29 Questions
What is the main objective of a Comparative Income Statement?
Analyze and evaluate the operating results of a business
How can an increase in sales affect profitability according to the text?
May not necessarily increase profits
In the context of a Comparative Income Statement, what should be studied in the first step?
Gross profit
Which type of expenses should be deducted from gross profit to find operating profits?
Cost of goods sold
What will result in an increase in operating profit according to the text?
Increase in sales and efficient management of expenses
What does a Comparative Income Statement aim to help management with?
Forecasting future profits
What does an interpreter look at to check the profitability of a concern?
Increase or decrease in retained earnings
According to the guidelines for interpreting a Common Size Income Statement, what should be studied first?
Gross profit ratio
What can be shown as percentages of sales in a Common Size Income Statement?
Items in the income statement
How can the profitability improve according to Common Size Income Statement guidelines?
By having an increase in sales more than cost of goods sold
What is one significance of showing items in the income statement as percentages of sales?
Evaluating operating activities of the enterprise
Which statement should be analyzed first according to the guidelines for interpretation of a Common Size Income Statement?
Gross profit ratio
What is the total Revenue for the year 2014 based on the provided information?
₹22,40,000
What was the Profit Before Tax for the year 2013?
₹2,70,000
How is Working Capital calculated?
Current Asset - Current liabilities
What financial aspect can be inferred from an increase in Working Capital?
Improvement in current financial position
How should an increase in fixed assets be financed?
By issuing long-term securities or fresh share capital
In the Balance Sheet analysis, what does an increase in long-term loans indicate?
Potential expansion or investment in fixed assets
Why has the gross profit ratio improved in 2014 according to the text?
The company reduced the cost of goods sold.
What action by the company helped increase the operating profit according to the text?
Reducing operational expenses.
How much did the net profit ratio increase from 2013 to 2014 according to the text?
Increased by 9.82%.
What helped improve the profitability of the company in 2014 according to the text?
Control and reduction of operating costs.
What does common-size income statement analysis involve?
Presenting each item as a percentage of a common figure.
Why is percentage analysis used in balance sheets according to the text?
To facilitate easy comparison of items.
What does the trend analysis reveal about fixed assets from 2016 to 2019?
The proportion of investment in fixed assets is decreasing.
According to the trend analysis, what can be inferred about the investment in current assets?
It is increasing year after year.
How have the total assets changed from 2016 to 2019 according to the trend analysis?
They have been increasing every year.
What conclusion can be drawn about the asset structure based on the trend analysis?
It is becoming less diversified.
Which trend percentage indicates a decrease relative to the base year of 2016?
140% total assets for 2018
This quiz focuses on the objectives of a comparative income statement in financial statement analysis, including analyzing operating results, expense trends, income indication, and enhancing the usefulness of an income statement.
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