Analysis of Financial Statements

Topics in this chapter

• Analysis Foundations and Limitations
• Comparative and Trend Statements
• Liquidity Ratio Analysis
• Solvency Ratio Analysis
• Activity Ratio Analysis
• Profitability Ratio Analysis

Cheat sheet

Practice questions

1. Question 1Q-656CFF

   Which of the following items is shown under the head 'Non-Current Liabilities' in the Balance Sheet of a company prepared as per Schedule III of the Companies Act, 2013?

   1. A.Short-term borrowings
   2. B.Long-term borrowings
   3. C.Trade payables
   4. D.Short-term provisions
   See the answer and solution
2. Question 2Q-7F70B9

   Under which major head and sub-head in the Statement of Profit and Loss of a company are 'Salaries and Wages' recorded?

   1. A.Revenue from Operations, Other Income
   2. B.Expenses, Cost of Materials Consumed
   3. C.Expenses, Employee Benefit Expenses
   4. D.Expenses, Other Expenses
   See the answer and solution
3. Question 3Q-DA62C3

   Which of the following tools of financial analysis is considered a dynamic analysis because it studies changes in financial statements over a period of several years?

   1. A.Comparative Statements
   2. B.Common Size Statements
   3. C.Trend Analysis
   4. D.Ratio Analysis
   See the answer and solution
4. Question 4Q-F34322

   In a Common Size Balance Sheet, each asset is expressed as a percentage of:

   1. A.Total Equity and Liabilities
   2. B.Total Current Assets
   3. C.Total Revenue from Operations
   4. D.Total Non-Current Assets
   See the answer and solution
5. Question 5Q-5349DB

   While preparing a Comparative Statement of Profit and Loss, if Revenue from Operations for the previous year is Rs. 10,00,000 and for the current year is Rs. 15,00,000, what is the percentage change?

   1. A.33.33%
   2. B.50.00%
   3. C.66.67%
   4. D.150.00%
   See the answer and solution