Practice test

Financial Reporting and Analysis Practice Test

10-question practice test based on the Financial statement analysis material.

10 questions · pass mark 50%

Try the first five — pick an answer to see if you got it right.

1 Which of the following is listed in the material as a tool of financial statement analysis?

Fund flow analysis
Ratio analysis
Variance analysis
Discounted cash flow analysis

Explanation: The material lists common size analysis, comparative analysis, and ratio analysis as tools of financial statement analysis.

2 In vertical common size analysis of the income statement, which item is used as the base account?

Gross profit
Sales revenue
Total assets
Operating profit

Explanation: The material states that in the income statement, every item is expressed as a percentage of sales revenue, with sales revenue held at 100%.

3 Horizontal analysis is one of the two categories of common size analysis mentioned in the material.

True
False

Explanation: The material categorizes common size analysis into vertical analysis and horizontal analysis.

4 According to the material, which three profit figures are obtained from a comparative income statement?

Gross profit, operating profit, and net profit
Contribution, EBIT, and EBITDA
Sales, gross margin, and retained earnings
Revenue, expenses, and tax

Explanation: The material states that comparative income statements provide gross profit, operating profit, and net profit.

5 What is the recommended current ratio given in the material?

0.5:1
1:1
2:1
3:1

Explanation: The material gives the recommended current ratio as 2:1, or 2 times.

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