Accountancy Part II - Analysis of Financial Statements Quiz
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Preview questions
1. What is the primary purpose of financial statement analysis?
To prepare tax returns · To evaluate financial performance · To comply with legal requirements · To increase sales
2. Which of the following is a common tool used in financial statement analysis?
Budgeting · Variance analysis · Ratio analysis · Forecasting
3. What does the current ratio measure?
Profitability · Liquidity · Solvency · Efficiency
4. Which ratio is calculated by dividing net profit by sales?
Return on equity · Gross profit ratio · Net profit ratio · Current ratio
5. What does a high debt-equity ratio indicate?
Low financial risk · High financial leverage · High profitability · Low liquidity
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