Question 1

Profit available to ordinary shareholders divided by the weighted number of ordinary shares is the calculation for:

Accepted Answer

A)  net tangible asset backing (NTA
B)  per share. 
B)  dividend per share. 
C)  operating cash flow per share. 
D)  earnings per share. 
A)  net tangible asset backing (NTA
B)  per share. 
B)  dividend per share. 
C)  operating cash flow per share. 
D)  earnings per share. D

Question 2

_________________ analysis assists users in their decision making by expressing an entity's financial performance and position in relative terms.

Accepted Answer

Financial

Question 3

Aspect Ltd has the following balance sheet figures.The current ratio is:
$ \begin{array}{lr}\text { Total current assets } & \$ 450000 \ \text { Total current liabilities } & 150000 \ \text { Inventory } & 200000 \ \text { Bank overdraft } & 30000\end{array} $

Accepted Answer

A)  2:1 
B)  1.67:1 
C)  3.75:1 
D)  3:1 
A)  2:1 
B)  1.67:1 
C)  3.75:1 
D)  3:1 D

Question 4

The profitability ratio that measures an entity's ability to generate a profit from its asset investments is:

Accepted Answer

A)  profit margin. 
B)  return on equity. 
C)  gross profit margin. 
D)  return on assets. 
A)  profit margin. 
B)  return on equity. 
C)  gross profit margin. 
D)  return on assets.

Question 5

Which of the following does not measure asset efficiency?

Accepted Answer

A)  Asset turnover ratio. 
B)  Return on assets. 
C)  Days inventory. 
D)  Times debtors turnover. 
A)  Asset turnover ratio. 
B)  Return on assets. 
C)  Days inventory. 
D)  Times debtors turnover.

Question 6

If an entity's selling and distribution expenses to sales ratio increases from 2.5% in one year to 3.8% the following year,this indicates that:

Accepted Answer

A)  the entity has become more efficient in controlling its selling and distribution expenses over the period. 
B)  the entity has become less efficient in controlling its selling and distribution expenses over the period. 
C)  selling and distribution expenses are a lower percentage of sales. 
D)  the entity's profitability has decreased. 
A)  the entity has become more efficient in controlling its selling and distribution expenses over the period. 
B)  the entity has become less efficient in controlling its selling and distribution expenses over the period. 
C)  selling and distribution expenses are a lower percentage of sales. 
D)  the entity's profitability has decreased.

Question 7

A measure of long-term solvency is:

Accepted Answer

A)  debt ratio. 
B)  debt to equity ratio. 
C)  equity ratio. 
D)  all these options measure long-term solvency. 
A)  debt ratio. 
B)  debt to equity ratio. 
C)  equity ratio. 
D)  all these options measure long-term solvency.

Question 8

____________________ analysis is a technique for evaluating a series of financial statement data over a period of time.

Accepted Answer

The answer of ____________________ analysis is a technique for evaluating...

Question 9

Relying on absolute values in an entity's financial statements to predict future risks is not meaningful because:

Accepted Answer

A)  an increase in the profit figure does not necessarily indicate an increase in the profitability of the entity. 
B)  an increase in non-current liabilities does not necessarily mean the entity has become more reliable on external funding. 
C)  an increase in current liabilities does not necessarily mean the entity is having liquidity problems. 
D)  all of the above statements are correct. 
A)  an increase in the profit figure does not necessarily indicate an increase in the profitability of the entity. 
B)  an increase in non-current liabilities does not necessarily mean the entity has become more reliable on external funding. 
C)  an increase in current liabilities does not necessarily mean the entity is having liquidity problems. 
D)  all of the above statements are correct.

Question 10

The gross profit margin is calculated as gross profit divided by _____________ _____________.

Accepted Answer

The answer of The gross profit margin is calculated as...

Question 11

Liquidity ratios measure the ability of an entity to:

Accepted Answer

A)  remain a going concern. 
B)  meet its short-term obligations and unexpected cash needs. 
C)  generate profit. 
D)  all of the options are correct. 
A)  remain a going concern. 
B)  meet its short-term obligations and unexpected cash needs. 
C)  generate profit. 
D)  all of the options are correct.

