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Financial Statement Analysis, Ratios & Feasibility (Accounting & Finance) Solved Questions & Notes (2026) - Apex Rankers

Higher Education & Professional Technical Tests > Accounting & Finance > Financial Statement Analysis, Ratios & Feasibility

100 Total Solved Questions
~150 mins Estimated Reading Time
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Financial Statement Analysis, Ratios & Feasibility

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Q. 1 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q1: In financial statement analysis (Liquidity & Solvency Ratios), what does current ratio equals total cur measure?
A
Current Ratio equals Total Current Assets divided by Total Current Liabilities, evaluating short-term debt coverage.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Liquidity & Solvency Ratios: Current Ratio equals Total Current Assets divided by Total Current Liabilities, evaluating short-term debt coverage.
Q. 2 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q2: How is quick ratio (acid-test) excludes in calculated and interpreted in corporate reporting (Liquidity & Solvency Ratios)?
A
Quick Ratio (Acid-Test) excludes inventory and prepaid expenses from current assets to test immediate liquidity.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Liquidity & Solvency Ratios: Quick Ratio (Acid-Test) excludes inventory and prepaid expenses from current assets to test immediate liquidity.
Q. 3 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q3: Under financial ratio analysis (Liquidity & Solvency Ratios), what formula governs cash ratio measures absolute liq?
A
Cash Ratio measures absolute liquidity by comparing cash and marketable securities directly against current liabilities.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Liquidity & Solvency Ratios: Cash Ratio measures absolute liquidity by comparing cash and marketable securities directly against current liabilities.
Q. 4 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q4: In corporate feasibility evaluation (Liquidity & Solvency Ratios), how is debt-to-equity ratio equals to applied?
A
Debt-to-Equity Ratio equals Total Debt divided by Total Shareholders' Equity, assessing financial leverage.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Liquidity & Solvency Ratios: Debt-to-Equity Ratio equals Total Debt divided by Total Shareholders' Equity, assessing financial leverage.
Q. 5 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q5: How do financial analysts use interest coverage ratio (tim in Liquidity & Solvency Ratios?
A
Interest Coverage Ratio (Times Interest Earned) equals EBIT divided by Interest Expense.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Liquidity & Solvency Ratios: Interest Coverage Ratio (Times Interest Earned) equals EBIT divided by Interest Expense.
Q. 6 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q6: Under financial modeling standards (Liquidity & Solvency Ratios), what rule applies to debt service coverage ratio (dscr?
A
Debt Service Coverage Ratio (DSCR) equals Cash Available for Debt Service divided by Total Debt Principal and Interest obligations.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Liquidity & Solvency Ratios: Debt Service Coverage Ratio (DSCR) equals Cash Available for Debt Service divided by Total Debt Principal and Interest obligations.
Q. 7 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q7: In investment appraisal (Liquidity & Solvency Ratios), which definition specifies debt-to-assets ratio equals tot?
A
Debt-to-Assets Ratio equals Total Liabilities divided by Total Assets, indicating asset financing by creditors.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Liquidity & Solvency Ratios: Debt-to-Assets Ratio equals Total Liabilities divided by Total Assets, indicating asset financing by creditors.
Q. 8 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q8: What is the analytical significance of equity multiplier equals tota in Liquidity & Solvency Ratios?
A
Equity Multiplier equals Total Assets divided by Total Shareholders' Equity, measuring financial leverage in DuPont analysis.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Liquidity & Solvency Ratios: Equity Multiplier equals Total Assets divided by Total Shareholders' Equity, measuring financial leverage in DuPont analysis.
Q. 9 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q9: In financial statement analysis (Profitability & Efficiency Ratios), what does dupont 3-step roe decomposes r measure?
A
DuPont 3-Step ROE decomposes Return on Equity into Net Profit Margin multiplied by Asset Turnover multiplied by Equity Multiplier.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Profitability & Efficiency Ratios: DuPont 3-Step ROE decomposes Return on Equity into Net Profit Margin multiplied by Asset Turnover multiplied by Equity Multiplier.
Q. 10 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q10: How is gross profit margin equals gross pr calculated and interpreted in corporate reporting (Profitability & Efficiency Ratios)?
A
Gross Profit Margin equals Gross Profit divided by Total Sales Revenue, assessing production cost efficiency.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Profitability & Efficiency Ratios: Gross Profit Margin equals Gross Profit divided by Total Sales Revenue, assessing production cost efficiency.
Q. 11 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q11: Under financial ratio analysis (Profitability & Efficiency Ratios), what formula governs operating profit margin equals e?
A
Operating Profit Margin equals EBIT divided by Total Sales Revenue, evaluating core operational profitability.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Profitability & Efficiency Ratios: Operating Profit Margin equals EBIT divided by Total Sales Revenue, evaluating core operational profitability.
Q. 12 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q12: In corporate feasibility evaluation (Profitability & Efficiency Ratios), how is return on capital employed (ro applied?
A
Return on Capital Employed (ROCE) equals EBIT divided by Capital Employed (Total Assets minus Current Liabilities).
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Profitability & Efficiency Ratios: Return on Capital Employed (ROCE) equals EBIT divided by Capital Employed (Total Assets minus Current Liabilities).
