Budgeting and Controlling Tool

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TUTORIAL 5: FINANCIAL STATEMENT ANALYSIS
Submission Date 12/12/12 Before 2.30 pm
1. Which one of the following is not a characteristic generally evaluated in analyzing financial statements?

a. Liquidity
b. Profitability
c. Marketability
d. Solvency

2. In analyzing the financial statements of the company, a single item on the financial statements

a. Should be reported in bold-face type.
b. Is more meaningful in compared to other financial information, c. Is significant only if it is large.
d. Should be accompanied by a note.

3. Short term creditors are usually most interested in evaluating

a. Solvency.
b. Liquidity.
c. Marketability.
d. Profitability.

4. Long-term creditors are usually most interested in evaluating

a. Liquidity and solvency
b. Solvency and marketability
c. Liquidity and Profitability
d. Profitability and solvency

5. Comparisons of financial data made within a company are called Long-term creditors are usually most interested in evaluating

a. Intracompany comparisons.
b. Interior comparisons.
c. Intercompany comparisons.
d. Intramural comparison.

6. Which of the following is not a tool in financial statement analysis?

a. Horizontal analysis.
b. Circular analysis.
c. Vertical analysis.
d. Ratio analysis.

7. The average collection period is 73 days, what is the receivables turnover?

a. 4.68 times.
b. 5.00 times.
c. 2.57 times.
d. None of the above.

8. If equal amounts are added to the numerator and denominator of the ratio. The ratio will always

a. Increase.
b. Decrease.
c. Stay at the same.
d. Equal zero.

9. A company has a receivables turnover ratio of 8. The average net receivables during the period are RM400,000. What is the amount of net credit collection sales for the period?

`a. RM50, 000.
b. RM3, 200,000.
c. RM600, 000.
d. Cannot be determined from the information given.

10. A company has an average inventory on hand of RM20, 000 and the average days to sell inventory is 14.6 days. What is cost of goods sold?

a. RM500, 000.
b. RM292, 000.
c. RM493, 150.
e. RM136, 986.

The following information is for questions 11 and 12.
The Pokok Sena Department Store (PSDS) had credit sales of RM8,000,000 and cost of good sold of RM6,000,000 for the year. The average inventory for the year amounted to RM2,400,000. 11. The inventory turnover ratio for the year is

a. 3.3 times.
b. 10 times
c. 2.5 times
d. 2 times.

12. The average number of days to sell the inventory during the year was

a. 183 days.
b. 146 days.
c. 61 days.
d. 37 days.

13. Traditional financial statement are based on

a. Unadjusted cost.
b. Price-level adjusted cost.
c. The lower of cost or price-level adjusted historical cost d. Fair market value

14. Net sales are RM1,300,000, beginning total assets are RM700,000, and the asset turnover is 2.5. What is the ending total asset balance?

a. RM520, 000.
b. RM340, 000.
c. RM700.000.
d. RM875, 000.

15. If a company has an acid-test ratio of 1.2:1, what respective effects will the following of cash by short-term debt and collection of account receivables have on the ration?
Short-term borrowingCollection of Receivables
a. Increase No effect
b. Increase Increase
c. Decrease No effect
d. Decrease Decrease

16. The acid-test ratio

a. Is a quick of an approximation of the current ratio.
b. Does not include all current liabilities in the calculation. c. Does not include inventory as part of the numerator.
d. Does include prepaid expenses as part the numerator.

17. Net income does appear in the numerator of the
a. Profit margin.
b. Return on assets.
c. Return on common...
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