Fınancıal Statement Analysıs (ENG) - İşletme (İngilizce)

Ünite 1

Soru 1

Which of the following accounting concepts ensures that the financial information presented in the financial statements is complete and free of error?

Accrual basis of accounting

Comparability of financial statements

Faithful representation of financial information

Understandibility of financial information

Verifiability of financial information

Açıklama:

Faithful representation of financial information demands that the financial information presented in the financial statements is complete and free of error.

Doğru Cevap: C

Soru 2

Dividends paid are reported as cash flows from .................... activities in the cash flow statements.

Operating

Investing

Financing

Collection

Payment

Açıklama:

Payment of dividends is a financing activity, so it is reported as a cash outflow in the seciton of cash flows from financing activities.

Doğru Cevap: C

Soru 3

Suppose an account officer in a bank analyses the financial statements of a company to evaluate the capacity of the company to pay back the bank loan in order to decide whther to grant the loan or not. This can be classified as a .............................. analysis.

External equity

External credit

Internal equity

Internal investment

Internal management

Açıklama:

This analysis is conducted by a financial institution, so it is an external analyisis. It is conducted to analyse the credibility of the company, so it is a credit analysis.

Doğru Cevap: B

Soru 4

A potential shareholder assessing the profitability of a company using trend analysis is applying a ........................... analysis.

Static credit

Static equity

Dynamic credit

Dynamic equity

Dynamic internal

Açıklama:

As the analysisi is applied by the potential shareholder, it is an equty analysis. As trend analysisi involves comparion of financial statements over time, it is a dynamic analyisis.

Doğru Cevap: D

Soru 5

The ability of an enterprise to pay its short term debt can be analyzed using ........ ratios while the ability of an enterprise to pay its long term debt can be analyzed using ......... ratios.

Liquidity, solvency

Liquidity, profitability

Solvency, profitability

Solvency, activity

Liquidity, activity

Açıklama:

The ability of an enterprise to pay its short term debt can be analyzed usingliquidity ratios while the ability of an enterprise to pay its long term debt can be analyzed using solvency ratios.

Doğru Cevap: A

Soru 6

What is net working capital?

Current assets

Non current assets

Current assets less short term liabilities

Total assets less short term liabilities

Total assets less long term liabilities

Açıklama:

Net working capital is current assets less short term liabilities.

Doğru Cevap: C

Soru 7

The combined effect of liquidity, asset management and debt on operating results are reflected on .................

efficiency ratios

solvency ratios

activity ratios

profitability ratios

financial structure ratios

Açıklama:

The combined effect of liquidity, asset management and debt on operating results are reflected on profitability ratios.

Doğru Cevap: D

Soru 8

................. ratios show the ability of the firm to convert its operating assets into sales and cash.

Profitability

Liquidity

Solvency

Financial structure

Efficiency

Açıklama:

Activity or efficiency ratios show the ability of the firm to convert its operating assets into sales and cash.

Doğru Cevap: E

Soru 9

Vertical analysis of the ..............shows the proportion of each item to sales whereas vertical analysis of the ..............shows the proportion of each item to total assets.

income statement, balance sheet

balance sheet, income statement

income statement, statement of cash flows

balance sheet, statement of cash flows

income statement, statement of changes in equity

Açıklama:

Vertical analysis of the income statement shows the proportion of each item to sales whereas vertical analysis of the balance sheet shows the proportion of each item to total assets.

Doğru Cevap: A

Soru 10

Which type of financial statement analysis utilizes a base year to compare financial information of multiple periods?

Comparative financial statement analysis

Trend analysis

Vertical analysis

Ratio analysis

Technical analyisis

Açıklama:

Trend analysis utilizes a base year to compare financial information of multiple periods.

Doğru Cevap: B

Soru 11

What is Financial reporting?

the process

the producing

the budgeting

the dept financial statement

the current budget deficit financial statement

Açıklama:

To take a look to the title of financial statement
Financial reporting is the process of producing and presenting financial information to the financial statement users. The production and reporting of financial information require a certain order and a set of rules. International Financial Reporting Standards (IFRS) has become the basis for production and reporting of the financial information in the world and in our country

Doğru Cevap: A

Soru 12

What is concept of financial statements?

preparation of financial statements

preparation of fdept statements

preparation of budget statements

preparation of law statements

preparation of fiscal order statements

Açıklama:

To tahe a look the the titile of financial reporting
Financial reporting is providing financial information to financial statement users. Financial reporting is a broader concept that includes the preparation of financial statements. However, in this section, the financial statement preparation dimension will be discussed.

Doğru Cevap: A

Soru 13

What is the purpose of financial reporting?

providing financial information

providing money information

providing currency cash information

providing dept information

providing external financial information

Açıklama:

To take a look to the title of Financial Reporting.
the purpose of financial reporting is determined as “ providing financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions relating to providing resources to the entity “

Doğru Cevap: A

Soru 14

What Financial statements should contain?

information on the financial position of the business

information on the dept position of the business.

information on the curreny position of the business.

information on the deficit position of the business.

information on the financial orders of the business.

Açıklama:

To take a look to the title of Financial Reporting
Financial statements should contain information on the financial position of the business. This information should show the entity’s economic resources (assets) and claims (liabilities and equity) against those resources. The entity should also report changes in its economic resources and claims. In the conceptual framework, it is stated that this information should be prepared using an accrual basis

Doğru Cevap: A

Soru 15

What are the cores of the footnotes in financial statement?

financial reporting

budget reporting

statistical reporting

risk reporting

cash flows reporting

Açıklama:

to take a look to title of Financial Statements
This assessment should be presented in footnotes by associating it with the related financial statement item. The minimum information to be reported in the footnotes is specified in the financial reporting standards. The fact that financial statements contain adequate and appropriate footnotes is an important factor that increases the transparency of the financial statements and the quality of the information provided.

Doğru Cevap: A

Soru 16

What are the two important measurement bases used in accounting standards?

historical cost and current value

current cost and current value

dept cost and current value

budget cost and current value

minimum cost and current value

Açıklama:

To take a look to the title of
Two important measurement bases used in accounting standards are historical cost and current value. Change in measurement bases of businesses over the years or comparing financial information of businesses using different measurement bases will lead to misleading results.

Doğru Cevap: A

Soru 17

What does cash flow from operating activities provide?

cash from operating activities

budget from operating activities

manufacturing from operating activities

company's cash flow statement from operating activities

new capital contributions from operating activities

Açıklama:

To take a look to the title of statement of changes in equity.
Cash flow from operating activities provides information about how the company generates cash from operating activities. This section substantially (not entirely) covers the conversion of the accrual-based income statement to cash basis. In this respect, it provides a basis for evaluations regarding the quality of the net income amount.

Doğru Cevap: A

Soru 18

What is internal analysis made by?

the internal units and individuals

the external units and individuals

the dept units and individuals

the internal borrow units and individuals

the internal units and stakeholders

Açıklama:

To take a look the titile of Internal and External Analysis
External analysis is the analysis of non-business groups using the financial statement information of the business. The amount and quality of the content of the financial statements directly affect the success of the financial analysis. External users make this analysis mostly for credit and investment decisions.

Doğru Cevap: A

Soru 19

What is the main core of Vertical analysis?

resources

external depts

currency

budget deficit

commercial goods

Açıklama:

To take a look to the title of Vertical Analysis
Vertical analysis common size is also called financial statement analysis. In this analysis, the share (rate) of a financial statement item in the group in which it is located is calculated.

