Financial statement analysis

1. Balance sheet shows:

• Financial position of the company

• Profit or loss of the company

• Cash flow of the company

• Assets, Liabilities and Profits

2. Annual report is issued by a company to its:

• Directors

• Auditors

• Shareholders

• Managers

3. Financial analysis is significant because it:

• Ignores qualitative aspect

• Judges financial position and operational efficiency

• Suffers from the limitations of financial statement

• Is affected by personal ability and bias of the analysis

4. Which of these are not the methods of financial statement analysis?

• Ratio analysis

• Comparative analysis

• Trend analysis

• Capitalization method

5. Financial statements are:

• Anticipated facts

• Estimated facts

• Recorded facts

• Forecasted values

6. Which of the following is not a measure of short-term liquidity?

• Quick ratio

• Current ratio

• Working capital

• Debt ratio

7. All of the following items are typical of a multiple-step income statement except for:

• Total costs and expenses.

• Gross profit

• Net sales

• Operating income

8. From the viewpoint of a stockholder, which of the following relationships do you consider of the least significance?

• ROA consistently is higher than the industry average.

• ROA is greater than the interest rate being paid to creditors.

• ROE has increased in each of the past five years.

• Net income is greater than the amount of working capital.

9. In the long run, it is most important for a business to generate an inflow of cash from its:

• Operating activities.

• Investing activities.

• Stockholders.

• Creditors

Which of the following is a current asset?

• automobiles

• marketable securities

• buildings

• equipment