Techniques of financial statements analysis A. analysis of financial statements | Unit iii | B.Com 5th Semester (Financial Statement Analysis) Question Answer Solution | B.Com 5th Semester (Financial Statement Analysis) GU English Medium Question Answer Solution For Assam |

  Unit- III

Techniques of financial statements analysis A. analysis of financial statements

Exercise

1. Objective type Questions:

1. Fill in the banks.

1. Analysis simply means _______ data. (simplifying data)

2. Interpretation means ______data.(explaining)

3. Comparative analysis is also known as ________ analysis.(impact of horizontal)

4. Common size analysis is also known as _______ analyses. (Vertical)

5. The analysis of actual movement of money inflow and outflow. in an organisation is called ______analysis (Cash flow)

 6.___________analysis shows the direction of movement upwards or downward. (Trend)

 7._________ analysis identifies the direction of changes and trends in different indicators of

performance of an organisation. (Comparative statement)

 8. ________analysis provides an insight into the structure of financial statements.

(Common size) 

2. choose correct alternative.

(1) Financial Statements of a business enterprise inclube : 

(a) Profit and Loss Account and Balance Sheet only. 

(b) Cash Flow Statement only.

(c) All the above.

Ans. (c) 

(2) The most commonly used tools for financial analysis are:

 (a) Horizontal and vertical analysis.

(b) Ratio analysis. 

(c) All the above.

 Ans. (c)

(3) Annual report is issued by a company to its:

(a) Directors

(b) Auditors

 (c) Shareholders.

Ans.(c)

(4) Balancesheet provides information about financial position of the enterprize.

(a) at a point in time

(b) over a period of time

(c) for a period of time.

Ans.(a)

(5) Comparative statements are also known as...

(a) Dynamic analysis

(b) Horizontal analysis

(c) Vertical analysis 

Ans. (b)

(6) Upward or down ward movement of operations is shown by

(a) Trend analysis 

(b) Comparative analysis

(c) Commonsize statement analysis. 

Ans.(b)

3. State whether each of the following statements is true or false :

  (a) Financial statements of a business enterprize include fund flow statement. (True)

 (b)Comparative statements are the form of horizontal analysis. (True)

(c)Common size statements and financial ratios are the two tools employed in vertical analysis. (True)

(d) Ratio analysis establishes relationship between financial statements.(True) 

(e)Ratio analysis is a tool for analysing the financial statement of any enterprise. (True) 

(f)Financial analysis is used only by the creditors.(False)

(g)Profit and Loss Account shows the operating performance of an enterprise for a period of time (True) 

(h) Financial analysis helps an analysist to arrive at a decision.(True) 

 (i)Cash flow statement is a tool of financial statement analysis.(True)

 (j) In a common size statement; each item is expressed as a percentage(True)

(k) The term financial analysis includes both analysis and interpretation.(True) 

(l)Vertical analysis refers to the comparison of financial data of a company for several years (False)

(m) Horizontal analysis is also known as static analysis.(False)

 II. Very Short Answer type Questions:

1. What is meant by financial statement analysis? 

2. What is analysis in case of a financial statement analyst?

3. What is interpretation of a financial statement?

 4. What is meant by comparative statement?

5. What is meant by common size statement?

6. What is Trend analysis?

7. What is internal analysis?

8. What is external analysis?

9. What is horizontal analysis?

10. What is vertical analysis?

III. Short Answer Type Questions:

1. Mention the techniques of financial statement analysis.

2. Distinguish between vertical and horizontal analysis of financial statements

3. What is the importance of financial analysis

4. What are comparative financial statements and what do they show?

 5. What are common size statements and what are their utilities?.

6. What is Trend analysis and what does it show?

7. What are the limitations of financial statement analysis?

8. What are the different types of financial analysis?

9. Compare horizontal analysis with vertical analysis

10. What is the procedure of analysis and interpretation of financial statements.

IV. Long Answer type Questions: 

1. Describe the different techniques of financial analysis and explain their limitations.

2. What are the objectives of financial analysis? Explain them.

3.Who are the principal users of financial analysis? What are their

4. What is the usefulness of Trend percentage in interpretation of financial performance of Y an enterprise?

5. What is the significance of comparative statements? Illustrate it with a refirence to comparative income statement.

6. What do you mean by analysis and interrogation of financial statements? Discuss their importance.

7. What are commonsize statements? How are they prepared?

 8. Analysis without interpretation is meaningless and interpretation without analysis is impossible" Discuss.

9. What is importance of comparative statements to the management? Illustratic your answer with a reference to a comparative revenue statement. How is it prapared?

10. What are common size financial statements. Explain the technique of preparing such statements.

Type by- pinku moni bora.