Financial Statement Quiz

10 Questions | By Phamthuy | Updated: Aug 28, 2022 | Attempts: 1914

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We have brought you a financial statement quiz. This quiz includes several simple questions about financial statement analysis. It should take you a short time to go through all the questions in the quiz. A financial statement is not as easy as it may seem. The questions here will not only help you test yourself, but they also give you a great opportunity to learn more. So, give your best and try to score as high as you can!

Questions and Answers

1.

Common size financial statements help an analyst to:
- A.
  
  Evaluate financial statements of companies within a given industry of the same approximate size.
- B.
  
  Determine which companies in similar industry are at approximately the same stage of development.
- C.
  
  Compare the mix of assets, liabilities, capital, revenue, and expenses within a company over a period of time or between companies within a given industry without respect to size.
- D.
  
  Ascertain the relative potential of companies of similar size in different industries.
2.

The issuance of common stock for cash at year-end will make an increase in both denominators: total assets and equity.
- A.
  
  True
- B.
  
  False
3.

Which of the following ratios would be least useful in determining a company's ability to pay its expenses and liabilities?
- A.
  
  Current ratio
- B.
  
  Acid-test ratio
- C.
  
  Price-earnings ratio
- D.
  
  Times interest earned ratio
4.

Price-earnings ratio is not useful for investors to evaluate a company's prospects in the stock market.
- A.
  
  True
- B.
  
  False
5.

Most stockholders would ordinarily be least concerned with which of the following ratios:
- A.
  
  Earnings per share
- B.
  
  Dividend yield ratio
- C.
  
  Price-earnings ratio
- D.
  
  Acid-test ratio
6.

The denominator of "return on common stockholder's equity" is the biggest if a company earns a profit.
- A.
  
  True
- B.
  
  False
7.

What effect will the issuance of common stock for cash at year-end have on the following ratios?
- A.
  
  Increases Return on Total Assets and increases Debt-to-Equity Ratio.
- B.
  
  Increases Return on Total Assets and decreases Debt-to-Equity Ratio.
- C.
  
  Decreases Return on Total Assets and increases Debt-to-Equity Ratio.
- D.
  
  Decreases Return on Total Assets and decreases Debt-to-Equity Ratio.
8.

Evaluating companies of different sizes MUST use a common size analysis technique in order to make them comparable.
- A.
  
  True
- B.
  
  False
9.

Acid-test ratio reflects the direct benefits that stockholders can gain from a company.
- A.
  
  True
- B.
  
  False
10.

If a company is profitable and is effectively using leverage, which one of the following ratios is likely to be the largest?
- A.
  
  Return on total assets
- B.
  
  Return on total liabilities
- C.
  
  Return on common stockholders' equity
- D.
  
  Cannot be determined