Financial Reporting And Analysis MCQ - Financial Reporting And Analysis Section 2

26 Which of the following statements is most accurate?

A
If revenue grows more quickly than assets, the company’s efficiency may be improving.
B
If inventory grows slower than revenue, the company is likely to face an operational problem with obsolescence.
C
If net income is growing faster than revenue, the company’s efficiency is declining.

Statement B is incorrect because the company is likely to face an operational problem with obsolescence if the inventory grows more quickly that revenue. Statement C is incorrect because if net income is growing faster than revenue, the company’s profitability increases.

27 With a vertical common size balance sheet, each item is divided by:

With a vertical common size balance sheet, each item is divided by total assets.

28 Which of the following is an analyst most likely to consider when deciding which financial ratios to use?

Several ratios are industry specific; hence ratios should be selected based on the industry being evaluated.

29 Presenting the financial data of a company in relation to a single financial statement item is best known as:

Presenting the financial data of a company in relation to single financial statement item is known common size analysis.

30 In which of the following situations is ratio analysis least likely useful?

This is a limitation of ratio analysis.

Financial Reporting And Analysis MCQ - Financial Reporting And Analysis Section 2

Why Practice with Avatto?

Accessibility

Financial Reporting And Analysis MCQ - Financial Reporting And Analysis Section 2

Follow Us :