MCQ of Financial Statement Analysis

Prof.Rahul Ghosale

Mo No-9665383478/7744083478

MCQ of Finanial !"a"e#en" $nal%sis 1. Accounting Ratios are important tools used by i. ii.

Managers, Researchers

iii. i&.

Investors, $ll of "he a'o&e

iii. iv.

$ig%term o olvency Profit fo for "e "enders.

2. Net Profit Ratio ignifies! i. ii.

()era"io "ional nal Profi" fi"a'i a'ili"% i"% "i#uidity Po Position

&. 'or(ing 'or(ing )apital *urnover measures the relationship of 'or(ing 'or(ing )apital +ith! i. ii.

iii. iv.

Fi*e+ $sse"s ales

Purchases toc(.

. In Ratio Analysis, the term )apital -mployed - mployed refers to! i. ii.

-#uity hare )apital Ne Net +o +orth

iii. iv.

har harehold olders /unds None of "he a'o&e .

iii. iv. iv.

Pref. i ividend  PA* Pref Pref.. iv ivid iden end d  -#ui -#uity ty ivi ivide dend nd..

iii. iv.

)apital $u $udgeting Anal Analy ysis sis of of /i6 /i6ed ed Asset ssetss.

iii. iv.

)redit ales )ost of goods sold.

0. ividend Payout Ratio is! i. ii.

PA* )apital ,P!  P!

3. 4 P5N* Analysis deals +ith! i. ii.

Anal Analy ysis sis of of )urr )urren entt Asset sets $nal%sis of of Pr Profi"

7. In Net Profit Ratio, the denominator is! i. ii.

Net Purchases Ne" !ales

8. Inventory *urnover measures the relationship of inventory +ith! i. ii.

Average a ales Cos" of Goo+s !ol+

iii. iv.

*otal Purchases *otal Assets.

iii. iv. iv.

-6pe -6pect cted ed :alue Analy nalyssis -ngi -ngine neer erin ing g :a :alue lue Analy nalysi sis. s.

iii. iii. i&.

Incr Increa easi sing ng )api )apita tall 4ti 4tili li
9. *he term -:A is used for! i. ii.

-6tra :a :alue Anal nalysis ono# no#i alue $++ ++ee+

1;. Return on Investment may be improved by! i. ii.

Increasing *u *urnover Reducing -6penses

11. In )urrent Ratio, )urrent Assets are compared +ith!

#ail +- rahulghosale=yahoo.com>ghosalerahul=gmail.com

Prof.Rahul Ghosale

i. ii.

Mo No-9665383478/7744083478

)urrent Profit Curren" 1ia'ili"ies

iii. iv.

/i6ed Assets -#uity hare )apital.

12. A$) "td. has a )urrent Ratio of 1.0! 1 and Net )urrent Assets of Rs. 0,;;,;;;. 'hat are the )urrent Assets? i. ii.

Rs. 0,;;,;;; Rs. 1;,;;,;;;

iii. iv.

Rs. 2500000 Rs. 20,;;,;;;

1&. *here is deterioration in the management of +or(ing capital of @B "td. 'hat does it refer to? i.

*hat the )apital -mployed

ii.

reduced *hat the Profitability has gone up

has

iii.

ha" +e'"ors olle"ion )erio+ has

iv.

inrease+ *hat ales has decreased.

1. 'hich of the follo+ing does not help to increase )urrent Ratio? i. ii.

Issue of ebentures to buy toc( Issue of ebentures to pay )reditors

iii. i&.

ale of Investment to pay )reditors $&ail an (/, "o 'u% Mahine

iii. i&.

Issue of -#uity hares Re+e#)"ion of ,e'".

10. ebt to *otal Assets Ratio can be improved by! i. ii.

$orro+ing More Issue of ebentures

13. Ratio of Net Income to Number of -#uity hares (no+n as! i. ii.

Price -arnings Ratio Net Profit Ratio

iii. iv.

arnins )er !hare ividend per hare.

17. *rend Analysis helps comparing performance of a firm i. ii.

'ith other firms  (&er a )erio+ of fir#

iii. i&.

'ith other industries None of the above.

iii.

Curren"

iv.

1ia'ili"ies hare )apital D )urrent Assets.

