Mastering Financial Statement Analysis

Mastering Financial Statement Analysis

12th Grade

28 Qs

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Mastering Financial Statement Analysis

Mastering Financial Statement Analysis

Assessment

Quiz

Mathematics

12th Grade

Practice Problem

Medium

Created by

Frans YT

Used 1+ times

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28 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

1 min • 2 pts

What is the formula for calculating the current ratio?

Current Ratio = Current Assets + Current Liabilities

Current Ratio = Current Assets / Current Liabilities

Current Ratio = Total Assets / Total Liabilities

Current Ratio = Current Liabilities / Current Assets

2.

MULTIPLE CHOICE QUESTION

1 min • 2 pts

What does a high debt-to-equity ratio indicate about a company?

It reflects a stable financial environment with low risk.

It indicates a strong market position due to high equity.

It indicates higher financial risk due to reliance on debt financing.

It suggests the company has no debt obligations.

3.

MULTIPLE CHOICE QUESTION

1 min • 2 pts

How can trend analysis help in forecasting future performance?

Trend analysis helps in forecasting future performance by identifying patterns in historical data that indicate potential future outcomes.

Trend analysis ignores historical data and focuses on current events.

Trend analysis relies solely on expert opinions for predictions.

Trend analysis is only useful for short-term forecasting.

4.

MULTIPLE CHOICE QUESTION

1 min • 2 pts

What is the purpose of common-size financial statements?

The purpose of common-size financial statements is to facilitate comparison of financial performance across different companies or time periods by expressing line items as percentages.

To summarize the cash flow activities of a business over a period of time.

To calculate the total revenue of a company for a specific year.

To provide a detailed breakdown of individual line items in financial statements.

5.

MULTIPLE CHOICE QUESTION

1 min • 2 pts

How do you calculate the gross profit margin?

Gross Profit Margin = (Total Revenue - COGS) * 100

Gross Profit Margin = (COGS / Total Revenue) * 100

Gross Profit Margin = ((Total Revenue - COGS) / Total Revenue) * 100

Gross Profit Margin = (Total Revenue + COGS) / Total Revenue

6.

MULTIPLE CHOICE QUESTION

1 min • 2 pts

What does a declining return on equity (ROE) suggest?

It shows increased dividends for shareholders.

It reflects higher sales growth rates.

It suggests potential issues with profitability or efficiency in using equity.

It indicates a strong market position.

7.

MULTIPLE CHOICE QUESTION

1 min • 2 pts

How can you use horizontal analysis to assess financial performance?

Horizontal analysis is used to evaluate only cash flow statements.

Horizontal analysis focuses solely on current year performance.

It compares financial ratios without considering time periods.

Horizontal analysis allows for the assessment of financial performance by comparing line items across multiple periods to identify trends and changes.

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