Financial statement analysis: ratio, funds flow, cash flow - One Line Questions
1.
The formula for the Gross Profit Margin is: —
(Sales - Cost of Goods Sold) / Sales
2.
A decrease in Working Capital signifies: —
A potential strain on liquidity
3.
In a funds flow statement, 'decrease in bills payable' would be treated as: —
A use of funds
4.
An increase in a current asset (e.g., accounts receivable) in a funds flow statement signifies: —
A use of funds
5.
The Cash Flow Statement is prepared based on the principles of: —
Accrual accounting
6.
The Quick Ratio is also known as the: —
Acid-Test Ratio
7.
Which ratio is calculated as Sales / Average Total Assets? —
Asset Turnover Ratio
8.
Which ratio measures how efficiently a company is using its assets to generate sales? —
Asset Turnover Ratio
9.
Under the direct method of preparing the operating activities section of a cash flow statement, cash receipts from customers are calculated by adjusting sales revenue for: —
Changes in accounts receivable and unearned revenue
10.
Under the direct method, cash paid to suppliers is calculated by adjusting Cost of Goods Sold for: —
Changes in inventory and accounts payable
11.
The Cash Conversion Cycle (CCC) measures the time it takes for a company to: —
Convert its investments in inventory and other resources into cash flows from sales
12.
The calculation of the Current Ratio involves dividing: —
Current Assets by Current Liabilities
13.
Which financial ratio measures a company's ability to meet its short-term obligations using its most liquid assets? —
Quick Ratio
14.
The ratio of Current Assets to Current Liabilities is known as the: —
Current Ratio
15.
A decrease in accounts payable would be treated as a _______ in the operating activities section (indirect method) of a cash flow statement. —
Deduction
16.
A company with a high inventory turnover ratio generally indicates: —
Efficient inventory management and strong sales
17.
A cash flow statement classifies cash movements into three main activities: Operating, Investing, and: —
Financing
18.
Which section of the cash flow statement includes transactions like issuing stock or paying dividends? —
Financing Activities
19.
Which financial statement is primarily used to analyze the sources and applications of working capital? —
Funds Flow Statement
20.
In a funds flow statement, an increase in current assets (other than cash) and an increase in current liabilities would typically: —
Increase working capital
21.
Which ratio is used to assess a company's ability to pay interest on its outstanding debt? —
Interest Coverage Ratio
22.
Which ratio helps in assessing the operational efficiency of a company's inventory management? —
Inventory Turnover Ratio
23.
Which of the following activities would result in a cash inflow from financing activities? —
Issuance of bonds
24.
Which of the following is NOT a source of funds in a funds flow statement? —
Payment of dividend
25.
Depreciation expense is added back to net income when using the indirect method because: —
It is a non-cash expense
26.
Under the indirect method, a gain on the sale of an asset is subtracted from net income because: —
It is a non-operating item and does not represent cash from core operations
27.
Under the indirect method, an increase in accounts payable is added to net income because: —
It represents cash generated from operations without a corresponding outflow
28.
When using the indirect method, an increase in inventory is subtracted from net income because: —
It represents cash used to acquire more inventory
29.
A high Debt-to-Equity Ratio generally indicates: —
High financial risk and reliance on debt financing
30.
The formula for the Receivables Turnover Ratio is: —
Net Credit Sales / Average Accounts Receivable
31.
The formula for Net Profit Margin is: —
Net Income / Sales
32.
The formula for Return on Equity (ROE) is: —
Net Income / Shareholders' Equity
33.
The Earnings Per Share (EPS) ratio is calculated as: —
Net Income / Weighted Average Number of Outstanding Shares
34.
Which of the following is a cash outflow from financing activities? —
Payment of dividends to shareholders
35.
Which of the following is a source of funds? —
Redemption of debentures
36.
Which of the following is a common use of funds? —
Redemption of preference shares
37.
Which of the following is typically classified as a cash outflow from investing activities? —
Purchase of property, plant, and equipment
38.
Which of the following items would be considered a 'use' of funds in a funds flow statement? —
Redemption of debentures
39.
Which ratio measures the profitability of a company relative to its total assets? —
Return on Assets (ROA)
40.
Which of the following is typically classified as a cash inflow from investing activities? —
Sale of property, plant, and equipment
41.
A company with a low inventory turnover ratio might indicate: —
Slow-moving inventory or obsolescence
42.
A company's ability to pay its long-term obligations is best assessed by which type of ratio? —
Solvency Ratio
43.
The primary purpose of a cash flow statement is to provide information about: —
The cash receipts and cash payments of an entity
44.
A high profit margin indicates: —
The company retains a larger portion of each sales dollar as profit
45.
The objective of preparing a cash flow statement is to provide insights into: —
The company's ability to generate cash
46.
The primary objective of a funds flow statement is to show: —
The sources and uses of working capital
47.
The formula for the Debt-to-Equity Ratio is: —
Total Debt / Total Shareholders' Equity
48.
If a company purchases machinery for cash, this would be shown as a _______ of funds in the funds flow statement. —
Use
49.
In a funds flow statement, 'payment of dividend' is considered a: —
Use of funds
50.
Funds flow statement primarily focuses on the movement of: —
Working Capital