18. A )urrent Ratio of "ess than 5ne means! i. ii.

)urrent "iabilities C )urrent Assets /i6ed Assets D )urrent Assets

$sse"s



Curren"

19. A firm has )apital of Rs. 1;,;;,;;;E ales of Rs. 0,;;,;;;E Fross Profit of Rs. 2,;;,;;; and -6penses of Rs. 1,;;,;;;. 'hat is the Net Profit Ratio? i. ii.

iii. iv.

0: 0;G

1;G ;G.

2;. @B "td. has earned 8G Return on *otal Assests of Rs. 0;,;;,;;; and has a Net Profit Ratio of 0G. /ind out the ales of the firm. i.

Rs. ,;;,;;;

ii.

Rs. 2,0;,;;;


Prof.Rahul Ghosale iii.

Mo No-9665383478/7744083478

Rs. 8000000

iv.

Rs. 8&,&&,&&&.

iii. iv.

Mar(et hare Position ebt Position.

21. uppliers and )reditors of a firm are interested in i. ii.

Profitability Position 1i;ui+i"% Posi"ion

22. 'hich of the follo+ing is a measure of ebt ervice capacity of a firm? i. ii.

)urrent Ratio Acid *est Ratio

iii. iv.

n"eres" Co&erae Ra"io ebtors *urnover.

2&. Fross Profit Ratio for a firm remains same but the Net Profit Ratio is decreasing. *he reason for such behavior could be! i. ii.

Increase in )osts of Foods old f nrease in *)ense

iii. iv.

Increase in ividend ecrease in ales.

iii.

Increase in Net Profit Ratio means

i&.

increase in ales 1o
2. 'hich of the follo+ing statements is correct? i.

A Higher Receivable *urnover is not

ii.

desirable Interest )overage Ratio

depends

upon *a6 Rate,

lo
20. ebt to *otal Assets of a firm is .2. *he ebt to -#uity boo +ould be! i. ii.

;.8; 0.5

iii. iv.

1.;; ;.70

23. 'hich of the follo+ing helps analysing return to e#uity hareholders? i. ii.

Return on Assets arnins Per !hare

iii. iv.

Net Profit Ratio Return on Investment.

27. Return on Assets and Return on Investment Ratios belong to! i. ii.

"i#uidity Ratios Profi"a'ili"% Ra"ios

iii. iv.

olvency Ratios *urnover.

28. @B "td. has a ebt -#uity Ratio of 1.0 as compared to 1.& Industry average. It means that the firm has! i. ii.

Higher "i#uidity =iher Finanial Ris

iii. iv.

Higher Profitability Higher )apital -mployed.

29. Ratio Analysis can be used to study li#uidity, turnover, profitability, etc. of a firm. 'hat does ebt%-#uity Ratio help to study? i. ii.

!ol&en% "i#uidity

iii. iv.

Profitability *urnover


Prof.Rahul Ghosale

Mo No-9665383478/7744083478

&;. In Inventory *urnover calculation, +hat is ta(en in the numerator?

i.

ales

iii.

5pening toc(

ii.

Cos" of Goo+s !ol+

iv.

)losing toc(.

&1.*he statement of cash flo+ is segregated into three categories! i.

()era"in

ii.

n&es"in 5perating,

Finanin

/inancing,

iii.

Investing,

5perating,

iv.

Accounting /inancing,

Managing,

Managing

Auditing

&2.*he statement of cash flo+ e6plains changes in  by listing the activities that increased and decreased cash. i. ii.

)urrent Asset )urrent "iabilities

iii. iv.

Cash /i6ed Asset

&&.*he statement of cash flo+ can be prepared by using either the Jdirect methodK or . i. ii.

n+ire" Me"ho+ )urrent Method

iii. iv.

Non current Method None of the above

&.4nder direct method,  cash flo+s are reported by maLor classes of operating cash receipts and payments. i. ii.

/inancing ()era"in

iii. iv.

Investing None of the above

&0./or a healthy gro+ing firm generally  cash flo+s from operating activities are e6pected. i. ii.

Negative Posi"i&e

iii. iv.

Null None of the above


Prof.Rahul Ghosale

Mo No-9665383478/7744083478

&3.A summary of a firms changes in financial position from one period to another, it is called . iii. 4ses i. !oures ii. Resources iv. /unds &7.*he flo+ of funds statement portrays net rather than  changes bet+een t+o comparable balance sheets at different dates. i. ii.

