Financial Analysis and Control

All of the statements below are correct regarding financial ratio EXCEPT ______

• Used to identify the pros and cons of a business

• Measure relationship between two or more components of the firm’s financial statements

• Evaluation of financial statements to make decision

• Assess a business's performance and status

Financial analysis is used by internal users to__________

• analyze the firm's true value

• analyze the capability of a firm to pay back loan

• monitor a firm's true value

• monitor the firm's financial performance

A firm is considered liquid if it has enough ______ to cover it's ______

• current assets, non-current liabilities

• non-current assets, current liabilities

• current assets, current liabilities

• non-current assets, non-current liabilities

________ refers to solvency of the firm’s overall financial position

Select the ratio that can be calculated using ONLY items found in income statement (you may select more than one answer)

• Inventory turnover ratio

• Return on asset

• Net profit margin

• Debt ratio

Select the ratio that can be calculated using ONLY items found in balance sheet (you may select more than one answer)

• Net profit margin

• Debt equity ratio

• Net working capital

• Return on equity

________ ratio can be used to analyze company's liabilities

Balance sheet shows the ___________ at one point it time and it is a summary of firm's resources balanced against its liabilities and ownership

"It relates to the firm's ability to obtain returns relative to sales, assets and equity". This statement refers to ______

• Liquidity ratio

• Market ratio

• Activity ratio

• Profitability ratio

Financial analysis is _______________ to make decision regarding financial management of a firm