Financial Statement Analysis Quiz

What is the primary purpose of a balance sheet?

• To measure the profitability of a company over a specific period.

• To provide a snapshot of a company's financial condition at a specific point in time.

• To track the cash inflows and outflows from various activities.

• To calculate the dividends to be paid to shareholders.

Which of the following is typically found on an income statement?

• Cash and cash equivalents

• Long-term liabilities

• Sales Revenue

• Inventory

What does the cash flow statement provide information about?

• The company's debt levels

• The company's investment in fixed assets

• The company's cash inflows and outflows during a period

• The company's equity levels

Which section of the cash flow statement includes transactions related to dividends paid and stock issued?

• Operating Activities

• Investing Activities

• Financing Activities

• Non-cash Activities

What does a high current ratio indicate about a company's financial health?

• High profitability

• High debt levels

• Strong liquidity position

• Poor asset management

On the balance sheet, what does the term "liabilities" refer to?

• The company's earnings after taxes

• The company's obligations and debts

• The company's ownership equity

• The company's cash reserves

Gross profit is calculated as:

• Total Revenue - Cost of Goods Sold

• Net Income + Taxes

• Operating Income + Non-operating Expenses

• Sales Revenue - Operating Expenses

Which of the following would be classified as an operating activity in the cash flow statement?

• Sale of company stock

• Purchase of a new factory

• Payment to suppliers

• Issuance of new bonds

What is the significance of the "retained earnings" on a balance sheet?

• It indicates the amount of dividends paid to shareholders.

• It represents the total assets minus total liabilities.

• It shows the cumulative total of all earnings not distributed to shareholders.

• It reflects the company's total share capital.

Depreciation expense is found on which financial statement?

• Balance Sheet

• Income Statement

• Cash Flow Statement

• Statement of Retained Earnings