Deck 32: Techniques of Financial Analysis

Question 1

IAS prescribes extensively for the layout of statements of financial position and comprehensive interest

Answer 1

False

Question 2

Which of these is NOT true about Segmental Analysis

A)All elements of the accounts are broken down by segment
B)it shows which segments are more volatile than others
C)segmental analysis between companies requires fully comparable segments
D)Segmental information disclosed under IFRS 8 follows internal reporting documents.

Answer 2

A

Question 3

IAS 14 and IFRS 8 have the same results for segmental information disclosure

Answer 3

False

Question 4

IFRS 5 stipulates that the impact of discontinued activities should be disclosed to the reader of accounts

Question 5

What is analysed by Trend analysis/ horizontal analysis?

A)Comparing the firms performance with its historical performance
B)Breakdown of the total revenue over differing business segments to enable comparison between businesses.
C)Comparing the firms performance based on industry wide trends
D)The performance of other firms in the same industry adjusted for size of the firm

Question 6

What is analysed by common size analysis?

A)Breakdown of the total revenue over differing business segments to enable comparison between those segments.
B)The performance of other firms in the same industry adjusted for size of the firm
C)Comparing the firms performance to its own history
D)Performance of firms of similar size in differing industries

Question 7

Industry Analysis and Accounting Analysis are not important to evaluate a firms performance

Question 8

Return on capital employed compares

A)Profit before long term interest & tax / total assets
B)Profit before long term interest & tax / total net assets
C)Profit before tax / total assets
D)Profit before tax / total net assets

Question 9

Which of these is NOT a red flag indicating non- compatibility in financial statements?

A)Changes in GAAP applied
B)Changes in the composition of the board of directors
C)Changes in accounting method choices
D)Changes in accounting estimate choices

Question 10

A limitation of financial analysis is that non- monetary factors are not reflected in financial statements