Financial Statements And Corporate Analysis

Question 1

On the balance sheet inventory assets are classified under included current assets

Answer 1

Correct

Question 2

On BS, Goodwill and patents are classified under current assets

Answer 2

False

Goodwill and patents are classifieds under fixed assets

Question 3

On BS, all prepaid expenses are classified on the fixed assets

Answer 3

False

Long term prepaid expenses are classified under fixed assets whereas short term prepaid expenses are classified under current assets

Question 4

In a profit and loss statement dividends are classified under non-operating expenses

Answer 4

False

Dividends received are classified under non-operating income

Question 5

Interest on the loan to an acquaintance fall under the category of interest income

Answer 5

False

Deemed as miscellaneous income instead of interest income

Question 6

When a corporation obtain funds by shares issuance = equity finance

Answer 6

True

Question 7

Index for measuring profitability of a company include ratio of profit to capital and current ratio

Answer 7

False

Ratio of profit to capital and
Profit margin on sales

Question 8

Liquidity ratio of 100% makes the fixed assets to long term capital ratio 100%

Answer 8

True

Question 9

With regards to ratio of cash flow from operations to interest-bearing liabilities, a lower ratio is viewed favorably as an indication that the company is in a superior position in terms of ability to repay its obligations

Answer 9

False

The ratio of cash flow from operations to interest-bearing shows to what degree a company is able to repay its interest-bearing loan obligations with cash flow generated from sales activity by the company during the fiscal year. A higher ratio is viewed favorably as an indication that the company is in a superior position in terms of ability to repay its obligations