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CBSE Class 12 (Commerce) Analysis of Financial Statements: Tools and Accounting Ratios — practice questions
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Practice CBSE Class 12 (Commerce) Analysis of Financial Statements: Tools and Accounting Ratios in the app →What does 'analysis' mean in financial statement analysis?In financial analysis, interpretation refers to which activity?Comparing a firm's ratios with those of other firms is called which analysis?Comparing a firm's own performance over several years is known as what?Which user of financial statements mainly checks short-term liquidity?Which group is mainly concerned with a firm's long-term solvency and survival?Which aspect mainly interests shareholders of a firm?Which party studies statements to judge whether it can afford a wage increase?Which tool shows the financial position of a firm for different periods side by side?Another name for the analysis done through comparative statements is which?Common size statements are also called which type of analysis?A common size statement expresses each item as a percentage of what?In a common size balance sheet, which amount is taken as 100?In a common size statement of profit and loss, which item is taken as 100?The trend percentage relates each item of a year to the same item of which year?With 2019 as base year, sales were Rs. 2,00,000 and in 2021 Rs. 3,00,000. What is the 2021 trend percentage?Which analysis studies actual movement of cash into and out of an organisation?Revenue rose from Rs. 2,00,000 to Rs. 2,50,000. What is the percentage change in a comparative statement?In a comparative statement, the percentage change is based on which amount?Comparative financial data is meaningful only when what is the same?Why is trend analysis important to an analyst?An accounting ratio is derived from numbers taken from which source?Gross profit Rs. 10,000 on revenue from operations Rs. 1,00,000 gives a gross profit ratio of what?Why is a ratio of purchases to furniture of little use?A ratio using one item from the profit and loss statement and one from the balance sheet is called what?The current ratio belongs to which traditional class of ratios?Which ratios are essentially short-term in nature and measure ability to pay dues?Activity ratios are also known by which other name?Ratios reflect only monetary aspects. Which limitation is this?The role of ratios is essentially that of a what?Which feature of ratio analysis makes comparison between firms hard in practice?Current ratio is the proportion of which two items?Current assets are Rs. 1,20,000 and current liabilities Rs. 60,000. What is the current ratio?Which item is counted as a current asset?What current ratio is normally considered safe?A very high current ratio usually suggests what?The quick ratio is also called which test?Current liabilities are Rs. 1,00,000, current ratio 2.5 : 1 and quick ratio 1.5 : 1. What is the inventory?Which ratio group measures a firm's ability to service its debt in the long run?Debt-equity ratio compares long-term debt with which item?Long-term debt Rs. 5,00,000 and shareholders' funds Rs. 15,00,000. What is the debt-equity ratio?Capital employed is equal to which sum?Long-term debt is Rs. 5,00,000 and capital employed Rs. 20,00,000. What is the debt to capital employed ratio?If debt to capital employed ratio is 0.25 : 1, what is the proprietary ratio?Total assets Rs. 14,00,000 and long-term debts Rs. 1,50,000. What is the total assets to debt ratio?Interest coverage ratio uses profit before interest and tax divided by what?A higher interest coverage ratio indicates what?Net profit after tax is Rs. 60,000, tax rate 40%, interest on debt Rs. 1,50,000. What is the interest coverageRedeeming debentures of a firm will have what effect on its debt-equity ratio?Activity ratios show the speed at which what happens?Inventory turnover ratio equals cost of revenue from operations divided by what?Inventory moved Rs. 40,000 to Rs. 60,000; cost of revenue Rs. 3,00,000. Inventory turnover?Revenue Rs. 5,00,000, gross profit Rs. 1,00,000, average inventory Rs. 80,000. What is inventory turnover?A low inventory turnover may signal which problem?Trade receivables turnover is computed from which kind of revenue?Higher trade receivables turnover implies what?Trade receivables turnover is 4 times a year. What is the average collection period in months?Trade payables turnover ratio relates trade payables to which item?A low trade payables turnover may indicate what?Fixed assets turnover ratio is calculated on which fixed asset base?Which group of ratios analyses the earning capacity of the business?Gross profit ratio is gross profit expressed as a percentage of which item?Net revenue Rs. 8,00,000 and cost of revenue from operations Rs. 6,00,000. What is the gross profit ratio?Gross profit ratio indicates the margin available to cover what?Which item is excluded when calculating cost of operations for the operating ratio?If the operating ratio is 82%, the operating profit ratio is what?In the net profit ratio, net profit generally means which profit?Return on capital employed uses which profit?Capital employed in the return on investment includes which funds?Return on net worth is profit after tax divided by what?Earnings per share uses profit available for which group?Profit after tax is Rs. 5,00,000, preference dividend Rs. 50,000, equity shares 1,00,000. What is EPS?Book value per share is equity shareholders' funds divided by what?Dividend payout ratio is dividend per share divided by what?Dividend per share is Rs. 3 and EPS is Rs. 12. What is the dividend payout ratio?Market price Rs. 96 and EPS Rs. 8. What is the price earning ratio?The P/E ratio mainly reflects what?Which ratio type measures investor response to owning a company's stock?Ratios are of limited use unless they are what?What makes ratios hard to compare across countries?Which 1934 book by Graham and Dodd is central to fundamental analysis?DuPont analysis multiplies several ratios to give which measure?