Exam 19: Analysis and Interpretation of Financial Statements

Which of these are limitations of financial analysis? I.The past is an imperfect guide to the future II.Historical cost financial reports are not adjusted for inflation III.Non-quantitative factors are not considered IV.Ratio results often contain errors in calculations V Comparisons may not be valid

An increase in the inventory turnover ratio is normally considered to be favourable but could be unfavourable if it means:

Of these businesses the one that is likely to have the highest inventory turnover ratio is a:

Which statement concerning the cash flow adequacy ratio is not correct?

In relation to the price-earnings ratio (P/E ratio),which statement is incorrect?

Which statement concerning earnings per share is incorrect?

When calculating the quick (acid test)ratio,which of these is normally deducted from current assets?

The profit margin ratio measures:

Financial stability refers to the ability of an entity to:

Profit less income tax,divided by revenue,is the formula for:

If the average market price of Silver Bling Ltd's shares is $3.50 and earnings per ordinary share are 70c the P/E ratio is:

Fricker's financial records reveal this information at 31 December 2016. Net sales for 2016 $105 000 Cost of sales for 2016 68 000 Ending inventory 15 000 Beginning inventory 19 000 The number of days taken to turn over average inventory for 2016 is:

Dividend yield on ordinary shares is calculated as:

Which P/E ratios and earnings yields do not match?

Indooroopilly & Sons reports: Total assets $ 950 000 Profit 80 000 Current liabilities 570 000 If current assets = 40% of total assets Indooroopilly's current ratio is:

Which statement is incorrect?

To calculate the current (working capital)ratio it is necessary to:

In a trend analysis of T Company,which of these changes appears to be the most significant in requiring further investigation?

The quick ratio (acid test ratio)reflects:

To be useful for decision making,absolute dollar amounts in financial statements need to be compared with other information.How many of these are possible comparisons? -Prior year results -Current year sales,total assets etc. -Results of similar businesses or industry averages