Question 12

An entity's profit margin is affected by which of the following ratios?

Accepted Answer

A)  Gross profit margin and expense ratios. 
B)  Inventory and debtors days ratios. 
C)  Gross profit margin and return on assets. 
D)  Debt and equity ratios. 
A)  Gross profit margin and expense ratios. 
B)  Inventory and debtors days ratios. 
C)  Gross profit margin and return on assets. 
D)  Debt and equity ratios.

Question 13

In a vertical analysis of a statement of profit or loss,the 100% figure would be assigned to:

Accepted Answer

A)  sales. 
B)  gross profit. 
C)  expenses. 
D)  net profit. 
A)  sales. 
B)  gross profit. 
C)  expenses. 
D)  net profit.

Question 14

It is argued that the cash flow ratio is a better measure of ________ than the current ratio as it uses cash flows generated over the whole reporting period rather than at a particular point in time.

Accepted Answer

The answer of It is argued that the cash flow...

Question 15

With ratio analysis,when an item on the statement of cash flows is compared to a balance sheet item:

Accepted Answer

A)  the balance sheet item should first be calculated as an average amount for the year. 
B)  the ending balance of the balance sheet item should be used. 
C)  the beginning balance of the balance sheet item should be used. 
D)  a meaningful comparison of items between these statements cannot be made. 
A)  the balance sheet item should first be calculated as an average amount for the year. 
B)  the ending balance of the balance sheet item should be used. 
C)  the beginning balance of the balance sheet item should be used. 
D)  a meaningful comparison of items between these statements cannot be made.

Question 16

Which of the following statements regarding days inventory is incorrect?

Accepted Answer

A)  Days inventory is much higher for a supermarket than a clothing retailer. 
B)  Days inventory is a measure of the average length of time it takes to sell inventory. 
C)  Days inventory is a measure of the efficiency of an entity at selling inventory. 
D)  All of the above options are incorrect. 
A)  Days inventory is much higher for a supermarket than a clothing retailer. 
B)  Days inventory is a measure of the average length of time it takes to sell inventory. 
C)  Days inventory is a measure of the efficiency of an entity at selling inventory. 
D)  All of the above options are incorrect.

Question 17

Using the data below to perform a trend analysis,and assuming that year 1 is the base year,the value assigned to sales revenue for year 2 is:
$\begin{array}{|l|r|}
\hline &\text{ Sales Revenue} \
\hline \text{Year 1 }&  \$ 180000  \
\hline \text{Year 2} & 155000 \
\hline \text{Year 3 }& 210000 \
\hline
\end{array}$

Accepted Answer

A)  135 
B)  100 
C)  116 
D)  86 
A)  135 
B)  100 
C)  116 
D)  86

Question 18

Using financial analysis to assist users in answering the 'why' questions requires a thorough understanding of:

Accepted Answer

A)  ratio measurements only. 
B)  preparation of the financial statements only. 
C)  all ratio measurements and how they interrelate. 
D)  only some of the ratio measurements. 
A)  ratio measurements only. 
B)  preparation of the financial statements only. 
C)  all ratio measurements and how they interrelate. 
D)  only some of the ratio measurements.

Question 19

Financial analysis can be categorised as:

Accepted Answer

A)  vertical and horizontal analysis. 
B)  ratio analysis. 
C)  trend analysis. 
D)  all of the above. 
A)  vertical and horizontal analysis. 
B)  ratio analysis. 
C)  trend analysis. 
D)  all of the above.

Question 20

In a vertical analysis,the anchor point for accounts payable is:

Accepted Answer

A)  total assets. 
B)  total current liabilities. 
C)  total liabilities. 
D)  total equity. 
A)  total assets. 
B)  total current liabilities. 
C)  total liabilities. 
D)  total equity.

Profit available to ordinary shareholders divided by the weighted number of ordinary shares is the calculation for:

_________________ analysis assists users in their decision making by expressing an entity's financial performance and position in relative terms.

