This quiz works best with JavaScript enabled. Home > Finance > Accounting > Financial Statement Analysis > Financial Statement Analysis – Quiz 13 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Statement Analysis Quiz 13 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Firm ABC had operating profits of RM100, 000, taxes of RM17, 000, interest expense of RM34, 000 and preferred dividends of RM5, 000. What was the firm's net profit after taxes? A) RM44, 000. B) RM83, 000. C) RM49, 000. D) RM66, 000. Show Answer Correct Answer: C) RM49, 000. 2. What ratio shows how well a business can turn revenue into gross profit? A) Current ratio. B) Gross profit margin. C) Net profit margin. D) Acid test ratio. Show Answer Correct Answer: B) Gross profit margin. 3. Which of the basic financial statements is best used to answer the questions "What does the company own and how is it financed?" A) Income statement. B) Balance sheet. C) Statement of shareholder's equity. D) Cash flow statement. Show Answer Correct Answer: B) Balance sheet. 4. Which one of the following is a long term asset? A) Market Beef. B) Breeding Beef. C) Land. D) Lance's goats. Show Answer Correct Answer: C) Land. 5. Given an accounts receivable turnover of 8 and annual credit sales of RM362, 000, the average collection period (360-day year) is A) 45 days. B) 60 days. C) 5 days. D) 90 days. Show Answer Correct Answer: A) 45 days. 6. Explain the significance of the quick ratio in financial statement analysis. A) The quick ratio is only relevant for non-profit organizations. B) The quick ratio has no significance in financial statement analysis. C) The quick ratio is significant in financial statement analysis because it provides insight into a company's short-term liquidity and ability to cover immediate liabilities. D) The quick ratio is used to measure long-term solvency of a company. Show Answer Correct Answer: C) The quick ratio is significant in financial statement analysis because it provides insight into a company's short-term liquidity and ability to cover immediate liabilities. 7. The dividend ratio is the most widely recognized measure of a corporation's financial performance. A) True. B) False. Show Answer Correct Answer: B) False. 8. The primary concern of short-term creditors when assessing the strength of a firm is the entity's A) Short-term liquidity. B) Profitability. C) Market price of stock. D) Leverage. Show Answer Correct Answer: A) Short-term liquidity. 9. What does the total debt to total capital ratio measure? A) The percentage of the firm's capital provided by debtholders. B) The rate of return on common stockholders' investment. C) The firm's ability to meet its annual interest payments. D) The firm's ability to pay off short-term obligations without relying on the sale of inventories. Show Answer Correct Answer: A) The percentage of the firm's capital provided by debtholders. 10. Financial ratios that show how and to what degree a company has financed its assets. A) Leverage ratios. B) Efficiency ratios. C) Profitability ratios. D) Liquidity ratios. Show Answer Correct Answer: A) Leverage ratios. 11. Choose the appropriate ratio analysis:Asset turnover A) Financial Ratios. B) Profitability ratios. C) Solvency Ratios. D) Liquidity ratios. Show Answer Correct Answer: B) Profitability ratios. 12. What could be the reasons for negative cash flows from operating activities? A) Increase in the level of Current Assets. B) Decrease in the level of Current Liabilities. C) Delays in the realisation of receivables. D) All the above. Show Answer Correct Answer: D) All the above. 13. Slow Moving / Non Moving / Obsolete stocks should be classified as? A) Fixed Assets. B) Intangible Assets. C) Current Assets. D) Non-current Assets. Show Answer Correct Answer: D) Non-current Assets. 14. The net tax liabilities for a particular FY as calculated by the unit is Rs. 163.50 lakh, whereas the tax payment is required to be made as per Income Tax Rules is Rs. 175 lakh for that particular year. The difference in the tax liability was on account of some expenses, which has been disallowed by the Income Tax Department. How this difference of Rs. 11.50 lakh will be accounted for? A) Deferred Tax Assets. B) Deferred Tax Liability. C) Will not be accounted for at all as the difference was due to permanent difference. D) Can not say. Show Answer Correct Answer: C) Will not be accounted for at all as the difference was due to permanent difference. 15. Net income after taxes divided by net sales A) Net profit margin. B) Net sales margin. C) Net profit and sales margin. D) Profit-sales ratio. E) NOT IN THE CHOICES. Show Answer Correct Answer: A) Net profit margin. 