Analysis of Financial Statements : Mock Test – 03

1. Which ratio is complimentary to each other?

2. Interest coverage ratio is given by:

3. Higher the ratio, the more favourable it is, does not stand true for:

4. Cash Flow Statement is prepared on the basis of ____________.

5. The ratios that analyse profits in relation to revenue from operations or funds employed in the business are called:

6. Bankers and lenders are interested in financial analysis to judge:

7. Assertion (A): Interest Coverage Ratio is a measure of security of interest payable on capital employed.

Reason (R): A higher Interest Coverage Ratio reveals the availability of surplus for shareholders.

8. If Share Capital ₹ 4,00,000, Reserves and Surplus ₹ 1,50,000, Non-current Assets ₹ 18,00,000, Current Assets ₹ 4,00,000, then proprietary ratio will be:

9. Calls-in-advance appears in a company’s balance sheet under:

10. 1,000, 9% debentures of ₹ 100 each are to be redeemed within 12 months of the date of Balance Sheet. They will be shown in current liabilities as:

11. Net Revenue from Operation ₹ 4,00,000, Average inventory ₹ 50,000, Gross Loss on sales 25%. Find Inventory Turnover Ratio:

12. Assertion (A): Net Assets Turnover Ratio indicates the firm’s ability of generating revenue per rupee of Net Assets.

Reason (R): The lower the ratio, the more efficient is the utilisation of owner’s and long-term creditors’ funds.

13. Which of the following items will not be deducted from Net Profit while calculating Net Cash from Operating Activities?

14. Which of the following transactions would not create a cash flow?

15. The ________ indicates the percentage of each sales rupee remaining after the firm has paid cost of goods sold.

16. Preparation of cash flow statement is ____________ for all listed companies, as per AS-3 (Revised).

17. To calculate trade receivable turnover ratio __________ is divided by average trade receivables.

18. Assertion (A): In the Common-size Statement of Profit and Loss figure of Net Revenue from operations is assumed to be equal to 100 and taken as base for comparison.

Reason (R): The objective of Common-size Statement of Profit and Loss is to establish relationship between various items and Revenue from Operations.

19. Which of the following ratio establishes relationship of ‘Shareholders’ funds’ to ‘Net assets’?

20. Comparative Statement are also known as:

21. The main objective of Common size statement is:

22. Which one of the following item is not a tool used for financial analysis?

23. Statement I: Solvency of business means the ability of the firm to meet its current liabilities (or short-term obligations) as and when fall due.

Statement II: Liquidity of business means ability to meet long-term commitments or obligations or liabilities.

24. Dev Ltd. purchased a plant and issued fully paid equity shares for consideration other than cash. These shares will be shown in notes to accounts to Share Capital as:

25. Which of the following is not a cash inflow?

26. Assertion (A): Inventory Turnover Ratio tells how well a company is turning its inventory into sales.

Reason (R): Inventory Turnover shows the relationship between the cost of revenue from operations during the year and average inventory kept during the year.

27. Publishing Titles will come under the main heading of

28. From the following calculate Interest Coverage Ratio: Net profit after tax ₹ 12,00,000; 10% Debentures ₹ 1,00,00,000; Tax rate 40%

29. Common-size statements are prepared:

30. Assertion (A): Comparative statement analysis is not a tool of financial statement analysis.

Reason (R): Comparative Statement facilitates comparison and helps in drawing conclusion about the operating and financial performance of the business enterprises.

31. Common-size income statement shows percentage of different items of income statement compared with:

32. Financial statements provide the necessary information about the performance of the management to the parties interested in the organisation and help in taking appropriate economic decisions.

Which option tells us that financial statements form the basis for prospective investors?

33. Net Profit during the year  2,00,000
Loss on sale of plant  10,000
Profit on sale of furniture  40,000
Depreciation  20,000
Goodwill written off  40,000
What is the amount of cash from operations?

34. Which of the ratios show how efficiently a companys’ resources are used?

35. During the year ended 31.3.2021, Soma Ltd. earned net profit after tax ₹ 6,00,000. The company has a long term 10% debt of ₹ 50,00,000. The tax rate is 40%. The interest coverage ratio of the company will be:

36. A company extends credit term of 45 days to its customers, its credit collection would be considered poor if its average collection period was:

37. Purchase of goods for resale is shown in Statement of Profit and Loss as:

38. The current assets of X Ltd. are ₹ 2,00,000 and its current liabilities are ₹ 1,50,000. If, its working capital turnover ratio is 6 times, its revenue from operations will be:

39. Bank overdraft and cash credit are to be treated as:

40. Cost of Revenue from operations ₹ 15,00,000, Current Assets ₹ 4,00,000, Current Liabilities ₹ 1,50,000. Find its Working Capital Turnover Ratio.