Doğru Cevap: A

Soru 20

What is profitability analysis?

is used to investigate to what extent the resources of the enterprise are used to make profit.

is used to investigate to what external the resources of the enterprise are used to make profit.

is used to investigate to what dept the resources of the enterprise are used to make profit.

is used to investigate to what budget the resources of the enterprise are used to make profit.

is used to investigate to what voluntary change the resources of the enterprise are used to make profit.

Açıklama:

To take a look to the title of Vertical Analysis
Profitability analysis is used to investigate to what extent the resources of the enterprise are used to make profit. And, also ,“Profitability is the net result of several policies and decisions. The ratios examined thus far provide useful clues as to the effectiveness of a firm’s operations, but the profitability ratios show the combined effects of liquidity, asset management, and debt on operating results.”

Doğru Cevap: A

Ünite 2

Soru 1

Which of the following is correct for cash basis?

When the delivery of goods is made, revenue is recorded

Periodicity and matching principles are the main fundamentals

It is used for balance sheet and income statement

The expenses are recorded on the payment day

It allows the user to see the entire picture in evaluating the financial performance

Açıklama:

The main differences between the cash basis and the accrual basis is the recording the revenue when the delivery of goods or services is made but cash collection can be before delivery or after the delivery.

Doğru Cevap: D

Soru 2

Which of the following is correct for business activities?

The business activities are analyzed by using profit analyses
It is the production and the sale of goods and services
The main business activity of tourism agency’ is to make money

Only I

I, II

Only II

II, III

I, II and III

Açıklama:

The main business activity of tourusim companies is to sell vacation in the name of others. So I and II is correct but III is not

Doğru Cevap: B

Soru 3

Which one is wrong about the income statement?

It reports the revenues and expenses in an organized manner

The income statement starts with gross sales

A high sales allowance indicates customer dissatisfaction

To determine it, only sales returns are deducted from the gross sales

Reports the financial performance for the time periods

Açıklama:

Income statement is the most important tool to understand and evaluate the efficiency of operations. It reports what the business earned and consumed. What the business earned shows the revenues; and what the business consumed shows expenses. Income statement reports the revenues and expenses in an organized manner. The income statement starts with gross sales. From the gross sales, sales discounts are deducted. Sales discounts are discounts used to encourage the customers to make an early payment. If a customer accepts to pay in the discount period, then the customer pays less than the gross amount. From the gross sales, sales returns and allowances are also deducted. As the name indicates, sales returns are those sales the customer wants to cancel later. Sales allowance means that the customer is not satisfied with the product, but instead of returning them, agrees to keep the product for a price cut. If this amount is relatively high, it indicates a problem related to customer satisfaction. After deducting the sales discounts and sales returns and allowances from the gross sales, net sales are obtained.

Doğru Cevap: D

Soru 4

…… are acquired by the business and expected to provide benefits to the business. Fill in the blank.

Expenses

Revenues

Assets

Gross margins

Gains

Açıklama:

Assets are tangıble resources acquired by the business and expected to provide benefits to the business, in other words to be used in operations. Assets are classified as current and non-current assets.

Doğru Cevap: C

Soru 5

A company sells some types of equipment that is no longer used in its main business activity. The amount received by this sale is more than the remaining value of the asset. What does the company report in this case?

Expense

Non operatıonal gain

Operational gain

Income revenue

None of the above

Açıklama:

Because the sale of equipment is outside of the main business activity and the amount received was greater than the amount at which the asset was carried in the company books, it is reported as a gain. The amount of the gain is the amount by which the proceeds exceeds the carrying amount.

Doğru Cevap: B

Soru 6

Which of the following is an example of intangible non-current assets?

Stok inventory

Equipment

Stocks

Fame

Buildings

Açıklama:

Current assets: stock inventory
Tangible non-current assets: equipment, stocks or buildings
Intangible non-current assets: Fame, patents, software

Doğru Cevap: D

Soru 7

Which of the following is an incorrect expression for non-current assets?

Expected to be sold in one year

Includes receivables

Divided into three groups

Needs strategic planing

Financed by using a long term dept or equity financing

Açıklama:

a is current assets, the others are no-current assets

Doğru Cevap: A

Soru 8

Which of the following is not related with financing activities?

Assets

Current liabilities

Long term liabilities

Equity

None of the above

Açıklama:

Financing activities are related to how the assets are financed, in other words, by current liabilities, by long term liabilities or by equity.

Doğru Cevap: E

Soru 9

Which of the following is an example of financing activities?

Payment for merchandise

Payment for equipment

Payment to employees

Cash receipts from issuance of bonds

Cash receipts from sales of goods

Açıklama:

a, c and e are samples of business activities, b is sample of investing activity and d is sample of financing activity.

Doğru Cevap: D

Soru 10

Cash dividends paid to shareholders
Cash payment to Lenders for interest on loans
Cash receipts from the sale of common stock

Which of the above is an example of business activities

Only I

I, II

Only II

I, II, III

Only IIII

Açıklama:

1 and III are samples of financial activities but II is samples of business activities

Doğru Cevap: C

Soru 11

What is one of the most important aspects of accounting analysis?

use of accrual basis instead of cash basis

use of accrual basis instead of dept basis

use of accrual basis instead of currency basis

use of accrual basis instead of budget basis

use of accrual basis instead of commodities basis

Açıklama:

To take al look to the title of Accrual Basis and Cash Basis
One of the most important aspects of accounting analysis is use of accrual basis instead ofcash basis. Another one is the financial statements are prepared for the use of various interest groups, not to satisfy one or some groups.

Doğru Cevap: A

Soru 12

What is core of recording the revenues and expenses?

the time period

the budget period

the revenues period

the expenditures period

the severely time period

Açıklama:

To take a look to the title of Accrual Basis and Cash Basis
Recording the revenues and expenses into the time period they actualized (for example the fiscal year of 2020) is important for measuring the financial performance of that time period correctly.

Doğru Cevap: A

Soru 13

Which one is matter in the periodicity principle?

the revenues of a time period are matched to the expenses of that period

the cash of a time period are matched to the expenses of that period

the goods of a time period are matched to the expenses of that period

the services of a time period are matched to the expenses of that period

the commodities of a time period are matched to the expenses of that period

Açıklama:

To take a look to the title of Accrual Basis and Cash Basis
In accordance with the periodicity principle, the revenues of a time period are matched to the expenses of that period, which is the matching principle. Periodicity and matching principles are closely related to each other and sometimes used even interchangeably. These two principles are the main fundamentals of the accrual basis

Doğru Cevap: A

Soru 14

For examining the efficiency of cash management, which one is favorable?

cash flow statement

post-cash flow statement

pre-cash flow statement

gross cash flow statement

current cash flow statement

Açıklama:

To take a look the title of Accrual Basis and Cash Basis
For examining the efficiency of cash management, cash flow statement is used.

Doğru Cevap: A

Soru 15

Who are not the stakeholders?

financial consulting companies

management

creditors (lenders)

suppliers

competitors

Açıklama:

To take a look to the title of Users of Information and Stakeholders of the Business
The stakeholders are; shareholders (owners), management, creditors (lenders), suppliers, customers, employees, state, regulatory bodies, and competitors. The interests
or expectations of these groups are not the same, furthermore sometimes their interests are even conflicting with each other’s.