16. How is the cash flow statement different from the income statement? A) The cash flow statement shows the net income or loss, while the income statement shows the cash inflows and outflows. B) The cash flow statement shows the revenues and expenses, while the income statement shows the inflows and outflows of cash. C) The cash flow statement shows the assets and liabilities, while the income statement shows the revenues and expenses. D) The cash flow statement shows the inflows and outflows of cash during a specific period, while the income statement shows the revenues, expenses, and net income or loss for a specific period. Show Answer Correct Answer: D) The cash flow statement shows the inflows and outflows of cash during a specific period, while the income statement shows the revenues, expenses, and net income or loss for a specific period. 17. What is the purpose of an income statement? A) To track the company's stock prices and market value. B) To calculate the company's total assets and liabilities. C) To determine the company's customer satisfaction and loyalty. D) To provide a summary of a company's revenues, expenses, and net income over a specific period of time. Show Answer Correct Answer: D) To provide a summary of a company's revenues, expenses, and net income over a specific period of time. 18. All of the following are included in the Statement of Financial Position, except for? A) Capital. B) Vehicle expenses. C) Vehicle. D) Profit. Show Answer Correct Answer: B) Vehicle expenses. 19. Why is the price-earnings (P/E) ratio considered important in financial analysis? A) It is used to determine the company's marketing strategy. B) It has no impact on the company's performance. C) It is only relevant for small businesses. D) It provides insight into the valuation of a company's stock and its potential for future growth. Show Answer Correct Answer: D) It provides insight into the valuation of a company's stock and its potential for future growth. 20. Which category of ratios helps answer the question 'Can we make required payments?' A) Profitability ratios. B) Debt management ratios. C) Asset management ratios. D) Liquidity ratios. Show Answer Correct Answer: D) Liquidity ratios. 21. At the end of FY, the inventory holding level of a unit has increased from 69 days to 103 days. What could be the possible reasons for substantial increase in the inventory holding level? A) The unit had procured raw material in bulk to complete the orders. B) The unit was holding the substantial amount of finished goods, waiting for clearance from the buyers to dispatch the material. C) The unit has bought substantial amount of raw material in the month of march as the prices are going upside. D) All the above. Show Answer Correct Answer: D) All the above. 22. The definition of Current Assets & Current Liabilities are available in? A) Accounting Standards. B) RBI Master Circular. C) Companies Act 2013. D) No where available, current assets are to be identified as per prevailing practice. Show Answer Correct Answer: C) Companies Act 2013. 23. Generally, a corporation is owned by its: A) Managers. B) Board of Directors. C) Shareholders. D) All of the above. Show Answer Correct Answer: C) Shareholders. 24. Asset turnover measures A) How often a company replaces its assets. B) How efficiently a company uses its assets to generate sales. C) The portion of the assets that have been financed by creditors. D) The overall rate of return on assets. Show Answer Correct Answer: B) How efficiently a company uses its assets to generate sales. 25. Examples may include salaries, utilities, rent, insurance, and office supplies. A) Expenses. B) Net Loss. C) Net Income. D) Revenue. Show Answer Correct Answer: A) Expenses. 26. The long term surplus / deficit in a funds flow statement depicts? A) Profitability of the unit. B) Excess Money available at Management disposal. C) Change in Net Working Capital. D) None of the above. Show Answer Correct Answer: C) Change in Net Working Capital. 27. ChaCha Corporation has current assets of RM11, 400, inventories of RM4, 000, and a current ratio of 2.6. What is ChaCha's quick or acid test ratio? A) 1.69. B) 0.54. C) 1.35. D) 0.74. Show Answer Correct Answer: A) 1.69. 28. The two basic measures of liquidity are: A) Inventory turnover and current ratio. B) Current ratio and acid test ratio. C) Gross profit Ratio and operating ratio. D) Current ratio and average collection period. Show Answer Correct Answer: B) Current ratio and acid test ratio. 29. Which of the following ratios assess the firm's ability to pay the debt interest and maturities as they become due? A) Net Profit Margin. B) Quick Ratio. C) Times Interest earned. D) Current Ratio. Show Answer Correct Answer: C) Times Interest earned. 30. The financial statement that reports whether the business earned a profit and also lists the revenues and expenses is called the: A) Income Statement. B) Statement of Cash Flows. C) Statement of Retained Earnings. D) Balance Sheet. Show Answer Correct Answer: A) Income Statement. ← PreviousNext →Related QuizzesAccounting QuizzesFinance 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 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books