Financial Statement Analysis Quiz

Financial statement analysis primarily helps in:

• Tax filing

• Decision-making

• Inventory valuation

• Audit verification

Which of the following is not an objective of financial statement analysis?

• Assessing profitability

• Evaluating liquidity

• Predicting employee turnover

• Measuring solvency

The process of understanding the financial health of a company through its statements is called:

• Bookkeeping

• Auditing

• Financial statement analysis

• Budgeting

A key importance of financial statement analysis is:

• Forecasting future performance

• Calculating only historical costs

• Ignoring external factors

• Avoiding financial planning

Which group of people primarily uses financial statement analysis for investment decisions?

• Employees

• Creditors

• Investors/shareholders

• Managers only

Vertical analysis of financial statements shows:

• Year-to-year trend

• Common-size comparison

• Future projections

• Only ratios

The main difference between internal and external users of financial analysis is:

• Level of access to information

• Type of currency used

• Size of organization

• Profit margins

Financial statement analysis is useful to creditors mainly for:

• Determining dividend policy

• Assessing repayment ability

• Reducing wages

• Predicting market share

Which of the following is a tool of financial statement analysis?

• Ratio analysis

• SWOT analysis

• Job evaluation

• Work study

A major objective of financial statement analysis is to:

• Replace bookkeeping

• Check fraud only

• Evaluate financial performance and position

• Eliminate accounting standards