Financial Statement Quiz

What is the main purpose of an income statement?

• To show the company’s financial position at a specific point in time

• To track how cash moves in and out of the business

• To show a company’s profitability over a period of time

• To measure a company’s stock price movements

Which financial statement tells you how much debt a company has?

• Income Statement

• Balance Sheet

• Cash Flow Statement

• Earnings Report

If a company has a high debt-to-equity ratio, what does that indicate?

• The company has more debt compared to its equity

• The company has more equity than debt

• The company is highly profitable

• The company has strong free cash flow

What does Earnings Per Share (EPS) measure?

• The total revenue a company generates

• The amount of net income earned per outstanding share

• The total number of shares a company has

• The company's cash reserves

What does a low Price-to-Earnings (P/E) ratio suggest?

• The stock may be undervalued

• The company is in financial trouble

• The stock is overpriced

• The company is not making any profit

Which financial statement includes Free Cash Flow?

• Income Statement

• Balance Sheet

• Cash Flow Statement

• Earnings Report

If a company consistently has negative cash flow from operations, what could this indicate?

• The company is investing heavily in future growth

• The company is struggling to generate cash from its core business

• The company has too much shareholder equity

• The company is issuing new stock

What is a key sign of a financially healthy company?

• High debt-to-equity ratio and low earnings

• Consistently increasing net income and strong cash flow

• Declining revenue but increasing debt

• A stock price that fluctuates frequently

If Company A has a P/E ratio of 30 and Company B has a P/E ratio of 10, what does this suggest?

• Company A’s stock is cheaper than Company B’s stock

• Investors expect Company A to have higher future growth

• Company B is growing faster than Company A

• Both companies are overvalued

What financial metric is most useful for assessing a company’s profitability?

• Earnings Per Share (EPS)

• Debt-to-Equity Ratio

• Free Cash Flow

• Total Assets