Quiz On Financial Analysis
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In the financial world, for a business to be a going concern, it has to be stable, profitable and viable. A financial analyst is therefore, expected to assess these conditions and generate a report on the findings. Are you on your way to becoming a financial analyst? Take the quiz see just how ready you are.
- 1.Financial analysis includes which of the following steps?
- A.
Establishing facts about an organization
- B.
Comparing facts about an organization over time
- C.
Making decisions on the basis of fact comparisons
- D.
All of the above
- 2.The four types of ratios used in financial analysis are
- A.
liquidity, profitability, activity, capital structure
- B.
Capital structure, current, profitability, activity
- C.
Revenue and expense, liquidity, capital structure, activity
- D.
Plant and equipment, activity, capital structure, liquidity
- 3.What is vertical analysis?
- A.
It measures an organization's performance by computing the relationships of important line items in the financial statements.
- B.
It looks at the internal structure of the organization by comparing a base number and percentages of important line items.
- C.
It evaluates the trend in line items by looking at the percentage change in the line items over time.
- D.
None of the above
- 4.The balance sheet displays an organization’s
- A.
Assets, liabilities, and expenses
- B.
revenues, expenses, and assets
- C.
net assets, liabilities, and assets
- D.
Net assets, revenues, and expenses
- 5.
- A.
Which assets have been moved from permanently restricted to unrestricted
- B.
Why net assets changed from the beginning of the statement period to the end of the statement period
- C.
Which assets have been moved from temporarily restricted to unrestricted
- D.
Why net assets have changed over the life of the organization
- 6.Which of the following accounts does NOT appear on the statement of operations?
- A.
Shareholders’ equity
- B.
Operating expenses
- C.
Depreciation
- D.
Net assets released from restrictions used for operations
- 7.How do managers use ratio analysis?
- A.
To make financial decisions
- B.
To determine the profitability of the organization in the future
- C.
To analyze the financial performance of the organization in previous years
- D.
To predict the future and plan strategies that will influence the future
- 8.Which of the following describes liquidity ratios?
- A.
They measure the amount of time an organization takes to turn its assets into cash.
- B.
They are measures of an organization’s ability to meet short-term obligations.
- C.
They reflect an organization’s long-term liquidity.
- D.
They measure an organization’s ability to exist and grow.
- 9.Which of the following ratios is NOT a liquidity ratio?
- A.
Operating margin
- B.
Current ratio
- C.
Average payment period
- D.
Days cash on hand
- 10.A current ratio is
- A.
calculated with current assets and current liabilities
- B.
The basic indicator of financial liquidity
- C.
calculated by dividing total current assets by total current liabilities
- D.
all of the above
- 11.
- A.
They measure the relationship of revenues to expenses.
- B.
They determine how profitable an organization is.
- C.
They measure an organization’s profitability across years.
- D.
They reflect an organization’s efficiency.
- 12.Which of the following is a profitability ratio?
- A.
Inventory turnover
- B.
Current ratio
- C.
Excess margin
- D.
Debt services coverage
- 13.Higher values indicate profitability in which of the following profitability ratios?
- A.
Return on net assets
- B.
Operating margin
- C.
Excess margin
- D.
All of the above
- 14.
- A.
They measure how efficiently assets can be converted into cash.
- B.
They measure the relationship between assets and revenues.
- C.
They indicate the overall liquidity of the organization.
- D.
They measure an organization’s long-term liquidity.
- 15.Which of the following is NOT an asset efficiency ratio?
- A.
Inventory turnover
- B.
Total asset turnover
- C.
Return on net assets
- D.
Current asset turnover
- 16.Lower values are preferable for which of the following asset efficiency ratios?
- A.
Total asset turnover
- B.
Inventory turnover
- C.
Current asset turnover
- D.
Fixed asset turnover
- 17.Capital structure ratios measure
- A.
The relationship between an organization’s invested capital and long-term liabilities
- B.
An organization’s ability to meet short-term obligations
- C.
An organization's long-term liquidity
- D.
The amount of profit an organization can earn from capital investments
- 18.Which of the following is a capital structure ratio?
- A.
Inventory turnover
- B.
Net asset financing
- C.
Debt services coverage
- D.
(b) and (c)
- 19.Which of the following is NOT an operating indicator?
- A.
Average length of stay
- B.
Days cash on hand
- C.
Occupancy rate
- D.
Outpatient revenue as a percentage of total patient revenue
- 20.Good financial reports have which of the following characteristics?
- A.
Accurate
- B.
Meaningful
- C.
Detailed
- D.
(a) and (b)
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