This quiz works best with JavaScript enabled. Home > Accounting > Financial Statement Analysis > Financial Statement Analysis – Quiz 10 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Statement Analysis Quiz 10 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Below are methods of analyzing financial statements except..... A) Index analysis. B) Environmental impact analysis. C) Analisis common size. D) .Financial ratio analysis. Show Answer Correct Answer: B) Environmental impact analysis. 2. Cash margin for issuance of LC for purchase of Machine, is to be classified as? A) Non-Current Assets. B) Current Assets. C) Intangible Assets. D) Fixed Assets. Show Answer Correct Answer: A) Non-Current Assets. 3. Revenue from Operations Rs.2, 00, 000; Inventory Turnover ratio 5; Gross Profit 25%. Find out the value of Closing Inventory, if Closing Inventory is Rs.8, 000 more than the Opening Inventory. A) Rs.38, 000. B) Rs.22, 000. C) Rs.34, 000. D) Rs.26, 000. Show Answer Correct Answer: C) Rs.34, 000. 4. Which of the following is not a current asset? A) Accounts payable. B) Marketable securities. C) Accounts receivable. D) Inventory. Show Answer Correct Answer: A) Accounts payable. 5. What does a current ratio tell us? A) A higher current ratio indicates better liquidity. B) A lower current ratio indicates better liquidity. C) A higher current ratio indicates what portion of assets are tied up in slow moving inventory. D) A lowercurrent ratio indicates what portion of assets are tied up in slow moving inventory. Show Answer Correct Answer: A) A higher current ratio indicates better liquidity. 6. Purpose of Financial Statement Analysis for investors A) Analyzing and checking the allocation of relevant resources of the enterprise. B) Analyzing the profitability, operational capacity, investment returns and risks. C) Analyzing the solvency of enterprises. D) Analyzing the structure (various ratios or indicators) and the trend. Show Answer Correct Answer: B) Analyzing the profitability, operational capacity, investment returns and risks. 7. Managers who want to control operating expenses will be more interested in the operating margin than the total operating expense ratio A) True. B) False. Show Answer Correct Answer: B) False. 8. What does the total assets turnover ratio measure? A) How many times inventory is turned over during the year. B) The average length of time the firm must wait after making a sale before it receives cash. C) How effectively the firm uses its plant and equipment. D) How effectively the firm uses its total assets. Show Answer Correct Answer: D) How effectively the firm uses its total assets. 9. Given item falls under direct expenses. A) Printing & Stationery. B) Carriage Inward. C) Carriage Outward. D) Office Rent. Show Answer Correct Answer: B) Carriage Inward. 10. Management could use the financial reports to determine the company's profitability A) True. B) False. Show Answer Correct Answer: A) True. 11. Financial ratios that tell how much of each rand of sales, assets, and owner's equity resulted in net profit. A) Liquidity ratios. B) Efficiency ratios. C) Profitability ratios. D) Leverage ratios. Show Answer Correct Answer: C) Profitability ratios. 12. What does the days sales outstanding ratio measure? A) How many times inventory is turned over during the year. B) The average length of time the firm must wait after making a sale before it receives cash. C) How effectively the firm uses its plant and equipment. D) How effectively the firm uses its total assets. Show Answer Correct Answer: B) The average length of time the firm must wait after making a sale before it receives cash. 13. If a company uses an inventory valuation basis using LIFO then this has an impact A) The current ratio presented is too high because inventory is presented too high. B) The current ratio presented is too high because inventory is presented too low. C) The current ratio presented is too low because inventory is presented too low. D) The current ratio presented is too low because inventory is presented too high. Show Answer Correct Answer: C) The current ratio presented is too low because inventory is presented too low. 14. The trade receivables balance is £19, 100. A debt of £400 is considered to be irrecoverable and is to be written off. The balance on the allowance for doubtful debts is currently £735 and the allowance is to be revised to 5% of trade receivables. The amount to be charged to the statement of profit or loss for the change in the doubtful debt allowance is: A) 935. B) 735. C) 200. D) 220. Show Answer Correct Answer: C) 200. 15. What does the return on common equity (ROE) ratio measure? A) Operating income per dollar of sales. B) Net income per dollar of sales. C) Net income to total assets. D) Net income to common equity. Show Answer Correct Answer: D) Net income to common equity. 16. Which of the following streams of income is not affected by how a firm is financed (whether with debt or equity)? A) Net profit after tax but before dividends. B) Net working capital. C) Operating income. D) Income before tax. Show Answer Correct Answer: C) Operating income. 17. Which of the basic financial statements is best used to answer the questions "Where did the company's money come from and how was it spent over the preceding year?" A) Balance sheet. B) Statement of shareholder's equity. C) Income statement. D) Cash flow statement. Show Answer Correct Answer: D) Cash flow statement. 18. Gross margin is also referred to as A) Operating margin. B) Gross profit margin. C) Rate of return on sales. D) Earnings per share. Show Answer Correct Answer: B) Gross profit margin. 19. If the gearing ratio of a unit is less than 1, which statement is correct? A) Tangible Net Worth of the unit will be lower than the Total Outside Liabilities. B) The term liabilities will be less than the Tangible Net Worth. C) Total Outside Liabilities of the unit will be lower than the Tangible Net Worth. D) The term Liabilities will be more than the Tangible Net Worth. Show Answer Correct Answer: C) Total Outside Liabilities of the unit will be lower than the Tangible Net Worth. 20. When a firm improves (decreases) its days of inventory, it generally A) Requires additional cash investment in inventory. B) Releases cash locked up in inventory. C) Does not alter its cash position. D) Cannot reduce its inventories . Show Answer Correct Answer: B) Releases cash locked up in inventory. ← PreviousNext →Related QuizzesAccounting QuizzesFinancial Statement Analysis Quiz 1Financial Statement Analysis Quiz 2Financial Statement Analysis Quiz 3Financial Statement Analysis Quiz 4Financial Statement Analysis Quiz 5Financial Statement Analysis Quiz 6Financial Statement Analysis Quiz 7Financial Statement Analysis Quiz 8Financial Statement Analysis Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books