Doğru Cevap: A

Soru 16

Which year is convenient for financial performance?

usually one year

usually two years

usually five years

usually six years

usually ten years

Açıklama:

To take a look to title of Business activities analysis
Financial performance of a period, which is usually one year. Income statement is the most important tool to understand and evaluate the efficiency of operations.

Doğru Cevap: A

Soru 17

Which one is not the main elements of income statement ?

the cost of inventory stocks

gross sales

sales discounts

sales returns

net sales

Açıklama:

To take a look to the title of business activities activities
Income statement reports the revenues and expenses in an organized manner. The main elements of income statement are as follows: The income statement starts with gross sales. This is the total amount of goods and services sold during 2020. From the gross sales, sales discounts are deducted. Sales discounts are discounts used to encourage the customers to make an early payment. If a customer accepts to pay in the discount period, then the customer pays less than the gross amount.

Doğru Cevap: A

Soru 18

After the gross margin, which one is following? the operating expenses follow.

the operating expenses

the cash expenses

the tax expenses

the external dept expenses

the income statement expenses

Açıklama:

To take alook to the titie of business activities anayses
After the gross margin, the operating expenses follow. Operating expenses are those expenses that are needed to run a business. They are expenses such as general administrative expense, marketing expense, selling expense, research and development expense.

Doğru Cevap: A

Soru 19

How can we classified of assets?

current and non-current assets

current and pre-current assets

current and post-current assets

current and moved assets

out of the business and moved assets

Açıklama:

To teke a look to the title of investment activities analysis
Assets are economic resources acquired by the business and expected to provide benefits to the business, in other words to be used in operations. Assets are classified as current and non-current assets.

Doğru Cevap: A

Soru 20

What does external financing require?

interest

rate of interest

dept

rate of currencies

rate of uneployment

Açıklama:

To take a look to the title of fiiancial activities analysis
External financing requires an interest. Interest is the excess of the initial amount and is recognized as an expense. If the business heavily relies on external financing, it may face a high amount of interest.

Doğru Cevap: A

Ünite 3

Soru 1

Which of the following statement is true for vertical analysis?

It is a static type of analysis

Decreases in the items are analysed

Increases in the items are analysed

Only the income statement can be analysed in vertical analysis

Gross sales profit is set as 100 so other items can be calculated

Açıklama:

Though it analyses just one financial term of a company it is a static type of analysis

Doğru Cevap: A

Soru 2

According to the balance sheet above calculate the group percentage for inventories

% 22,75

% 30,41

% 25,15

% 20,25

% 27,25

Açıklama:

(7.693.800x100)/33.826.037 = % 22,75

Doğru Cevap: A

Soru 3

What is the percentage of non-current assets?

% 45,71

% 51,25

% 40,35

% 43,10

% 47,19

Açıklama:

Total assets - Current Assets = Non-Current Assets
62.305.144-33.826.037= 28.479.107
(28.479.107*100)/62.305.144= %45,71

Doğru Cevap: A

Soru 4

The company has %104,75 percentage of gross sales. Why does the gross sales percentage is % 4,75 higher than the percentage of net sales?

The company has sales discounts of % 4,75 percentage

The company has the operating expense of %4,75 percentage

Income and revenues from other operations has a percentage of %4,75

Net profit of the company is %4,75

Cost of sales is %4,75 higher than the net sales percentage

Açıklama:

Gross sales - Sales discounts = Net Sales. So the difference between gross sales percentage and net sales percentage which is 100 gives the percentage of sales discounts.

Doğru Cevap: A

Soru 5

Which of the following statement is true for the balance sheet given above?

The company cannot meet its short-term liabilities by current assets

Financial liabilities can be paid by handling inventories to lenders

Advances from buyers can be met by collecting the receivables from customers

Inventories are adequate for paying advances from buyers

Short-term liabilities can be met by non-current assets

Açıklama:

Because of current assets are less then short-term liabilities, the company cannot meet its short-term liabilities

Doğru Cevap: A

Soru 6

How did the company finance its non-current assets according to the balance sheet?

By owner's equity and short-term liabilities

Only by owner's equity

Only by short-term liabilities

By using its current assets

By short-term trade payables

Açıklama:

Because of non-current assets are more than owner's equity, it can be said that owner's equity is not adequate for financing non-current assets alone. By adding short-term liabilities to owner's equity the company managed to finance its non-current assets

Doğru Cevap: A

Soru 7

Net Sales........ %100
Cost of Sales .. %87
If the company gas the percentage as given above, which of the following statement is true?

The gross sales profit has a percentage of %13

Sales discounts of the company is %13

Gross sales percentage is %13 higher than net sales percentage

The percentage of cost of sales should be higher than the percentage of net sales for having profit

The company has %13 percentage from other operating profit

Açıklama:

Net Sales - Cost of Sales = Gross sales profit. So the gross sales sales profit is %13.

Doğru Cevap: A

Soru 8

Company (A) produces carbon fibre bicycles for road racing. Which of the following statement can reflect the balance sheet composition of the company?

Non-current assets should be more than current assets

Current assets must be higher than owner's equity

Non-current assets must be financed by short-term liabilities

Liabilities must be higher than owner's equity

Current assets must be financed by non-current assets

Açıklama:

In manufacturing companies, non-current assets should be higher than current assets. Because non-current assets, specially the fixed assets are the capacity indicator of manufacturing companies.

Doğru Cevap: A

Soru 9

The percentages in the balance sheet in vertical analysis show....

the proportion of items to group and general totals

the proportion of items to net sales

the proportion of items to owner's equity and assets

the proportion of items to gross sales profit

the proportion of items to assets

Açıklama:

The percentages in the balance sheet in vertical analysis show the proportion of items to group and general totals.

Doğru Cevap: A

Soru 10

Which of the statement is true for vertical analysis?

The proportion of owner's equity must exceed the totals of liabilities

The proportion of current assets must always be lower than the proportion of short-term liabilities

Non-current assets must always be financed by short-term liabilities

The proportion of liabilities must be over the proportion of owner's equity

The proportion of cost of sales must be higher than the proportion of net sales

Açıklama:

The proportion of owner's equity must exceed the totals of liabilities for the strength of the financial structure of the company.

Doğru Cevap: A

Ünite 4

Soru 1

___ shows percentage and absolute changes in corresponding financial statement items over a period. It is a very useful tool to gain an understanding and make evaluations on trend situations.
Which of the following completes the sentence above?

Horizontal analysis

Vertical analysis

Trend analysis

Benchmarks analysis

Comparative analysis

Açıklama:

The answer is A.
Horizontal analysis shows percentage and absolute changes in corresponding financial statement items over a period. It is a very useful tool to gain an understanding and make evaluations on trend situations.

Doğru Cevap: A

Soru 2

I. Comparative financial statement analysis
II. Trend analysis
III. Linear analysis
IV. Vertical analysis
Which of the following describes horizontal analysis completely?

I and II

II and III

III and IV

I and IV

II and IV

Açıklama:

The answer is A.
Horizontal analysis can be done in two different ways; Comparative Financial Statement Analysis and Trend Analysis

Doğru Cevap: A

Soru 3

___ provides valuable information about whether a company’s accounts are improving or deteriorating.

Common size analysis

Trend analysis

Income statement analysis

Ratio analysis

Percentage analysis

Açıklama:

The answer is B.
Trend analysis provides valuable information about whether company’s accounts are improving or deteriorating.

