CPFM Financial Statement Analysis 2

Question 1

The current ratio is calculated as which of the following?

Accepted Answer

Current assets divided by current liabilities

Answer

Current liabilities divided by current assets

Answer

Cash divided by current liabilities

Answer

Current assets minus inventory divided by current liabilities

Question 2

The quick ratio differs from the current ratio because it excludes which asset?

Accepted Answer

Inventory

Answer

Cash

Answer

Accounts receivable

Answer

Marketable securities

Question 3

A company's gross profit margin is best calculated as which formula?

Accepted Answer

Gross profit divided by revenue

Answer

Net income divided by revenue

Answer

Operating income divided by assets

Answer

Revenue divided by cost of goods sold

Question 4

Which financial statement reports a company's revenues and expenses over a period?

Accepted Answer

Income statement

Answer

Balance sheet

Answer

Statement of cash flows

Answer

Statement of retained earnings

Question 5

Return on equity (ROE) measures profitability relative to which item?

Accepted Answer

Shareholders' equity

Answer

Total assets

Answer

Total liabilities

Answer

Total revenue

Question 6

The debt-to-equity ratio is primarily used to assess a company's:

Accepted Answer

Financial leverage

Answer

Liquidity

Answer

Inventory turnover

Answer

Profit margin

Question 7

Horizontal analysis of financial statements compares data across:

Accepted Answer

Multiple periods to identify trends

Answer

Different line items within one period

Answer

Industry benchmarks only

Answer

Cash versus accrual basis