Aspect Ltd has the following balance sheet figures.The current ratio is: Total current assets \ 450000 Total current liabilities 150000 Inventory 200000 Bank overdraft 30000

The profitability ratio that measures an entity's ability to generate a profit from its asset investments is:

Which of the following does not measure asset efficiency?

If an entity's selling and distribution expenses to sales ratio increases from 2.5% in one year to 3.8% the following year,this indicates that:

A measure of long-term solvency is:

____________________ analysis is a technique for evaluating a series of financial statement data over a period of time.

Relying on absolute values in an entity's financial statements to predict future risks is not meaningful because:

The gross profit margin is calculated as gross profit divided by _ _.

Liquidity ratios measure the ability of an entity to:

An entity's profit margin is affected by which of the following ratios?

In a vertical analysis of a statement of profit or loss,the 100% figure would be assigned to:

It is argued that the cash flow ratio is a better measure of ________ than the current ratio as it uses cash flows generated over the whole reporting period rather than at a particular point in time.

With ratio analysis,when an item on the statement of cash flows is compared to a balance sheet item:

Which of the following statements regarding days inventory is incorrect?

Using the data below to perform a trend analysis,and assuming that year 1 is the base year,the value assigned to sales revenue for year 2 is: Sales Revenue Year 1 \ 180000 Year 2 155000 Year 3 210000

Using financial analysis to assist users in answering the 'why' questions requires a thorough understanding of:

Financial analysis can be categorised as:

In a vertical analysis,the anchor point for accounts payable is:

Introduction to Accounting and Business Decision Making

Accounting in Society

Business Structures

Business Transactions

Balance Sheet

Statement of Profit or Loss and Statement of Changes in Equity

Statement of Cash Flows

Budgeting

Costvolumeprofit Analysis

Costing and Pricing in an Entity

Capital Investment

Financing the Business

Performance Measurement

Filters

Exam 8: Analysis and Interpretation of Financial Statements

Profit available to ordinary shareholders divided by the weighted number of ordinary shares is the calculation for:

_________________ analysis assists users in their decision making by expressing an entity's financial performance and position in relative terms.

Aspect Ltd has the following balance sheet figures.The current ratio is: Total current assets \ 450000 Total current liabilities 150000 Inventory 200000 Bank overdraft 30000

The profitability ratio that measures an entity's ability to generate a profit from its asset investments is:

Which of the following does not measure asset efficiency?

If an entity's selling and distribution expenses to sales ratio increases from 2.5% in one year to 3.8% the following year,this indicates that:

A measure of long-term solvency is:

____________________ analysis is a technique for evaluating a series of financial statement data over a period of time.

Relying on absolute values in an entity's financial statements to predict future risks is not meaningful because:

The gross profit margin is calculated as gross profit divided by _____________ _____________.

Liquidity ratios measure the ability of an entity to:

An entity's profit margin is affected by which of the following ratios?

In a vertical analysis of a statement of profit or loss,the 100% figure would be assigned to:

It is argued that the cash flow ratio is a better measure of ________ than the current ratio as it uses cash flows generated over the whole reporting period rather than at a particular point in time.

With ratio analysis,when an item on the statement of cash flows is compared to a balance sheet item:

Which of the following statements regarding days inventory is incorrect?

Using the data below to perform a trend analysis,and assuming that year 1 is the base year,the value assigned to sales revenue for year 2 is: Sales Revenue Year 1 \ 180000 Year 2 155000 Year 3 210000

Using financial analysis to assist users in answering the 'why' questions requires a thorough understanding of:

Financial analysis can be categorised as:

In a vertical analysis,the anchor point for accounts payable is:

Introduction to Accounting and Business Decision Making

Accounting in Society

Business Structures

Business Transactions

Balance Sheet

Statement of Profit or Loss and Statement of Changes in Equity

Statement of Cash Flows

Budgeting

Costvolumeprofit Analysis

Costing and Pricing in an Entity

Capital Investment

Financing the Business

Performance Measurement

Filters

The gross profit margin is calculated as gross profit divided by _ _.