Q. 13 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q13: How do financial analysts use inventory turnover ratio equ in Profitability & Efficiency Ratios?
A
Inventory Turnover Ratio equals Cost of Goods Sold divided by Average Inventory.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Profitability & Efficiency Ratios: Inventory Turnover Ratio equals Cost of Goods Sold divided by Average Inventory.
Q. 14 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q14: Under financial modeling standards (Profitability & Efficiency Ratios), what rule applies to days sales outstanding (dso) equa?
A
Days Sales Outstanding (DSO) equals (Accounts Receivable divided by Annual Credit Sales) multiplied by 365 days.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Profitability & Efficiency Ratios: Days Sales Outstanding (DSO) equals (Accounts Receivable divided by Annual Credit Sales) multiplied by 365 days.
Q. 15 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q15: In investment appraisal (Profitability & Efficiency Ratios), which definition specifies total asset turnover ratio equa?
A
Total Asset Turnover Ratio equals Net Sales Revenue divided by Average Total Assets.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Profitability & Efficiency Ratios: Total Asset Turnover Ratio equals Net Sales Revenue divided by Average Total Assets.
Q. 16 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q16: What is the analytical significance of fixed asset turnover ratio eq in Profitability & Efficiency Ratios?
A
Fixed Asset Turnover Ratio equals Net Sales Revenue divided by Net Property, Plant and Equipment.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Profitability & Efficiency Ratios: Fixed Asset Turnover Ratio equals Net Sales Revenue divided by Net Property, Plant and Equipment.
Q. 17 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q17: In financial statement analysis (Valuation & Market Ratios), what does price-to-earnings (p/e) ratio measure?
A
Price-to-Earnings (P/E) Ratio equals Current Market Price per Share divided by Earnings Per Share (EPS).
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Valuation & Market Ratios: Price-to-Earnings (P/E) Ratio equals Current Market Price per Share divided by Earnings Per Share (EPS).
Q. 18 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q18: How is price-to-book (p/b) ratio equals ma calculated and interpreted in corporate reporting (Valuation & Market Ratios)?
A
Price-to-Book (P/B) Ratio equals Market Price per Share divided by Book Value of Equity per Share.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Valuation & Market Ratios: Price-to-Book (P/B) Ratio equals Market Price per Share divided by Book Value of Equity per Share.
Q. 19 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q19: Under financial ratio analysis (Valuation & Market Ratios), what formula governs dividend yield equals annual div?
A
Dividend Yield equals Annual Dividend per Share divided by Current Market Price per Share.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Valuation & Market Ratios: Dividend Yield equals Annual Dividend per Share divided by Current Market Price per Share.
Q. 20 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q20: In corporate feasibility evaluation (Valuation & Market Ratios), how is dividend payout ratio equals t applied?
A
Dividend Payout Ratio equals Total Common Dividends divided by Net Income Available to Common Shareholders.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Valuation & Market Ratios: Dividend Payout Ratio equals Total Common Dividends divided by Net Income Available to Common Shareholders.
Q. 21 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q21: How do financial analysts use retention ratio equals 1 min in Valuation & Market Ratios?
A
Retention Ratio equals 1 minus Dividend Payout Ratio, representing earnings reinvested in the business.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Valuation & Market Ratios: Retention Ratio equals 1 minus Dividend Payout Ratio, representing earnings reinvested in the business.
Q. 22 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q22: Under financial modeling standards (Valuation & Market Ratios), what rule applies to sustainable growth rate (sgr) equ?
A
Sustainable Growth Rate (SGR) equals ROE multiplied by Retention Ratio (b).
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Valuation & Market Ratios: Sustainable Growth Rate (SGR) equals ROE multiplied by Retention Ratio (b).
Q. 23 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q23: In investment appraisal (Valuation & Market Ratios), which definition specifies enterprise value (ev) equals ma?
A
Enterprise Value (EV) equals Market Capitalization plus Total Debt plus Preferred Stock minus Cash and Cash Equivalents.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Valuation & Market Ratios: Enterprise Value (EV) equals Market Capitalization plus Total Debt plus Preferred Stock minus Cash and Cash Equivalents.
Q. 24 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q24: What is the analytical significance of ev/ebitda multiple evaluates in Valuation & Market Ratios?
A
EV/EBITDA multiple evaluates total firm enterprise value relative to cash operating earnings before financing and tax.
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Valuation & Market Ratios: EV/EBITDA multiple evaluates total firm enterprise value relative to cash operating earnings before financing and tax.
Q. 25 Accounting & Corporate Finance
Difficulty: Medium (1 Mark)
Q25: In financial statement analysis (Financial Modeling & Feasibility), what does benefit-cost ratio (bcr) equal measure?
A
Benefit-Cost Ratio (BCR) equals Present Value of Project Benefits divided by Present Value of Project Costs (>1 indicates viability).
✓ Correct
B
Calculating gross corporate revenue multiplied by municipal property rate
C
Dividing annual cash disbursements by authorized share capital
D
Subtracting accumulated depreciation from bank overdraft balances
💡 Step-by-Step Explanation & Concept Rationale
Under Financial Modeling & Feasibility: Benefit-Cost Ratio (BCR) equals Present Value of Project Benefits divided by Present Value of Project Costs (>1 indicates viability).
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