Financial Statement Analysis Multiple Choice Questions#10

NOTE: Attempt all Questions to see the Result at the bottom of this page.

  1. 1)

    Which of the following is NOT a feature of preferred shares?

    • A) Distributive
    • B) Callable
    • C) In arrears
    • D) Cumulative

  2. 2)

    Which one of the following represents the value of shares in the market at any point of time?

    • A) Par value
    • B) Book value
    • C) Face value
    • D) Market value

  3. 3)

    Which of the following would NOT improve the current ratio?

    • A) Issue long-term debt to buy inventory
    • B) Sell common stock to reduce current liabilities
    • C) Sell fixed assets to reduce accounts payable
    • D) Borrow short term to finance additional fixed assets

  4. 4)

    Krisle and Kringle's debt-to-total assets ratio is 4%. What is its debt-to-equity ratio?

    • A) 2%
    • B) 7%
    • C) 6%
    • D) 3%

  5. 5)

    A company experiences a dramatic fall in its gross profit ratio. This could be the result of which of the following?

    • A) An increase in competition in the company's main product market
    • B) An increase in the incidence of bad debts
    • C) An increase in overhead expenses
    • D) An increase in demand for the company's products

  6. 6)

    Which of the following is NOT an objective of fundamental analysis?

    • A) To make projection on its business performance
    • B) To predict the future stock price
    • C) To evaluate its management and make internal business decisions
    • D) To calculate its credit risk

  7. 7)

    Which of the following is NOT a goal of analysis of financial statement?

    • A) Assess the past performance
    • B) Asses the current financial position
    • C) Predict the future performance of the company
    • D) Asses the working of management in the future

  8. 8)

    In isolation, which of the following is TRUE about a financial ratio?

    • A) Useless piece of information
    • B) Useful piece of information
    • C) Useful only for past performance
    • D) Useful only for future predictions

  9. 9)

    Financial statement ratio analysis may be undertaken to study liquidity, turnover, profitability, and other indicators. To which does the current ratio most relate?

    • A) Liquidity
    • B) Turnover
    • C) Profitability
    • D) Other indicator

  10. 10)

    Which of the following is the ideal position of debt ratio?

    • A) 30%
    • B) 60%
    • C) 50%
    • D) 45%