Doğru Cevap: B

Soru 4

How many different ways Horizontal analysis can be done?

Açıklama:

The answer is A.
Horizontal analysis can be done in two different ways; Comparative Financial Statement Analysis and Trend Analysis

Doğru Cevap: A

Soru 5

Comparative financial statement analysis generally applied to ___ periods and the following 5-column table is used to implement comparative financial analysis.
Which of the following completes the sentence above?

Competitive

Argumentative

Consecutive

Collaborative

Informative

Açıklama:

The answer is C.
Comparative financial statement analysis generally applied to consecutive periods and the following 5-column table is used to implement comparative financial analysis.

Doğru Cevap: C

Soru 6

One limitation of the horizontal analysis is ___.
Which of the following completes the sentence above?

Inflation

Trend

Inter firm

Intra firm

Financial information

Açıklama:

The answer is A.
One limitation of the horizontal analysis is inflation

Doğru Cevap: A

Soru 7

The horizontal analysis also has some problems that may lead some ___ conclusions.
Which of the following completes the sentence above?

Accurate

Inaccurate

Unexpected

Interesting

Successful

Açıklama:

The answer is B.
Horizontal analysis also has some problems that may lead some inaccurate conclusions.

Doğru Cevap: B

Soru 8

Intra firm comparisons provide useful information for understanding ___.
Which of the following completes the sentence above?

The historical trend

The future predictions

The opportunities

The policies of the company

The financial issues

Açıklama:

The answer is A.
Intra firm comparisons provide useful information for understanding the historical trend.

Doğru Cevap: A

Soru 9

Trend information provides a meaningful basis for those who want to make predictions about ___.

The future

The past

The needs

The limitations

The analysis

Açıklama:

The answer is A.
Trend information provides a meaningful basis for those who want to make predictions about the future.

Doğru Cevap: A

Soru 10

If there is significant inflation, the horizontal analysis may require financial information to be adjusted for ___.
Which of the following completes the sentence above?

Prediction

Information

Inflation

Comparison

Limitation

Açıklama:

The answer is C.
If there is significant inflation, horizontal analysis may require financial information to be adjusted for inflation.

Doğru Cevap: C

Soru 11

What is the correct formula to calculate absolute change?

Absolute Change = Current Year - Previous (Base)Year

Absolute Change = Current Year + Previous (Base)Year

Absolute Change = Current Year / Previous (Base)Year

Absolute Change = Current Year X Previous (Base)Year

Absolute Change = Previous (Base)Year - Current Year

Açıklama:

The absolute change is calculated as follows;
Absolute Change = Current Year - Previous (Base)Year

Doğru Cevap: A

Soru 12

Financial information of how many years are usually compared in trend analysis?

1-2 years

2-5 years

3-7 years

8-10 years

10-15 years

Açıklama:

In trend analysis usually financial information of 3 to 7 years are compared.

Doğru Cevap: C

Soru 13

In trend analysis, all values in the base year have which percentage?

60%

70%

80%

90%

100%

Açıklama:

In trend analysis all values in the base year have the same percentage, 100%.

Doğru Cevap: E

Soru 14

Which of the following is one of the objectives of the horizontal analysis users?

Focusing on the results that indicate success

Identfying the expected outcomes in using budgets

Obtaining information about the business environment

Evaluating the overall performance

Observing the magnitude of the changes

Açıklama:

Findings in the horizontal analysis may highlight problematic areas to the financial statement users. The objectives of the horizontal analysis users are:
a. To see the trend of financial statement accounts and evaluate the overall performance
b. To evaluate the achievement of business goals, and investigate the unexpected variances with using budgets

Doğru Cevap: D

Soru 15

"In order to make an efficient financial analysis we have to check ______________ and ______________of financial statements." Which of the following terms best complete the blanks in this sentence?

coherence-cohesion

consistency-compatibility

interpretability-comparability

consistency-coherence

consistency-comparability

Açıklama:

In order to make an efficient financial analysis we have to check consistency and comparability of financial statements.

Doğru Cevap: E

Soru 16

If the measurement bases applied to financial statements vary year by year, what principle is violated?

The need for consistency

The need for comparability

The need for compatibility

The need for measurability

The need for legibility

Açıklama:

In order to make an efficient financial analysis we have to check consistency and comparability of financial statements. Consistency is related with the measurement basis. If different measurement bases are applied annually, then it will be hard to make any conclusions from the results.

Doğru Cevap: A

Soru 17

Which analysis can not be applied if the balance of an account is 0 or negative in the base year?

Trend analysis

Comparative analysis

Comparative financial statement analysis

Item analysis

Base-year analysis

Açıklama:

Trend analysis will not be applied if the balance of an account is 0 or negative in the base year.

Doğru Cevap: A

Soru 18

"While increase in prepaid expenses could be immaterial for an analyst aiming to invest in the company, it will be material for a(n) _________________." Which of the following words fills in the blank correctly?

auditor

investor

supplier

creditor

competitor

Açıklama:

While increase in prepaid expenses could be immaterial for an analyst aiming to invest in the company, it will be material for an auditor.

Doğru Cevap: A

Soru 19

In comparative financial statement analysis, if industry averages are not computed, then the results of what could be used for external comparison?

Auditors

Investors

Competitors

Suppliers

Creditors

Açıklama:

In comparative financial statement analysis, if industry averages are not computed, then results of the competitors could be used for external comparison.

Doğru Cevap: C

Soru 20

In the presentation of horizontal analysis results, what type of graphs are useful when the focus is on the change in amount for a limited number of items over a relatively longer time period?

Pie graph

Line graph

Stacked column graph

Bar graph

Histogram graph

Açıklama:

In general, pie graphs are most useful to communicate the composition of a total value (e.g., assets over a limited amount of time, say one or two periods). Line graphs are useful when the focus is on the change in amount for a limited number of items over a relatively longer time period. When the composition and amounts, as well as their change over time, are all important, a stacked column graph can be useful (Henry, et al., 2017).

Doğru Cevap: B

Ünite 5

Soru 1

___ are used to measure the short-term debt-paying ability of the business and to determine whether the networking capital is sufficient.
Which of the following completes the sentence above?

Liquidity ratios

Financial structure ratios

Activity ratios

Profitability ratios

Prior ratios

Açıklama:

The answer is A.
Liquidity ratios are used to measure the short-term debt paying ability of the business and to determine whether the net working capital is sufficient.

Doğru Cevap: A

Soru 2

While analyzing the ratios,___, the situation of the industry and competitors, and the past analysis results of the company need to be taken into account.
Which of the following completes the sentence above?

The Liquidity

The inflation

The profitability

The financial structure

The standards

Açıklama:

The answer is B.
While analyzing the ratios, the inflation, the situation of the industry and competitors and the past analysis results of the company need to be taken into account

Doğru Cevap: B

Soru 3

Which of the following can be said when the current ratio is 1.88?

Current assets are 18.8% of current liabilities.

Current assets are 18.8 times current liabilities.

Current assets are 1.88 times current liabilities.

The relationship of current assets to liabilities is 188:1

The relationship of current assets to liabilities is 18.8:1

Açıklama:

The answer is C.
If the current ratio is 1.88, the alternative means of expression are as follows: • Current assets are 188% of current liabilities. • Current assets are 1.88 times current liabilities. • The relationship of current assets to liabilities is 1.88:1.

