Chapter 2: Financial Statement Analysis

Sales minus cost of sales is equal to 

• Net Profit

• Gross Profit

• Proft after tax

• Earnings before interest and tax

All are profitability ratios EXCEPT

• Days debtors

• Gross profit margin

• Profit margin 

• Return on equity

Which of the following is a liquidity ratio?

• Times debtors turnover

• Current ratio

• Days debtors

• Equity ratio

The gross profit margin ratio is calculated by dividing: 

• profit by sales revenue. 

• profit by shareholders’ equity. 

• gross profit by sales revenue. 

• sales revenue by cost of sales. 

What do we deduct from the current asset to calculate the quick asset ratio?

• Receivables

• Prepaid expense

• Inventory

• Short-term investment

What does ROA stand for?

• Rate of Return on Equity

• Rate of Return on Income

• Rate of Return on New Worth

• Rate of Return on Assets

If your current ratio is above this number you are considered to have good liquidity.

• 0

• 1

• 2

• 10

What information do you need for the Current Ratio?

• Current Assets

• Current Liabilities

• Total Assets

• Total Liabilities

Which one of the following is a long term asset?

• Market Beef

• Breeding Beef

• Land

• Lance's goats

Which one of the following is a current asset?

• Bank Account

• Operating Note

• Land

• Machinery