Chapter 1

Financial analysis
1.What is financial analysis ?

Answer : its the process of evaluating business, project and budget

2 . looking at a specific company , which 3 statement financial analyst analysis ?

Answer : income statement , balance sheet , and cash flow statement

3.financial statement information facilitate decision making and monitoring of management

True or false ?

Answer: true

4.who are the major recipients of the financial statement ?

Answer : shareholder and investor

5. which three parties range is relatively limited resources to large and well endowed ?

Answer : shareholder ,investor, and security analysts

6. employee has no interested in the continued and profitable operations ? true or false ?

Answer : false

7. how many parties demanding financial statement information ?

Answer : six parties

8. who are responsible for the financial health of an organization are called ?

Answer : financial manager

9. financial manager produce what ?

Answer : financial report , direct investment activities and strategic plans

10. where financial manager works ?

Answer : banks and insurance company

11. the board term marketplace where trading securities , bonds , currencies, and derivatives are
called ?
Answer : financial market

12. some financial market are small with little activity is it true or false ?

Answer : true

13.how many category of a financial market ?

Answer: four category

14. which one is money market ?

Answer : commercial paper , certificate of deposits , t-bill

15.how many types of capital market ?

Answer : two types

16. transaction between buyer and seller is called ?

Answer : cash market

17.what is the full form of OTC?

Answer : over the counter market

Chapter 2

Financial statement
18. How many types of financial statement ?

Answer :four types

19.statement of financial position is knowing as ?

Answer : balance sheet

20.cash ,inventory ,plant and machinery are known as ??

Answer : asset

21.what is example of liabilities

Answer :creditors and bank loans

22.difference between assets and liabilities represents as ?

Answer : equity

23.income statement known as ?

Answer : profit or loss statement

24.which is known as income ?

Answer : sales revenue , dividend income

25.depriciation , rental charges ,salaries and wages are known as ?

Answer : expense

26.what is the formula of net income ?

Answer :net income =total revenue –total expense

27.cashflow statement has _

Answer : operating activities

Investing activities

Financing activities

28.Equity known as ?

Answer : retained earnings

29.which one is statement of changes in equity ?

Answer : net profit or loss, dividend payment

Chapter 3

CVP analysis
30.what is the abbreviation of CVP ?

Answer : cost volume profit

31.cvp analysis affect a company’s?

Answer :operating income and net income

32.sales per unit is constant in cvp analysis true or false ?

Answer : true

33.if a company produces 10 units , where fixed cost is 1000 and variable cost is 50

What is the total cost ?

Answer : ( units *variable cost) +fixed cost

10*50+1000=1500

34.if the total cost is 1500 and total selling price is 1000 is it profit or loss ?

Answer : loss (-500)

35.what is the formula of breakeven point in units ?

Answer : FC/SALES-VC

36.which one is the contribution margin ratio ?

Answer : sales –variable cost / sales

37.if the amount of contribution margin is not enough to cover all fixed expenses , the business will_

Answer : suffer a loss

38.if sales revenue is 100, variable cost is 50 then what is the contribution margin ?

Answer : 1

39. if the selling price is $32 per unit , total fixed cost is $320000.. what will be the breakeven point in
units ?

Answer : 40000 units

Chapter 4

Cash flow statement

40. Cash Flow Statement is also known as ?

Answer : a) Statement of Changes in Financial Position on Cash basis

b) Statement accounting for variation in cash

c) Both a and b

d) None of the above.

Answer C

41. Cash Flow Statement is based upon

a) Cash basis of accounting

b) Accrual basis of accounting

c) Credit basis of accounting

d) None of the above

Answer A

42. depreciation always increase is it positive and negative ?

Answer : positive

43.from cash flow statement old asset is sold , is profit increase or decrease ?

Answer : increase

44.old asset sale always increase from which cash flow statement ?

Answer : cash flow from investing

45.dividend increase from which cash flow statement ?

Answer : cash flow from financing

46.A decrease of accounts payable is _

Answer : negative

47. An increase in the long term asset investment in a company is ?

Answer : negative
 Chapter 5

Horizontal and vertical analysis

48.horizontal analysis known as ?

Answer : trend analysis

49.dollar computed by which formula?

Answer : amount of the item in comparison year –amount of the item in base year

50.percentage changes are computed by which formula ?

Answer : dollar change /amount of base year *100

51. xyz company has a current asset 55000 in 2008 and in 2007 has 53000.. what amount increase or
decrease ??

Answer : 2000 (decrease )

52. As per question number 50 which one item is base year ?

Answer : 53000 (2007 base year )

53.what is change of percentage as per question number 50 ??

Answer : 3.78% (2000/53000*100)

54.vertical analysis known as ?

Answer : common size analysis

55. what is the formula of a percentage of base ?

Answer : amount of individual item / amount of base *100

56.if current asset in 2008 550000 and total asset is 1139500… what is the percentage of base ?

Answer : 48.3%

57. comparative balance sheet in vertical analysis which one is computed as base year ?
Answer : total asset

Chapter 6

Corporate restructuring

58. when corporate action taken to significantly modify the structure or operations of the company are
called as ??

Answer : corporate restructuring

59. the restructuring of a corporation should be undertaken if

Answer : restructuring is expected to create value for shareholder

60.troubled company attempts to improve the company’s performance by _

Answer : eliminating certain subsidiaries or divisions

61. management take wrong decision to start the division or decline in the profitability due to _

Answer : increasing cost or changing customer needs

62.reverse synergy part is worth more than combined unit ,,, true or false ??

Answer : true

63. if a company facing difficulty in finance then the company do _

answer : selling an asset to raise money and reduce debt

64.distrinuting share among the existing shareholder which should be ?

Answer : proportionately

65.shareholder of the subsidiary of the company trade in ?

Answer : existing stocks in the company

66.apart from the asset or division sold piece by piece is called ?

Answer : liquidation

67.the complete absorption of one company by another , wherein the acquiring firm retains its identify
and the acquire firm ceases to exist as a separate entity is called ?
Answer : merger

68. The sale of a portion of a firm's assets, operations, or divisions to a third party is

referred to as a:

Answer : divestiture

69. The distribution of shares in a subsidiary to existing parent company stockholders is

called ?

Answer : spin off

70. he sale of stock in a wholly owned subsidiary via an initial public offering is referred

to as

Answer : equity crave out

71. The division of a firm into two or more separate companies is called ?

Answer : split off

72.how many types of merger

Answer : five types

73. how many types of takeover ?

Answer : four types