
- profitability
- asset utilization
- liquidity
- none of the above.
Q18 | __________ analysis is the process of studying a series of ratios for a companyand/or industry over time.
- dupont
- trend
- common size
- all of the above
Q19 | The ideal level of current ratio is
- 4:02
- 2:01
- both a and b
- none of the above
Q20 | The most precise test of liquidity is
- quick ratio
- current ratio
- absolute liquid ratio
- none of the above
Q21 | Debt-equity ratio is a sub-part of
- short-term solvency ratio
- long-term solvency ratio
- debtors turnover ratio
- none of the above
Q22 | Quick ratio is 1.8:1, current ratio is 2.7:1 and current liabilities are Rs 60,000.Determine value of stock.
- rs 54,000
- rs 60,000
- rs 1, 62,000
- none of the above
Q23 | 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
Q24 | Net Profit ratio is calculated by
- (gross profit/gross sales) *100
- (gross profit/net sales) *100
- (net profit/net sales) *100
- none of the above
Q25 | If sales is Rs 5, 00,000 and net profit is Rs 1, 20,000 Net Profit ratio is
- 24%
- 41%
- 60%
- none of the above