5perating Gross

iii. iv.

/inancial Investing

iii. iv.

$oth a and b None of the above

&8.Any decrease in asset item represents i. ii.

4ses of funds !oures of fun+s

&9.An increase in account receivables +ould be a . i. ii.

iii. iv.

>se of fun+s Reuse of funds

ources of funds $oth a and c

;. is a boo((eeping entry that allocates the cost of assets against income but does not involve any movement of capital. i. ii.

epletion Amorti
iii. iv.

,e)reia"ion None of the above

1.eferred ta6es an item that often appear in the long term  portion of a firms balance sheet. i. ii.

Assets o+ners e#uity

iii. iv.

lia'ili"% current assets

2.eferred ta6es most commonly arises +hen a firm determines .. -6penses in its published financial statement on a different basis then in its ta6 return. aO irect e6pense bO +e)reia"ion

cO indirect e6pense dO ta6 e6pense

eO


Prof.Rahul Ghosale

Mo No-9665383478/7744083478

&.Most li(ely a company chooses  depreciation method for its published income statement. i. ii.

MA)R simple method

iii.

s"raih" line #e"ho+

iv.

double decline method

./or ta6 purpose company uses the  depreciation method. i. ii.

M$CR! simple method

iii. iv.

straight line method double decline

0.$y analy
iii. iv.

$"i&i"% Profitability

Mar(et "i#uidity

3.An analysis of percentage of financial statements +here all the balance sheet items are divided by total assets and all income statement items are divided by net sales and revenue, is called i. ii.

*rend analysis Co##on si?e anal%sis

iii. iv.

:ertical analysis Inde6 analysis

7.An analysis of percentage of financial statements +here all the balance sheet or income statement figures for a base year e#uals 1;;. i. ii.

*rend analysis )ommon si
iii. i&.

:ertical analysis n+e* anal%sis

8.'hich of the follo+ing +ould be considered a use of funds? i.

a decrease in accounts

ii.

receivable. a decrease in cash.

iii.

an increase in account

i&.

payable. an inrease in ash.


Prof.Rahul Ghosale

Mo No-9665383478/7744083478

9.'hich of the follo+ing is N5* a cash outflo+ for the firm? i. ii.

iii. iv.

+e)reia"ion. dividends.

interest payments. ta6es.

0;.An e6amination of the sources and uses of funds statement is part of! i.

A

forecasting

ii.

techni#ue. $ fun+s flo< anal%sis.

iii. iv.

A ratio analysis. )alculations for

the

balance sheet.

01.4ses of funds include a anO! i. ii.

decrease in cash. increase in any liability.

iii. iv.

inrease in fi*e+ asse"s. ta6 refund.

02.According to the /inancial Accounting tandards $oard /A$O, +hich of the follo+ing is a cash flo+ from a QfinancingQ activity? i.

cash outflo+ to the government for

ii.

ta6es. ash ou"flo< "o sharehol+ers as

iii. iv.

cash outflo+ to lenders as interest. cash outflo+ to purchase bonds issued by another company.

+i&i+en+s.

0&. provides a financial summary of the firms operating results during a specified period. i. ii.

$alance sheet no#e s"a"e#en"

iii. iv.

)ash flo+ statement tatement of retained earning

0./irms financial position at a given point in time is stated in . i. ii.

alane shee" Income statement

iii. iv.

)apital budgeting None of the above


Prof.Rahul Ghosale

Mo No-9665383478/7744083478

00.*he times interest earned ratio, sometimes also called the. i. ii.

*otal Asset *urnover Average Payment Period

iii. i&.

/i6ed%Payment )overage Ratio n"eres" o&erae ra"io

03.A popular tool for evaluating profitability in relation to sales is the . i. ii.

"i#uidity Ratios Co##on-si?e

ino#e

iii. iv.

uic( Ratio )ash Ratio

s"a"e#en"

07.'hich of the follo+ing three is not fre#uently cited ratio of profitability that can be read directly from the common%si
Fross profit margin, 5perating profit margin,

iii. i&.

Net profit margin Re"urn on o"al $sse"s


MCQ of Financial Statement Analysis

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