Doğru Cevap: C

Soru 4

___ is a measure of a company’s immediate liquidity.
Which of the following completes the sentence above?

The cash ratio

The debt ratio

The acid-test ratio

The debt to equity ratio

The Non-Current Assets to Equity Ratio

Açıklama:

The answer is C.
The acid-test ratio is a measure of a company’s immediate liquidity.

Doğru Cevap: C

Soru 5

___ are used to determine whether the expressed profit amounts are sufficient.
Which of the following completes the sentence above?

Liquidity ratios

Financial structure ratios

Activity ratios

Profitability ratios

Prior ratios

Açıklama:

The answer is D.
Profitability ratios are used to determine whether the expressed profit amounts are sufficient.

Doğru Cevap: D

Soru 6

___ are used for measuring the efficiency of the assets and also supports measuring the liquidity of the business.
Which of the following completes the sentence above?

Activity ratios

Financial structure ratios

Liquidity ratios

Profitability ratios

Prior ratios

Açıklama:

The answer is A.
Activity ratios are used for measuring the efficiency of the assets and also supports measuring the liquidity of the business.

Doğru Cevap: A

Soru 7

___ provides a different perspective on the manner in which a company funds its assets as with the debt ratio, it shows the relative proportion of equity and debt used to finance a company’s assets.
Which of the following completes the sentence above?

Cash ratio

Debt ratio

Short Term Liabilities to Total Sources Ratio

Non-Current Assets to Equity Ratio

Debt to equity ratio

Açıklama:

The answer is E.
Debt to equity ratio provides a different perspective on the manner in which a company funds its assets as with the debt ratio, it shows the relative proportion of equity and debt used to finance a company’s assets.

Doğru Cevap: E

Soru 8

I.Cash
II. Activity ratios
III. Inventories
IV. Trade receivables
Which of the following describes the operating cycle correctly?

I-II-III

II-III

II-III-IV

I-III-IV

II-IV

Açıklama:

The answer is D.
Figure 5.1 Operating cycle
Cash, Inventories, Trade receivable

Doğru Cevap: D

Soru 9

___ measures the number of times a company sells its average level of merchandise inventory during a period.

Debt to equity ratio

Non-Current Assets to Equity Ratio

Non - Current Assets to Continuous Capital Ratio

Times interest earned ratio

Inventory turnover ratio

Açıklama:

The answer is E.
Inventory turnover ratio measures the number of times a company sells its average level of merchandise inventory during a period.

Doğru Cevap: E

Soru 10

Which of the following formula describes the amortization of continuous capital ratio?

Period Profit+LongTermFinancial Expenses/Owners' Equity+LongTermLiabilities*100=%

Period Profit-LongTermFinancial Expenses/Owners' Equity+LongTermLiabilities*100=%

Period Profit+LongTermFinancial Expenses*Owners' Equity+LongTermLiabilities*100=%

Period Profit+LongTermFinancial Expenses/Owners' Equity-LongTermLiabilities/100=%

Period Profit*LongTermFinancial Expenses/Owners' Equity/LongTermLiabilities*100=%

Açıklama:

The answer is A.
Period Profit+LongTermFinancial Expenses/ Owners' Equity+LongTermLiabilities x100=%

Doğru Cevap: A

Soru 11

"The ratio of current assets to short-term liabilities which is called ---------------------- provides information about the entity’s ability to pay its short-term debts and net working capital." Which of the following words completes the blank correctly?

asset ratio

short-term ratio

current ratio

net ratio

debt ratio

Açıklama:

The ratio of current assets to short-term liabilities which is called current ratio provides information about the entity’s ability to pay its short-term debts and net working capital.

Doğru Cevap: C

Soru 12

Payment of overdue short-term liabilities and ensuring that daily transactions are carried out are two main functions of which type of capital?

Gross working

Current liabilities

Net working

Liquidity

Receivables

Açıklama:

Current assets, also known as gross working capital, have two main functions. These are;
• Payment of overdue short-term liabilities and
• Ensuring that daily transactions are carried out.

Doğru Cevap: A

Soru 13

Which of the following is the correct formula in defining the "Net Working Capital"?

Net Working Capital = Current Assets + Current Liabilities

Net Working Capital = Current Assets - Current Liabilities

Net Working Capital = Current Liabilities - Current Assets

Net Working Capital = Current Assets / Current Liabilities

Net Working Capital = Current Assets X Current Liabilities

Açıklama:

Net Working capital is current assets minus current liabilities and it is defined as follows:
Net Working Capital = Current Assets - Current Liabilities

Doğru Cevap: B

Soru 14

"_________________ is expressed as an indicator of the quality and adequacy of current assets in order to meet the short-term financial obligations." Which of the following words completes the blank correctly?

Gross working capital

Current asset

Liquidity

Current ratio

Liability

Açıklama:

Liquidity is expressed as an indicator of the quality and adequacy of current assets in order to meet the short-term financial obligations.

Doğru Cevap: C

Soru 15

The _______________________ indicates what percentage of inventory should be sold, except for liquid assets and securities (securities + receivables) in the payment of short term debts of the company.
Which of the following words completes the blank correctly?

acid-test ratio

quick-ratio

liquidity ratio

inventory dependency ratio

inventory independency ratio

Açıklama:

The inventory dependency ratio indicates what percentage of inventory should be sold, except for liquid assets and securities (securities + receivables) in the payment of short term debts of the company.

Doğru Cevap: D

Soru 16

Below which cash ratio a company faces the risk of falling into liquidity shortage?

0.35

0.30

0.25

0.20

0.15

Açıklama:

If a company’s cash ratio is less than 1, company’s current liabilities are higher than cash and cash equivalents on hand. If the ratio falls below 0.20, the company might fall into liquidity shortage.

Doğru Cevap: D

Soru 17

Which principle indicates that current liabilities must only finance the current assets, while the non-current assets should be financed by owners’ equity and long term liabilities?

Long-term liabilities principle

Non-current assets principle

Current assets principle

Current liabilities principle

Maturity compliance principle

Açıklama:

Maturity compliance principle indicates that current liabilities must only finance the current assets, while the non-current assets should be financed by owners’ equity and long term liabilities.

Doğru Cevap: E

Soru 18

What is the sum of owners’ equity and long-term liabilities?

Continuous capital

Working capital

Non-Current Assets

Current Assets

Total Sources Ratio

Açıklama:

Continuous capital is the sum of owners’ equity and long-term liabilities.

Doğru Cevap: A

Soru 19

Which ratio measures the number of times a company sells its average level of merchandise inventory during a period and aims to measure the liquidity of the inventory?

Acid-test ratio

Inventory turnover ratio

Total sources ratio

Interest coverage ratio

Continuous capital ratio

Açıklama:

Inventory turnover ratio measures the number of times a company sells its average level of merchandise inventory during a period. Its purpose is to measure the liquidity of the inventory.

Doğru Cevap: B

Soru 20

The turnover ratio of ___________________ is calculated by dividing the amount of credit sales in a certain period by the average accounts receivables. Which of the following words completes the blank correctly?

cost of goods

trade receivables

accounts receivables

credit sales

net sales

Açıklama:

The turnover ratio of accounts receivables is calculated by dividing the amount of credit sales in a certain period by the average accounts receivables.

Doğru Cevap: C

Ünite 6

Soru 1

Which of the following closeşy affects the ability to pay a firm's short term debts?

