TEST YOUR UNDERSTANDING I
• Fill in the blanks with appropriate word(s).
Question 2. Interpretation means————-data.
Question 3. Comparative analysis is also known as—————Analysis.
Question 4. Common size analysis is also known as————–Analysis
Question 5. The analysis of actual movement of money inflow and outflow in an organisation is called———-analysis.
DO IT YOURSELF I
From the following balance sheet and income statement of Day Dreaming Co.Ltd., for the year ending 2002 and 2003, prepare the comparative statements.
DO IT YOURSELF II
The following are the Balance Sheets of Harsha Ltd. as on March 31, 2006 and March 31, 2007
TEST YOUR UNDERSTANDING – II
Choose the right answer :
2. The most commonly used tools for financial analysis are:
3. An Annual Report is issued by a company to its:
4. Balance Sheet provides information about financial position of the enterprise:
5. Comparative statement are also known as:
DO IT YOURSELF III
Question 1. The following data is available from the P&L Account of Deepak Limited
TEST YOUR UNDERSTANDING III
• State whether each of the following is true or false
(a) The financial statements of a business enterprise include funds flow statement.
(b) Comparative statements are the form of horizontal analysis.
(c) Common size statements and financial ratios are the two tools employed in vertical analysis.
(d) Ratio analysis establishes relationship between two financial statements.
(e) Ratio analysis is a total for analysing the financial statements of any enterprise.
(f) Financial analysis is used only by the creditors.
(g) Profit and loss account shows the operating performance of an enterprise for a period of time.
(h) Financial analysis helps an analyst to arrive at a decision.
(i) Cash flow statement is a tool of financial statement analysis.
(j) In a common size statement each item is expressed as a percentage of some common base.
SHORT ANSWER TYPE QUESTIONS
Question 1. List the techniques of Financial Statement Analysis.
Question 3. Explain the meaning of Analysis and Interpretation.
Question 4. Bring out the importance of Financial Analysis.
Question 5. What are Comparative Financial Statements?
The following are the two Comparative Financial Statements that are commonly prepared
Question 6. What do you mean by Common Size Statements?
LONG ANSWER TYPE QUESTIONS
Question 1. Describe the different techniques of financial analysis and explain the limitations of financial analysis.
Question 2. Explain the usefulness of trend percentages in interpretation of financial performance of a company.
Usefulness and Importance of Trend Analysis:
Question 3. What is the importance of comparative statements? Illustrate your answer with particular reference to comparative income statement.
Question 4. What do you understand by analysis and interpretation of financial statements? Discuss their importance.
Question 5. Explain how common size statements are prepared giving an example.
1. From the following information of Narsimham Company Ltd., prepare a Comparative Income Statement for the years 2004-2005
2. The following are the Balance Sheets of Mohan Ltd., at the end of 2004 and 2005.
Question 3. The following are the balance sheets of Devi Company Limited at the end of 2011 and 2012. Prepare a comparative Balance Sheet and study the financial position of the concern.
Question 4. Convert the following Income Statement into Common Size Statement and interpret the changes in 2011 in the light of the conditions in 2010.
Question 5. Following are the balance sheets of Reddy Limited as on 31 March, 2011 and 2012
Question 7. From the following particulars extracted from P&L Account of ‘Prashanth Limited, you are required to calculate trend percentages
Question 8. Calculate trend percentages from the following figures of ABC Limited, taking 2000 as base and interpret them.
Question 10. Prepare comparitive statements from the following.