Division of Cebu Province

District of Bantayan I
Secondary Schools
School Year 2020-2021
SUMMATIVE TEST # 2 IN FABM 2
Name:__________________________Grade/Section:________________Score: ________

Directions: Encircle the letter which corresponds to the correct answer of each statement/questions
that follows.

1. What analysis of the income statement helps the management to answer the question, what is the
percentage of net income to sales?
a. Vertical Analysis b. Horizontal Analysis c. Trend Analysis d. None
2. Which of the following is the correct step in performing vertical analysis?
I. Add one column on the right side of each year
II. Prepare comparative financial statements of two consecutive years.
III. Express each account as a percentage of the total assets.

a. I, II, III b. III, III, I c. I, III, II d. II, I, III

3. It analyzes not only two years in comparison but covers three, four- or five-years’ financial
statements to determine the trends in the industry.
a. Vertical Analysis b. Horizontal Analysis c. Trend Analysis d. Financial Ratio
4. Known as comparative analysis which helps management analyze increases and decreases in the
balance sheet and income statement accounts.
a. Vertical Analysis b. Horizontal Analysis c. Trend Analysis d. Ratio Analysis
5. Given that the cash in the income statement is year 2017 is P222.9 million and in 2016 is P330.2
million, what is the increase amount?
a. P (107.3) M b. (32.5) % c. P102.3 M d. 32.5 M
6. Which of the following is the correct steps in identifying the increase or decrease for each
account?
I. Choose a base year which is usually the initial year of analysis.
II. Multiply the quotient by 100 to get the percentage or change.
III. Deduct the amount of the current year from the base year.
IV. Divide the difference above by the amount of the base year.

a. I,II,III,IV b. I, III, IV, II c. I, III, II, IV d. II, III, IV, I

7. Compares the same account in the financial statement of two periods (current and past year)
determining the amount of changes and computing its percentage change using a base year as
comparison.
a. Vertical Analysis b. Horizontal Analysis c. Trend Analysis d. Ratio Analysis
8. What financial statement analysis determines the trends in the industry?
a. Vertical Analysis b. Horizontal Analysis c. Trend Analysis d. Ratio Analysis
9. What is the current assets trend % in 2016 if the chosen year has P665.40 M and the base year
has P597.6 M?
a. 113.9% b. 111.3% c. 100% d. 76.9%
10. It involves the computation of percentage, fractions or proportions using certain formulas.
a. Vertical Analysis b. Horizontal Analysis c. Trend Analysis d. Ratio Analysis
11. Which of the following does not belong to the classification of financial ratios?
a. Liquidity ratio b. Solvency ratio c. Working ratio d. Profitability ratio
12. If a firm has P10,000 inventories, P50,000 cash, P20,000 machineries, and P10,000 current liabilities.
What is the firm’s Working Capital?
a. P40,000 b. P50,000 c. P60,000 d. P80, 000
13. If a firm has P20,000 accounts receivable, P40,000 in cash, P10,000 inventory, and P20,000
equity, what is the firm’s equity ratio?
a. 1.00 b. 0.33 c. 0.29 d. 0.50
14. If a firm has P60,000 accounts receivable, P50,000 in cash, P20,000 inventory, P20,000 notes
payable and P10,000 accounts payable, what is the firm’s debt ratio?
a. 0.60 b. 0.33 c. 0.27 d. 0.23
15. If a firm has P80,000 credit sales, P50,000 accounts receivable, beginning, P73,000 accounts
receivable, end. What is the companys accounts receivable turnover?
a. 1.30 b. 0.65 c. 1.60 d. 1.10
16. It is a financial ratio computed by deducting current liabilities from current assets?
a. Current ratio b. Working Capital c. Debt ratio d. Equity ratio
17. It is the most commonly used ratio in measuring the ability of the business to pay its short term
debts.
a. Current ratio b. Debt ratio c. Gross profit ratio d. Inventory turnover
18. It is a financial ratio computed by dividing the cost of goods sold to Average Inventory.
a. Current ratio b. Debt ratio c. Receivable turnover d. Inventory turnover
19. It is a financial ratio computed by dividing the profit over total assets
a. Return of Assets b. Net Profit ratio
c. Gross profit ratio d. Debt-to-equity ratio
20. It is a financial ratio computed by dividing the credit sales to average accounts receivable.
a. Debt ratio b. Equity ratio
c. Inventory turnover d. Receivable turnover

Answer Key

1. a 6. b 11. c 16. b
2. d 7. b 12. b 17. a
3. c 8. c 13. c 18. d
4. b 9. b 14. d 19. c
5. a 10. d 15. a 20. d