This quiz works best with JavaScript enabled. Home > Accounting > Financial Statement Analysis > Financial Statement Analysis – Quiz 14 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Statement Analysis Quiz 14 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. If you want to assess the profitability of a business, which ratio is the most appropriate? A) Net profit margin. B) Return on assets. C) Return on equity. D) Return on capital. Show Answer Correct Answer: D) Return on capital. 2. What are the different methods used in financial statement analysis? A) Qualitative analysis, quantitative analysis, regression analysis. B) Income statement analysis, balance sheet analysis, statement of cash flows analysis. C) Vertical analysis, horizontal analysis, cash flow analysis. D) Ratio analysis, trend analysis, comparative analysis, and common size analysis. Show Answer Correct Answer: D) Ratio analysis, trend analysis, comparative analysis, and common size analysis. 3. Total equity divided by total assets A) Equity ratio. B) Debt ratio. C) Debt-to-equity ratio. D) Equity-to-debt ratio. E) NOT IN THE CHOICES. Show Answer Correct Answer: A) Equity ratio. 4. You can get this information by reading financial reports, except A) Financial Position. B) Entity Cash Flows. C) Financial performance. D) When is Debt Due. Show Answer Correct Answer: D) When is Debt Due. 5. If at year end Cash is $ 5, 460, Accounts Receivable is $ 3, 505, Current Assets are $ 18, 475, and Current Liabilities are $ 18, 860; what is the current ratio? A) 0.48:1. B) 0.98:1. C) 0.45:1. D) 1.45:1. Show Answer Correct Answer: B) 0.98:1. 6. Comparisons of financial statements highlights the trend of the ..... of the business. A) Financial position. B) Performance. C) Profitability. D) All of the above. Show Answer Correct Answer: D) All of the above. 7. Under which major head will the following be shown:(i) Share Capital; and (ii) Money Received Against Share Warrants? A) Shareholders Fund. B) Reserves and Surplus. Show Answer Correct Answer: A) Shareholders Fund. 8. Which of the following would NOT be included as a liability in a corporate balance sheet? A) Notes payable. B) Accounts payable. C) Bonds. D) Accumulated Depreciation. Show Answer Correct Answer: D) Accumulated Depreciation. 9. Investors are willing to pay a higher P/E ratio for growth stocks than for income stocks. A) True. B) False. Show Answer Correct Answer: A) True. 10. Below are all the advantages of financial ratio except: A) Simplifies the comprehension of financial statements. B) Help in planning and forecasting. C) Adjusting cost of capital for different risk. D) Help in investment decision. Show Answer Correct Answer: C) Adjusting cost of capital for different risk. 11. If Nico Corporation has cost of goods sold of RM300, 000 and inventory of RM30, 000, then the inventory turnover is ..... and the average age of inventory is ..... A) 36.5; 10. B) 10; 36.5. C) 36.0; 10. D) 10; 36.0. Show Answer Correct Answer: B) 10; 36.5. 12. Return on assets measures the efficiency with which management A) Generates earnings from the assets under its control, regardless of how these assets are financed. B) Generates earnings from the assets under its control, giving consideration to any costs of financing these assets. C) Generates cash from the assets under its control, regardless of accrual-based measures of profitability. D) Converts its current assets into cash. Show Answer Correct Answer: A) Generates earnings from the assets under its control, regardless of how these assets are financed. 13. Liabilities means A) Liabilities must pay. B) Long-term liabilities. C) Short-term debt. D) None of above. Show Answer Correct Answer: A) Liabilities must pay. 14. Calculate the debt-to-equity ratio for a company with total debt of $ 1, 000, 000 and total equity of $ 500, 000. A) 2. B) 0.5. C) 1.5. D) 3. Show Answer Correct Answer: A) 2. 15. What does a high debt-to-equity ratio indicate about a company's financial health? A) Strong financial position. B) Financial instability. C) High profitability. D) Low risk. Show Answer Correct Answer: B) Financial instability. 16. Which of the following is a liquidity ratio? A) Times debtors turnover. B) Current ratio. C) Days debtors. D) Equity ratio. Show Answer Correct Answer: B) Current ratio. 17. How do you find Working Capital? A) Assets-Liabilities. B) Current Assets-Owner's Capital. C) Current Assets-Current Liabilities. D) Long Term Assets-Long Term Liabilities. Show Answer Correct Answer: C) Current Assets-Current Liabilities. 18. Cost of Sales can be arrived as? A) Cost of Production + SGA Expenses. B) Cost of Production + Non Operating Expenses. C) Cost of Production + Opening Stock of SIP-Closing Stock of SIP. D) Cost of Production + Opening Stock of FG-Closing Stock of FG. Show Answer Correct Answer: D) Cost of Production + Opening Stock of FG-Closing Stock of FG. 19. Management is a user of financial analysis. Which of the following comments does not represent a fair statement as to the management perspective? A) Management is always interested in maximum profitability. B) Management is interested in the view of investors. C) Management is interested in the financial structure of the entity. D) Management is interested in the asset structure of the entity. Show Answer Correct Answer: A) Management is always interested in maximum profitability. 20. If revenue for 2021 is25, 000 and revenue for 2020 is 23, 000, the variance percentage is 7% A) True. B) False. Show Answer Correct Answer: A) True. ← 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