Practice Financial Statement Analysis Questions and Answers

• Company A has a current ratio of 1.2:1 and quick ratio of 0.9:1. It also has significant inventory holding. What does this indicate about the company’s l...
• A company’s debt-to-equity ratio increases from 1.5 to 2.5 over the year. What can be a likely interpretation?
• ABC Ltd.’s net profit is ₹1 crore. Its equity is ₹5 crore. The return on equity (ROE) is:
• Which statement is incorrect in the context of comparative financial analysis?
• Company A and Company B both have a net income of ₹5 crores. However, Company A has equity of ₹50 crores while Company B has equity of ₹20 crores. Ba...
• ABC Ltd., a non- financial enterprise presents the following information for the year ended 31st March 2025: • Proceeds from issue of equity shares: ₹1...
• A company has the following balances on its Balance Sheet: • Cash & Bank Balances: ₹2 crore • Trade Receivables: ₹4 crore • Inventory: ₹6 crore...
• A firm’s gross profit is ₹50 lakh, sales are ₹2 crore. What is its gross profit margin?
• A firm’s EBIT is ₹20 lakh and interest is ₹5 lakh. What is interest coverage ratio?
• A company has the following details: • Net Profit: ₹12 lakh • Equity: ₹60 lakh • Debt: ₹40 lakh • Interest: ₹4 lakh • EBIT: ₹16 lakh Wh...
• XYZ Ltd. has the following details: Equity Share Capital = ₹50 lakhs, Reserves = ₹20 lakhs, Long-term Debt = ₹30 lakhs. EBIT for the year is ₹18 la...
• A company has: • Net profit after tax: ₹60 lakh • Depreciation: ₹30 lakh • Interest on term loan: ₹30 lakh • Term loan principal due: ₹40 l...
• A firm’s net sales are ₹5 crore, and cost of goods sold is ₹3.5 crore. Inventory at the start of the year was ₹80 lakhs and at the end ₹1.2 crore...
• Company A has a current ratio of 1.2:1 and quick ratio of 0.9:1. It also has significant inventory holding. What does this indicate about the company’s l...
• A firm’s balance sheet shows: • Current assets: ₹400 lakh • Current liabilities: ₹250 lakh • Inventory: ₹100 lakh • Total debt: ₹500 lakh...
• Which of the following appears on the Balance Sheet?
• A large NBFC reported an increase in operating profit over the last year. However, its cash flow from operations was negative due to a sharp rise in receiv...
• A company’s gross profit margin remains stable, but its net profit margin shows significant fluctuations year over year. The finance team wants to invest...
• A firm issues debentures of ₹10,00,000 at 10% coupon rate, redeemable after 5 years at 5% premium. Flotation cost = 2%. Calculate effective cost of debt ...
• A company has Sales = ₹40,00,000, Variable cost = ₹24,00,000, Fixed cost = ₹8,00,000, Interest = ₹2,00,000. Calculate Combined Leverage.
• Annual sales of a company are ₹36,00,000, out of which 25% are cash sales. The balance represents credit sales. The company’s Debtors at year-end are �...
• A company earns ₹20,00,000. Capitalisation rate is 10%. Equity capital is ₹1,00,00,000 (₹10 each). Dividend payout ratio is 40%. According to Walter�...
• A company has Current Assets = ₹6,00,000; Current Liabilities = ₹3,00,000; Inventory = ₹1,50,000. Calculate Quick Ratio.
• A company refinances a short-term loan (due in 4 months) after the balance sheet date but before the financial statements are authorised. Management argues...
• A company’s Profit before tax for the year is ₹6,00,000. Depreciation charged is ₹50,000. During the year, trade debtors increased by ₹40,000 and t...
• A company reports Current Assets ₹6,00,000, Current Liabilities ₹3,00,000, Inventory ₹1,20,000, Cash ₹60,000. What is the company’s Quick Ratio?...
• XYZ Ltd. is a medium-sized manufacturing company. Its summarized Balance Sheet and additional financial information for the year ended 31st March 2024 are ...
• XYZ Ltd. is a medium-sized manufacturing company. Its summarized Balance Sheet and additional financial information for the year ended 31st March 2024 are ...
• XYZ Ltd. is a medium-sized manufacturing company. Its summarized Balance Sheet and additional financial information for the year ended 31st March 2024 are ...
• XYZ Ltd. is a medium-sized manufacturing company. Its summarized Balance Sheet and additional financial information for the year ended 31st March 2024 are ...
• A company reports an EBIT (Earnings Before Interest and Tax) of ₹10,00,000. It incurs interest charges of ₹2,00,000. The company also pays a Preference...
• A company has Net Sales of ₹1,000 lakhs, Net Profit of ₹80 lakhs, Total Assets of ₹750 lakhs, and Equity of ₹250 lakhs. Calculate Return on Equity ...
• Sales = ₹200 lakhs, Variable cost = ₹120 lakhs, Fixed cost = ₹30 lakhs Interest = ₹10 lakhs Calculate (i) Operating Leverage and (ii) Financial Lev...
• A company is evaluating its debt-equity mix. It observes that increasing debt reduces overall cost of capital up to a point, but beyond that the cost of eq...
• A firm has sales of Rs. 50,00,000, variable costs of Rs. 30,00,000, and fixed costs of Rs. 10,00,000. It has debt of Rs. 20,00,000 at 10% interest. What is...
• A company has Rs. 20,00,000 equity (Ke = 15%) and Rs. 10,00,000 debt (Kd = 10% post-tax). Calculate Weighted Average Cost of Capital (WACC).
• Two firms, Firm A and Firm B, are identical in all respects except their capital structure. • Firm A (Unlevered): It is entirely equity financed with equ...
• A company’s Balance Sheet shows the following figures: • Current Assets amounting to ₹12,00,000, which include an Inventory balance of ₹3,00,000. �...
• A company’s share is currently quoted at a market price of ₹120 per share. The company is expected to pay a dividend of ₹12 per share in the next yea...
• A firm evaluates two projects with identical expected cash flows, but Project A has higher variability. If the firm is risk-averse, what would be its decis...