The ability to generate cash from operations

The profitability

The long term debts

The expectations of stakeholders

The current liabilities

Açıklama:

Ability to genarate cash from operations of a firm closely related to the ability to pay its short term debts.

Doğru Cevap: A

Soru 2

Which of the folllowing also refers the concept of "current assets"?

Operational assets

Collected assets

Frequent assets

Cycle assets

Inventory assets

Açıklama:

Operational assets also refer the concept of current assets.

Doğru Cevap: A

Soru 3

Which of the following is used to calculate the working capital turnover?

Net sales/Gross working capital

Net sales/Net working capital

Gross sales/Gross working capital

Gross sales/Net working capital

Net profit/Net working capital

Açıklama:

The working capital turnover is the ratio of net sales to gross working capital.

Doğru Cevap: A

Soru 4

What is the realtionship between working capital turnover and profitablity?

Positive

Negative

Neutral

First negative and then positive

There is no clear relationship

Açıklama:

There is a positive relationship between working capital turnover and profitability.

Doğru Cevap: A

Soru 5

I. Paying its short term debts
II. Continue its operations
III. Meet its current obligations
Which of the above listed diffuculties arises when a company has a net working capital deficit?

I, II and III

Only I

Only II

Only III

I and III

Açıklama:

All of the listed problems arise when a company has a working capital deficit.

Doğru Cevap: A

Soru 6

Which of the following is a common measure of a company's liquidity, efficiency and overall health?

Working capital

Profit level

Total assets

Total liabilities

Bank loans

Açıklama:

Working capital is a common measure of a company's liquidity, efficiency and overall health.

Doğru Cevap: A

Soru 7

Which of the following cannot be listed among current liabilities?

Long term debts

Short term bank loans

Advances taken

Taxes payable

Accrued expenses

Açıklama:

Long term debts are not a part of current liabilities.

Doğru Cevap: A

Soru 8

Which of the following should be used to calculate of a firm's net working capital?

Current assets - Short term liabilities

Current assets - Total assets

Current liabilities - Total liabilities

Total assets - Total liabilities

Total assets - Short term liabilities

Açıklama:

Net working capital is the diffrence between current assets and short term liabilities.

Doğru Cevap: A

Soru 9

"The ..... cash collection period, the ...... net working capital is required."
Which of the following pairs correctly completes the above statement?

longer - more

longer - less

shorter - more

shorter - higher

longer - lower

Açıklama:

The longer cash collection period, the more net working capital is required.

Doğru Cevap: A

Soru 10

I. Inventory turnover decreases
II. Cash collection period increases
III. Need for net working capital decreases
Which of the above listed events occur during an economic recession?

I and II

I and III

II and III

I, II and III

Only III

Açıklama:

During economic recessions, inventory turnover decreases, cash collection period increases.

Doğru Cevap: A

Soru 11

Why are Current assets also called “operational assets”?

because they are frequently used and consumed in day-to-day activities.

because they are frequently used and consumed in year -to-year activities.

because they are frequently used and consumed in semi year activities.

because they are frequently used and consumed in total five years activities.

because they are frequently used and purchased in total five years activities.

Açıklama:

To take a look to title of The Distribution and Conversion of Current Assets with Regard to Gross Working Capital
Current assets are also called “operational assets” because they are frequently used and consumed in day-to-day activities. Their usage, acquisition and
disposal is mostly determined by the middle and low level management of business.

Doğru Cevap: A

Soru 12

If “allowance for doubtful accounts” is high what should we look to?

compared to previous years

compared to another companies

compared to budget deficit

compared to external dept

compared to last year external dept

Açıklama:

To take a look to the title of Short Term Debt Paying Ability Analysis
If there is a significant increase in one or some items of the current assets, or the amount of “allowance for doubtful accounts” and “allowance for obsolete inventory” is high, compared to previous years, this cycle will slow down and the ability to pay short term debts will become difficult.

Doğru Cevap: A

Soru 13

Need for net working capital of labor-intensive businesses is usually higher than of capital-intensive businesses. Why?

Due to technology utilization

Due to technology transfers

Due to budget utilization

Due to technology investment

Due to new personel policy

Açıklama:

To take a look to Technology Utilization
Technology Utilization: Need for net working capital of labor-intensive businesses is usually higher than of capital-intensive businesses that utilizes advanced technology.

Doğru Cevap: A

Soru 14

Why do we need to Trend analysis ?

for understanding direction of items on financial statements.

for understanding direction on only financial statements.

for understanding direction on only budget result statements.

for understanding direction on only current issues statements.

for understanding direction on only national dept statements.

Açıklama:

To take a look to trend analyses
Trend analysis is made for understanding direction of items on financial statements. It is made by using 3 or more years’ financial statements. In determining the ability to pay short term debts by using trend analysis, trends of the items in current assets and current liabilities are examined.

Doğru Cevap: A

Soru 15

How are the inventories and bank loans increasing both?

as the amount and percentage in total assets

as the amount and percentage in budget assets

as the amount and percentage in dept assets

as the amount and percentage in loan assets

as the amount and percentage in budget deficit assets

Açıklama:

To take a look to Analysis of Ability to Pay Short Term Debts by Using Liquidity Ratios
Another important point is, instead of the fact that the inventories and bank loans are increasing both as the amount and percentage in total assets, there is no increase in trade payables, which can mean that the suppliers refuse to sell inventories to this business on credit, it lacks credibility.

Doğru Cevap: A

Soru 16

Do liquidity ratios help in analyzing to which?

to which degree the current assets

to which degree the current dept

to which degree the current budget dept

to which degree the current loans

to which degree the current external dept

Açıklama:

To take a look to the title of Analysis of Ability to Pay Short Term Debts by Using Liquidity Ratios
Liquidity is related to convertibility of an asset to cash. Liquidity ratios help in analyzing to whichdegree the current assets are able to meet short term liabilities. It demonstrates the relations between the items of current assets and current liabilities

Doğru Cevap: A

Soru 17

How long does the current ratio measure whether or not a firm has enough resources?

over the next 12 months

over the next 21 months

over the next 24 months

over the next 1 months

over the next 42 months

Açıklama:

To take a look to the title of Current Ratio
The current ratio indicates a company’s ability to meet short-term debt obligations. The current ratio measures whether or not a firm has enough resources to pay its debts over the next 12 months. Potential creditors use this ratio in determining whether or not to make short-term loans

Doğru Cevap: A

Soru 18

In order to make an analysis of ability to pay the short term liabilities, what is the main indicator?

Ratios

Sums

Products

Factors

Quotients

Açıklama:

To take a look to title of Inventory Dependency Ratio
In order to make an analysis of ability to pay the short term liabilities, the before mentioned ratios can be computed.

Doğru Cevap: A

Soru 19

How can we measured the liquidity of a business ?

by liquidity ratios

by budget ratios

by current budget ratios

by total dept ratios

by total budget ratios

Açıklama:

To take a look to tiyle of Determining the Ability to Pay Short Term Debts by Using Cash Conversion Cycle
The liquidity of a business is measured by liquidity ratios; they are very useful in examining the ability to pay short term debts

Doğru Cevap: A

Soru 20

What is receivable turnover?

a measure of how many times a business collects

a measure of how many times a business liabilities

a measure of how many times a business accounts payable

a measure of how many times a business account assets

a measure of how many times a business account expenses

Açıklama:

To take a look to the title of Days Sales Outstanding (DSO)
Receivable turnover is a measure of how many times a business collects its receivables in a time period, usually one year.

Doğru Cevap: A

Ünite 7

Soru 1

Which of the following is required to assess the ratios that represent the long term debt paying ability of a company?

Update financial data

Positive investor expectations

Economic recovery period

High level of profit

Short term indebtness of the company

Açıklama:

Update financial data is required to assess the ratios that represent the long term debt paying ability of a company.

Doğru Cevap: A

Soru 2

"Each company strives to find optimal capital structure which maximizes the market value at ...."
Which of the following correctly completes the above statement?

minimum capital cost

maximum capital cost

minimum output level

maximum output level

minimum profit share

Açıklama:

Each company strives to find optimal capital structure which maximizes the market value at minimum capital cost.

Doğru Cevap: A

Soru 3

Which of the following approach assumes market efficiency to decide capital structure?

Modigliani - Miller

Myers

Jensen - Meckling

Myers - Majluf

Baumol - Tobin

Açıklama:

Modigliani - Miller approach assumes market efficiency to decide capital structure.

Doğru Cevap: A

Soru 4

According to Myers - Majluf approach, which of the following is the main reason for incorrectly determined stock prices?

Asymmetric information

Economic fluctuations

Long term debt level of the company

Openness to international trade

Existence of taxes

Açıklama:

According to Myers - Majluf approach, asymmetric information is the main reason for incorrectly determined stock prices.

Doğru Cevap: A

Soru 5

According to Agency Cost Theory, which of the following causes wealth transfer from lenders to shareholders?

Higher leverage ratio

Lower leverage ratio

Higher profitability

Lower profitability

Higher Tobin's q value

Açıklama:

According to Agency Cost Theory, higher leverage ratio causes wealth transfer from lenders to shareholders

Doğru Cevap: A

Soru 6

Which of the following shows an emprically proved positive relationship with the tax base?

Level of leverage

Working capital need

Company risk

Depreciations

Borrowing limit

Açıklama:

There is an emprically proved positive relationship between tax base and level of leverage.

Doğru Cevap: A

Soru 7

Which of the following displays a positive relationship with cost of borrowing?

Level of leverage

Profitability

Tax shields

Liquidity

Short term advances

Açıklama:

There is a positive relationship between the cost of borrowing and the level of leverage.

Doğru Cevap: A

Soru 8

Which of the following is used to calculate the financial leverage for a company?

Percentage change in earning per share/Percentage change in profit before interest and taxes

Percentage change in profit before interest and taxes/Percentage change in earning per share

Percentage change in total assets/Percentage change in total liabilities

Percentage change in total liabilities/Percentage change total assets

Percentage change in gross working capital/Percentage change net working capital

Açıklama:

Financial leverage is the ratio of percentage change in earning per share to percentage change in profit before interest and taxes.

Doğru Cevap: A

Soru 9

Earning per share Profit before interest and taxes
2020 100 1000
2021 120 1100
What is the value of financial leverage for the hypothetical company whose financial data given in the above table?

0,5

Açıklama:

Financial leverage is the ratio of percentage change in earning per share to percentage change in profit before interest and taxes. Therefore:
Leverage = ((120 - 100)/100)/((1100 - 1000)/1000) = 0,2/0,1 = 2

Doğru Cevap: A

Soru 10

What is the effect of a 5% increase in profit before interest and taxes on earning per share for a company with a financial leverage level of 3?

15% increase

15% decrease

1,67% increase

1,67% decrease

5% increase

Açıklama:

Financial leverage is the ratio of percentage change in earning per share to percentage change in profit before interest and taxes. Therfore:
3 = Percentage change in earning per share/5%
Percentage change in earning per share = 3 x 5% = 15%

Doğru Cevap: A

Soru 11

How do we call "the composition of the long term financings"?

The capital structure of a company

Modigliani-Miller (MM) structure

Long Term Debt Paying Ability

ShortTerm Debt Paying Ability

Solvency structure

Açıklama:

The capital structure of a company is defined as the composition of the long term financings.

Doğru Cevap: A

Soru 12

Which theory is based on the proposals of Myers about the costs of bankruptcy and financial stress and of Jensen and Meckling about the agency costs?

The balancing theory

The investing theory

The optimaization theory

The signalling theory

The structuring theory

Açıklama:

The balancing theory is based on the proposals of Myers about the costs of bankruptcy and financial stress and of Jensen and Meckling about the agency costs.

Doğru Cevap: A

Soru 13

Which of the following theory proposes that there is a positive relation between the size of the company and the leverage level as big companies have lower probability of bankruptcy and lower relative cost of bankruptcy.

The Balancing Theory

The Liquidity Theory

Agency Theory

The volatility theory

Tradeoff Theory

Açıklama:

The Balancing Theory proposes that there exists a positive relation between the size of the company and the leverage level as big companies have lower probability of bankruptcy and lower relative cost of bankruptcy.

Doğru Cevap: A

Soru 14

If he financial leverage level of company is 3, what it tells you about earning per share (EPS)?

The financial leverage level of 3 means that 1% change in the EBIT of the company causes an increase in EPS by 3%.

The financial leverage level of 3 means that 1% change in the EPS of the company causes an increase in EBIT by 3 times.

The financial leverage level of 3 means that 1% change in the Net Income of the company causes an increase in EPS by 3%.

The financial leverage level of 3 means that 1% change in the EPS of the company causes an increase in Income Tax Level by 3%.

The financial leverage level of 3 means that Net income of the company is 3 times higher than EPS.

Açıklama:

Financial Leverage Level=Change in Earning per Share(%) / Change in Profit Before Interest and Taxes(%)
The leverage level of 3 means that 1% change in the EBIT of the company causes an increase in EPS by 3%.

Doğru Cevap: C

Soru 15

The interest coverage ratio of a company is increasing during the last three years such as 2.4, 4.3 and 6.5. What will the analyst think about the long term debt paying ability of the company?

The company's risk of default for the interest payments will become lower and when the default risk of a company is low, the company will have more ability to roll over the existing principal payments.

The company's risk of default for the interest payments will become higher and when the default risk of a company is high, the company will have more ability to roll over the existing principal payments.

Such an increase in the interest coverage ratio will lower paying ability of the company and is sourced by the increase in the interest expense and decrease in the operational profit.

Such an increase in the interest coverage ratio will increase the default risk of a company and will reduce the paying ability of the company.

It can be said that the company paid its low interest long term borrowings in the last year by using high interest short term financing and only the ordinary income items should be taken into account.

Açıklama:

The interest coverage ratio determines the long term debt paying ability in the means of the income statement. The higher the interest coverage ratio is, the lower the risk of default for the interest payments becomes. When the default risk of a company is low, it has more ability to roll over the existing principal payments.

Doğru Cevap: A

Soru 16

Which of the following ratio will be used for evaluating the long term debt paying ability of a company under the income statement approach?

The interest coverage ratio

Debt Ratio (Leverage Ratio)

Debt to Equity Ratio

Fixed Assets to Permanent Capital Ratio

Current Ratio

Açıklama:

The interest coverage ratio determines the long term debt paying ability in the means of the income statement. The coverage ratio for fixed financing expenses is another ratio used for evaluating the long term paying ability of a company under the income statement approach.
In the long-run, there exists a relation between the profit reported in the income statement and the ability to pay long term debt. The following ratios are used to determine the paying ability:
• The Interest Coverage Ratio
• The Coverage Ratio for Fixed Financing Expenses

Doğru Cevap: A

Soru 17

Which of the following ratios give the information about the proportion of assets financed by the external funding sources?

