Page 142 - DMGT403_ACCOUNTING_FOR_MANAGERS

Unit 6: Financial Statements: Analysis and Interpretation

6.6 Self Assessment Notes

Choose the appropriate answer:
1. Financial statement analysis is to

(a) Inter firm comparison (b) Intra firm comparison
(c) Industrial average comparison (d) (a), (b) & (c)
2. Comparative financial statement analysis is into
(a) Comparison of income and position statements
(b) Common size statements

(c) Trend percentage analysis
(d) (a), (b) & (c)
3. Ratio is an expression of

(a) Quotient (b) Time
(c) Percentage (d) Fraction
(e) All of these
4. Accounting ratios are to study
(a) Accounting relationship among the variables

(b) The relationship in between the variables of financial statements
(c) The relationship in between the variables of financial statements for analysis and
interpretations

(d) None of the above.
5. Accounting ratios are of
(a) Income statement ratios (b) Positional statement ratios

(c) Both (a) & (b) (d) None of the above
6. Solvency position of the firm studied and interpreted through
(a) Short-term solvency ratios (b) Long-term solvency ratios
(c) Coverage ratios (d) (a), (b) & (c)
7. Efficiency and effectiveness of the firm is studied through

(a) Liquidity ratios (b) Leverage ratios
(c) Turnover ratios (d) Profitability ratios
8. Profitability ratios to study the potential to earn profits

(a) On Assets (b) On Capital employed
(c) On Sales (d) (a), (b) & (c)
9. Standard norm of the current ratio is
(a) 2:1 (b) 1:5
(c) 1:2 (d) 3:1

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