Vidaara.orgClass 12 · Mathematics
CodeVID-M12-WS
Analysis of Financial Statements — Practice Worksheet
Name: ____________________
Roll No.: __________
Date: ____________
General Instructions
- All questions are compulsory.
- Choose the correct option (A, B, C or D) for each question.
- The answer key is at the end — try the paper first!
Section A — Multiple Choice (1 mark each)
15 × 1 = 15 marks
1.
Analysis of financial statements aims to:
- A.Hide figures
- B.Interpret figures for decisions
- C.Increase tax
- D.Replace the ledger
2.
Comparing figures across several years is:
- A.Vertical analysis
- B.Horizontal analysis
- C.Cash analysis
- D.No analysis
3.
Comparing items within one year as a % of a base is:
- A.Horizontal analysis
- B.Vertical analysis
- C.Trend analysis
- D.Cash analysis
4.
Which is a tool of analysis?
- A.Common-size statements
- B.Cash memo
- C.Voucher
- D.Pay-in slip
5.
A limitation of analysis is that it ignores:
- A.Qualitative (non-money) factors
- B.All figures
- C.Revenue
- D.The balance sheet
6.
A comparative statement shows figures of:
- A.One year
- B.Two or more years side by side
- C.Cash only
- D.Ratios only
7.
Percentage change =
- A.Change ÷ previous year × 100
- B.Change ÷ current year × 100
- C.Current − previous
- D.Previous ÷ current
8.
Revenue rose 4,00,000 → 4,80,000. The % change is:
- A.20%
- B.16.7%
- C.80%
- D.25%
9.
A comparative statement is an example of:
- A.Vertical analysis
- B.Horizontal analysis
- C.Ratio analysis
- D.Cash flow
10.
In a common-size income statement, 100% is:
- A.Total assets
- B.Revenue from operations
- C.Profit
- D.Capital
11.
In a common-size balance sheet, 100% is:
- A.Revenue
- B.Total assets
- C.Cash
- D.Profit
12.
Cost of materials 7,00,000 on revenue 10,00,000 is, in common-size terms:
- A.70%
- B.30%
- C.7%
- D.143%
13.
Common-size statements are useful mainly because they:
- A.Allow comparison of firms of different sizes
- B.Hide proportions
- C.Remove percentages
- D.Use only cash
14.
If revenue rises 15% and profit rises 30%, it suggests:
- A.Costs rose faster
- B.Costs rose more slowly than sales
- C.A loss
- D.No change
15.
Analysis is only as reliable as the:
- A.Underlying financial statements
- B.Weather
- C.Share price
- D.Auditor's age
Section B — Challenge / Olympiad (2 marks each)
10 × 2 = 20 marks
16.
Two firms, one large and one small, are best compared on cost structure using:
- A.Common-size statements (percentages remove the size effect)
- B.Absolute figures
- C.Their share prices
- D.Trial balances
17.
Revenue rose from 8,00,000 to 10,00,000 while profit before tax rose from 1,00,000 to 1,60,000. The percentage changes are:
- A.Revenue +25%, PBT +60%
- B.Revenue +20%, PBT +60%
- C.Revenue +25%, PBT +37.5%
- D.Revenue +60%, PBT +25%
18.
A comparative balance sheet shows borrowings up 80% but fixed assets up only 5%. A reasonable inference is that:
- A.Borrowed funds may have financed working capital or losses, not new fixed assets
- B.The firm bought a lot of machinery
- C.Equity increased
- D.Profits soared
19.
Why can horizontal and vertical analysis give different insights from the SAME statements?
- A.Horizontal tracks change over time; vertical shows each item's share of a base
- B.They use different companies
- C.One ignores revenue
- D.They are identical
20.
In a common-size income statement, if PBT is 18% of revenue this year vs 22% last year, it indicates:
- A.Profitability margin has fallen
- B.Revenue fell
- C.Profitability improved
- D.No change
21.
The base for % change in a comparative statement is always the:
- A.Previous (earlier) year's figure
- B.Current year's figure
- C.Average of both
- D.Total assets
22.
Which limitation makes inter-firm analysis risky even with common-size statements?
- A.Firms may follow different accounting methods/policies
- B.Percentages cannot be computed
- C.Revenue is unknown
- D.Statements are secret
23.
A common-size balance sheet shows current assets are 70% of total assets vs 50% for a rival. This suggests the firm:
- A.Holds relatively more in current assets (possibly more liquid, or idle stock/debtors)
- B.Has more fixed assets
- C.Has more equity
- D.Earns more profit
24.
Trend analysis differs from a two-year comparative statement mainly because it:
- A.Studies several years against a base year to reveal the long-term direction
- B.Uses only one year
- C.Ignores time
- D.Uses ratios only
25.
Analysis converts data into decisions, but its conclusions must be drawn:
- A.With judgement, allowing for the statements' own limitations
- B.Mechanically and absolutely
- C.Ignoring the figures
- D.Only from share prices
Answer Key
Section A — Multiple Choice (1 mark each)
- (B) Interpret figures for decisions
- (B) Horizontal analysis
- (B) Vertical analysis
- (A) Common-size statements
- (A) Qualitative (non-money) factors
- (B) Two or more years side by side
- (A) Change ÷ previous year × 100
- (A) 20%
- (B) Horizontal analysis
- (B) Revenue from operations
- (B) Total assets
- (A) 70%
- (A) Allow comparison of firms of different sizes
- (B) Costs rose more slowly than sales
- (A) Underlying financial statements
Section B — Challenge / Olympiad (2 marks each)
- (A) Common-size statements (percentages remove the size effect)
- (A) Revenue +25%, PBT +60%
- (A) Borrowed funds may have financed working capital or losses, not new fixed assets
- (A) Horizontal tracks change over time; vertical shows each item's share of a base
- (A) Profitability margin has fallen
- (A) Previous (earlier) year's figure
- (A) Firms may follow different accounting methods/policies
- (A) Holds relatively more in current assets (possibly more liquid, or idle stock/debtors)
- (A) Studies several years against a base year to reveal the long-term direction
- (A) With judgement, allowing for the statements' own limitations
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