Debt ratio (leverage ratio) and debt to equity ratios

Reserves for Debt and Expense ratios

The debt to net tangible asset ratio and The ratio of tangible assets to long term debt

Fixed Assets to Permanent Capital Ratio and Current ratio

The Interest Coverage Ratio and The Coverage Ratio for Fixed Financing Expenses

Açıklama:

Debt ratio indicated the proportion of assets that are financed by the external funding sources. This ratio compares total assets of the company with total liabilities and generally named as leverage ratio. Both the leverage ratio and debt to equity ratios serve for the same purpose and they are used interchangeably.

Doğru Cevap: A

Soru 18

Why the intangible assets such as goodwill, brand recognition, patents and trademarks are excluded from total assets when calculating the "Debt to net tangible asset ratio"?

the intangible assets do not create cash inflow.

the intangible assets do not have physical substance.

the intangible assets do not have important portion.

the intangible assets are not useful.

the intangible assets are less than tangible assets.

Açıklama:

The debt to net tangible asset ratio is used to elaborate the long term debt paying ability of a company. It shows the level of protection provided to the creditors in the time of bankruptcy. As for all debt ratios, the lower debt to net tangible asset ratio is preferred. In the calculation the intangible assets such as goodwill, brand recognition, patents and trademarks are excluded from total assets as they do not create
In the calculation the intangible assets such as goodwill, brand recognition, patents and trademarks are excluded from total assets as they do not create cash inflow.

Doğru Cevap: A

Soru 19

How did the company finance its fixed assets if the ratio of tangible assets to long term debt result is 0.8?

the fixed assets financed by the long term external borrowing.

the fixed assets financed by the long term and short term external borrowing.

the fixed assets financed by the long term external borrowing and equity.

the fixed assets financed by the internal borrowing.

the fixed assets financed by the capital.

Açıklama:

The ratio of tangible assets to long term debt measures the level of the fixed assets financed by the long term external borrowing.
The following formula is used for calculation:
Tangible Asset to Long
A tangible assets to long term debt ratio lower than 1 means that all of the tangible assets are financed by the long term debt and no short term funding or equity is used.

Doğru Cevap: A

Soru 20

Which items will be used as Permanent capital to calculate the Fixed Asset to Permanent Capital Ratio?

Longterm Debt + Equity

Permanent capital is defined as the total of long term liabilities and the short term liabilities.

Long term Debt + Short term debt

Liabilities + Equity

Capital + Equity

Açıklama:

Permanent capital is defined as the total of long term liabilities and the equity. It measures the strength of the company for financing the fixed assets. The following formula is used for calculation:
Fixed Asset to Permanent Capi
Permanent capital is defined as the total of long term liabilities and the equity.
The following formula is used for calculation:
Fixed Asset to Permanent Capital Ratio = Net Tangible Fixed Assets Longterm Debt + Equity

Doğru Cevap: A

Ünite 8

Soru 1

Why A company’s income or loss matter?

a direct effect on its ability

a direct effect on its dept

a direct effect on its current budget

a direct effect on its current deficit

a direct effect on its accountability

Açıklama:

To taka a look to profitability
A company’s income or loss has a direct effect on its ability to obtain debt and equity financing, its liquidity and its growth performance. Analysts
use profitability as a test of management’s operating effectiveness

Doğru Cevap: A

Soru 2

What is the core of Profitability analysis?

relationships of profits

relationships of transparency

relationships of budget deficit

relationships of budget surplus

relationships of budget corruption

Açıklama:

To take a look to title of profitability analysis
Profitability analysis deals with relationships of profits with some operational and financial aspects of a company. This analysis requires “profit (or loss)” in order to calculate some ratios. That raises a need for understanding the profit concept.

Doğru Cevap: A

Soru 3

What is the main indicator If a person select to use one statement approach?

income statement items

Budget items

Dept items

income surplus items

Budget surplus items

Açıklama:

To take a look to the title of Financial Statement Analysis
If we select to use one statement approach, we start this statement with income statement items and find a profit or loss of the period. Then to present the total comprehensive income, other comprehensive income items are added to profit or loss amount.

Doğru Cevap: A

Soru 4

Why is gross profit affected by management policy?

because set lower prices and maximize the total amount of units sold

because set high prices and maximize the total amount of units sold

because set lower prices and maximize the total amount of negatif units sold

because set lower prices and maximize the total amount of sub track units sold

because set lower only budget and maximize the total amount of units sold

Açıklama:

To take a look to the title of Components of Income Statement
Gross profit is affected by management policy. Some companies set lower prices and try to maximize the total amount of units sold, some set higher prices which may lead to fewer sales.

Doğru Cevap: A

Soru 5

Why is external financing for businesses matter in net profit?

to generate sufficient

to generate surplus

to generate deficit

to generate external dept

to generate internal dept

Açıklama:

To take a look to the title of Net Profit
Net profit/loss represents the final outcome of the company’s performance which was the net of all revenues and expenses of the company for the given period. It is accepted by many financial statement users as a measure of a company’s success. Failure of companies to generate sufficient net profit may increase the need for external financing for businesses.

Doğru Cevap: A

Soru 6

What does Margin ratio represent?

the relationship of income (profit) elements

the relationship of expenditures (profit) elements

the relationship of budget elements

the relationship of external elements

the relationship of internal elements

Açıklama:

To take a look to the title of Margin Ratios
Margin ratios represent the relationship of income (profit) elements with sales. Income statement is the only source needed to calculate these ratios

Doğru Cevap: A

Soru 7

As a person, why do we need Gross profit indicates?

Gross profit indicates the margin on products sold

Gross profit indicates the margin on products bought

Gross profit indicates the margin on budget issues

Gross profit indicates the margin on dept issues

Gross profit indicates the margin on corruption

Açıklama:

To take a look to The Gross Profit Margin
Gross profit indicates the margin on products sold and services rendered. A low gross profit margin may cause financial problems for the company

Doğru Cevap: A

Soru 8

If total expenses of the company exceed total income what virtually circumstance we would encounter?

a negative profit margin

a positive profit margin

a negative profit budget

a positive profit budget

a negative profit external dept

Açıklama:

To take a look to The Net Profit Margin
Sometimes total expenses of the company exceed total income. That results in a loss which causes a negative profit margin.

Doğru Cevap: A

Soru 9

Why return on equity is important?

This ratio shows the net income

This ratio shows the net budget income

This ratio shows the net tax income

This ratio shows the net stability rates

This ratio shows the net current budget stability rates

Açıklama:

To take a look to the title of Return on Equity
Another important ratio is return on equity. This ratio shows the net income earned for one unit of investment made by the shareholders.

Doğru Cevap: A

Soru 10

What does DuPont analysis help?

better understand the profitability

better understand the budget deficit

better understand the budget surplus

better understand the budget deficit margin

better understand the rate of total amount of external dept

Açıklama:

To take a look to the title of DuPont Analysis
DuPont analysis helps analysts better understand the profitability and how effectively it is made. Simply this analysis decomposes Return on Equity (ROE) into subcomponents; net profit margin, total assets turnover, and financial leverage.

Doğru Cevap: A

Fınancıal Statement Analysıs (ENG) - Tüm Sorular

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