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CA Final Analysis of Financial Statements — practice questions

Explore 61 free Analysis of Financial Statements questions in CA Final Financialreporting. Open each question or exercise to read its content, reference answers and available explanation.

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Analysis of Financial Statements questions and exercises with answers

Showing questions 1–30 of 61.

Which group of ratios shows the availability of cash to pay debt?Read the answer and worked solution →Which ratios show how quickly non-cash assets are converted into cash?Read the answer and worked solution →Which ratios measure investor response to owning a company's stock?Read the answer and worked solution →Debt ratios are mainly used to judge a firm's ability to do what?Read the answer and worked solution →Profitability ratios show how well a firm uses assets and controls expenses to earn what?Read the answer and worked solution →Comparing the ratios of several rival firms for the same year is which type of analysis?Read the answer and worked solution →An analyst compares a firm's current ratios for the last five years. This is called what?Read the answer and worked solution →Ratios are generally not useful unless they are what?Read the answer and worked solution →Why are ratios of firms in different industries usually hard to compare?Read the answer and worked solution →What does the abbreviation EBIT stand for?Read the answer and worked solution →EBITDA is earnings before which set of items?Read the answer and worked solution →In ratio analysis, COGS means what?Read the answer and worked solution →Net sales are invoice charges less which deductions?Read the answer and worked solution →Which statement also supplies data for ratios?Read the answer and worked solution →Horizontal analysis of financial statements compares data across what?Read the answer and worked solution →Common-sizing of financial statements is another name for which technique?Read the answer and worked solution →In a vertical analysis of an income statement, each line item is shown as a percentage of what?Read the answer and worked solution →How is the current ratio calculated?Read the answer and worked solution →The gross profit ratio equals gross profit divided by which amount?Read the answer and worked solution →Which two are common activity ratios?Read the answer and worked solution →The debt-to-equity ratio is a common ratio of which category?Read the answer and worked solution →Recasting leases as capital leases changes the balance sheet how?Read the answer and worked solution →Recasting of financial statements is also known as what?Read the answer and worked solution →DuPont analysis splits ROE into which three parts?Read the answer and worked solution →Which DuPont component captures financial leverage?Read the answer and worked solution →Which DuPont element reflects how efficiently assets are used?Read the answer and worked solution →Which DuPont element reflects the profitability of sales?Read the answer and worked solution →The DuPont framework links ROE to ROA through which relation?Read the answer and worked solution →The DuPont formula began to be used in which decade?Read the answer and worked solution →A grocery chain has thin margins but sells many times its assets yearly. Which DuPont driver matters most?Read the answer and worked solution →

Worked practice questions

Which group of ratios shows the availability of cash to pay debt?

  1. Profit ratios
  2. Liquidity ratios
  3. Market ratios
  4. Debt ratios
Show answer and solution

Correct answer: B. Liquidity ratios

Liquidity ratios look at how readily cash can be found to settle what the firm owes.

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Which ratios show how quickly non-cash assets are converted into cash?

  1. Market-based ratios
  2. Long-term debt ratios
  3. Activity ratios
  4. Profitability ratios
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Correct answer: C. Activity ratios

Activity ratios track the speed at which assets such as stock and receivables turn into cash.

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Which ratios measure investor response to owning a company's stock?

  1. Market ratios
  2. Liquidity ratios
  3. Debt ratios
  4. Efficiency ratios
Show answer and solution

Correct answer: A. Market ratios

Market ratios link the share price to earnings and show how investors value holding the stock.

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More Financialreporting topics

Ind AS 116 LeasesInd AS 36 Impairment of Assets and Ind AS 38 Intangible AssetsInd AS 24 Related Party Disclosures and Ind AS 108 Operating SegmentsInd AS 1 Presentation of Financial StatementsInd AS 12 Income TaxesInd AS 113 Fair Value MeasurementInd AS 109 Financial InstrumentsInd AS 23 Borrowing Costs and Ind AS 40 Investment Property