TUTORIAL # 5

DUE DATE: 8th Dec. 2014

1. If you were analyzing a corporations shareholders equity, and you wanted to

how many units of common share were issued during the current year, the best
statement to review would be the:
A.
B.
C.
D.
2.

increase the ROE

not change the ROE
decrease the ROE
change the ROE in an indeterminable manner

Return on total assets is a function of:

A.
B.
C.
D.

6.

Every six month

Every month
Once a year
None of the above is correct

If the interest rate on debt is higher than ROA, then a firm will __________ by
increasing the use of debt in the capital structure.
A.
B.
C.
D.

5.

statement of changes in owners equity.

notes to the financial statements.
statement of cash flow.
corporate governance statement.

How often is the annual report being issued?

A.
B.
C.
D.

4.

statement of changes in owners equity.

statement of retained earnings.
statement of financial position.
statement of cash flows.

Information about the accounting policies adopted in preparing the financial

statements are explained in the:
A.
B.
C.
D.

3.

determine
financial

interest rates and pre-tax profits

the debt-equity ratio
the after-tax profit margin and the asset turnover ratio
sales and fixed assets

Which of the following ratios gives information on the amount of profits reinvested in
the firm over the years?
A.
B.
C.
D.

Sales/total assets
Debt/total assets
Debt/equity
Retained earnings/total assets

Use the following information for questions 60 to 62:

The Statement of Financial Position for Azmi Bhd is given below.
Account
2012
Cash
RM 200,000
Account receivable
1,200,000
Inventory
1,840,000
Total current assets
3,240,000
Fixed assets
3,200,000
Total assets
RM 6,440,000

2011
RM
50,000
950,000
1,500,000
2,500,000
3,000,000
RM 5,500,000

Account payable
Bank loan
Total current liabilities
Bonds payable
Total liabilities
Common shares (130,000 units)
Retained Earnings
Total liabilities and equity

720,000
100,000
820,000
1,000,000
1,820,000
300,000
3,380,000
RM 5,500,000

7.

The companys current ratio for 2012 is:

A.
B.
C.
D.

8.

2.31
1.87
2.22
2.46

The companys debt ratio for 2012 is:

A.
B.
C.
D.

9.

800,000
600,000
1,400,000
900,000
2,300,000
300,000
3,840,000
RM 6,440,000

3.00
0.33
2.8
0.36

The companys return on common equity for 2012 is:

A.
B.
C.
D.

153.33%
353.85%
12.8%
29.54%

10. Company directors are required to include in the annual report the companys and its
subsidiaries financial statements as mandatorily required in the:
A.
B.
C.
D.

Section 169 (5) Company Act 1965

International Financial Reporting Standards (IFRS)
Income Tax Act 1967
Bursa Malaysia Listing Requirement

11. The opinion given on the sufficiency of financial records kept by the company in accordance
to the stated act and compliance with the approved accounting standards can be found in
which of the following report?
A.
B.
C.
D.

Directors Report
Audit Committees Report
Chairmans Statement
Auditors Report

12. Inventory turnover is calculated by dividing:

A.
B.
C.
D.

cost of goods sold by the ending inventory

cost of goods sold by the beginning inventory
cost of goods sold by the average inventory
average inventory by cost of goods sold

13. A general rule to use in assessing the average collection period is that:
A.
B.
C.
D.

it should not exceed 30 days

it can be any length as long as the customer continues to buy goods
it should not greatly exceed the discount period
it should not exceed the credit term period

14. If a company has acid-test ratio (quick ratio) of 1.2:1, what respective effects will the
borrowing of cash by short-term debt and collections of accounts receivable have on
the ratio?

A.
B.
C.
D.

Short-term borrowing

Collection of receivables

Increase
Increase
Decrease
Decrease

No effect
Increase
No effect
Decrease

15. Net sales are RM6,000, beginning total assets are RM2,800, and the asset turnover
ratio (ratio of net sales to assets) is 3.0 times. What is the ending total asset balance?
A.
B.
C.
D.

RM2,000
RM1,200
RM2,800
RM1,600

16. Man Pharmacy had net credit sales of RM16,000 and cost of goods sold of RM12,000
for
the year. The average inventory for the year amounted to RM2,000. What is the average
number of days to sell the inventory during the year?
A.
B.
C.
D.

91 days
61 days
46 days
26 days

17. Assume the following sales data for a company:

2010
2009
2008
2007

RM1,200,000
RM960,000
RM840,000
RM600,000

If 2007 is the base year, what is the percentage increase in sales from 2007 to 2009?
A.
B.
C.
D.

100%
160%
70%
62.5%

18. The major device for measuring the profitability of a firm over a defined period of
time is the
A.
B.
C.
D.

income statement.
balance sheet.
statement of cash flow.
none of the above.

19. The major device that indicates what the firm owns and how these assets are financed
in the form of liabilities or ownership interest:
A.
B.
C.
D.

the balance sheet.

the statement of cash flows.
the income statement.
the general ledger.

20. Which of the following statements about liquidity ratios is true?

A.
B.
C.
D.

The higher the current ratio, the more likely a firm is able to pay its short-term
obligations.
The lower the quick ratios relative to the current ratio, the safer a firm is in
terms of liquidity.
The ratio of net working capital to total assets always lies between 0 and 1.
Relatively high current ratios are usually a sign of efficient working capital
management.

21. An analyst can judge a company's level of debt by comparing these ratios:

A.
B.
C.
D.

return-on-equity to total debt-to-assets.

return-on-equity to total asset turnover.
return-on-equity to debt turnover.
return-on-equity to return-on-assets

22. Financial ratios are used to weigh and evaluate:

A.
B.
C.
D.

the operating performance and capital structure of the firm.

which stocks are the "gold mine" stocks when investing in the market.
which stocks are about to file for bankruptcy.
the net present value of the company.

23. What type of analysis is indicated by the following?

Account
Current assets
Fixed assets
A.
B.
C.
D.

2010
RM380,000
1,680,000

2009
Amount
RM500,000 RM120,000
1,500,000
180,000

Percent
24%
12%

vertical analysis
horizontal analysis
liquidity analysis
Quick ratio

24. An annual report contains a great many statements and

reports. Which of the following statements/reports is NOT
required either by statute or by accounting standards?
Financial highlights
A
B

Income statement

Operating and financial review

Chairman statement

25. An annual report contains a great many statements and reports. Which one of the
following statements/reports is not covered either by statute or by accounting
standards?

Periodic summary

Cash flow statement

Auditors' report

Directors' report

26. Working capital is defined as

A

total assets minus total liabilities

total assets minus current liabilities

current assets minus total liabilities

current assets minus current liabilities

27. Under current accounting principles, net income on the income statement is measured
as the
A

net change in owners' equity during a period

excess of revenues over expenses during a period

net change in the cash balance after adjustment for dividends

excess of revenues over expenses less dividends paid

28. Which of the following items will typically be found in a corporate annual report?
A

Company budgets

Notes to Financial Statements

Selected financial data for competitor companies

Management's declaration that the auditors are responsible for the financial
statements

29. Assume that you want to determine the amount of gross profit for a company. Which
of the following financial statements is the BEST source of this information?

Statement of Retained Earnings

Statement of Stockholders' Equity

Statement of Cash Flows

Income Statement

30. Zino Corp. reported the following items on its balance sheet:

How much is the current ratio?

A

1.61 to 1

0.52 to 1

1.91 to 1

2 to 1

TUTORIAL # 5

DUE DATE: 8th December 2014

MATRIC NO: _____________

NAME:

GROUP: _____

______________________________________

ANSWER:

POSITION NO: ______

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