Practice Financial Statement Analysis Questions and Answers

• 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...
• Current ratio = 1.5 and current assets = ₹3,00,000. Current liabilities are:
• A company has sales ₹50,00,000 and gross profit margin 40% (on sales). Cost of goods sold (COGS) is:
• Company A has inventory turnover 6 times and average inventory ₹4,00,000. Annual cost of goods sold is:
• The acid-test (quick) ratio excludes:
• A company's EBITDA is ₹18,00,000, depreciation ₹2,00,000, interest ₹1,00,000, tax 30%. Net profit after tax (approx) is:
• A firm's debt = ₹8,00,000 and equity = ₹12,00,000. Debt-equity ratio is:
• Which of the following is a useful liquidity metric for short-term creditors?
• Which of the following increases return on assets (ROA) if profit constant?
• A firm has EBIT ₹2,50,000 and interest expense ₹50,000. Interest coverage ratio (EBIT/Interest) is:
• Which of the following is a classic efficiency ratio?
• A company has the following: Sales ₹10,00,000; Variable cost 60% of sales; Fixed cost ₹1,20,000. Contribution margin = ? Break-even sales = ?
• If company's operating cycle (inventory days + receivables days) = 120 days and payables days = 40 days, cash conversion cycle = ?
• Which of the following is typically excluded from EPS (earnings per share) basic calculation?
• The Debt-Equity Ratio is a measure of a company's:
• A company has a Current Ratio of 3:1. If it pays a current liability of ₹50,000, what will be the effect on the Current Ratio?
• A high Inventory Turnover Ratio indicates: