FIN4060
Financial Statement Analysis
Finals Exam (Qns & Ans)
2025
General Instructions
1. Read All Questions Carefully: Make sure you understand each question.
2. Time Management: You have a specific amount of time to complete the exam.
Keep an eye on the clock and pace yourself.
3. Allowed Materials: Only use materials that are explicitly allowed. Unauthorized
materials can lead to disqualification.
4. ANS Format: Follow the required format for your ANS. For example, multiple-
choice questions might need you to select the best ANS, while essay questions
require detailed responses.
5. Academic Integrity: Adhere to the university's honor code. Any form of cheating or
plagiarism is strictly prohibited.
6. Technical Requirements: Ensure your computer and internet connection are
stable. For online exams, you might need a webcam and microphone for proctoring
purposes.
7. Submission: Submit your ANS before the time expires. Late submissions might
not be accepted.
©2024/2025
,1. Which of the following ratios measures a company's ability to
meet its short-term obligations?
- A) Return on Equity (ROE)
- B) Current Ratio
- C) Debt to Equity Ratio
- D) Price to Earnings Ratio
ANS: B) Current Ratio
Rationale: The current ratio evaluates whether a company
can cover its short-term liabilities with its short-term assets.
2. What does a negative working capital indicate?
- A) The company is highly liquid.
- B) The company may have difficulties meeting short-term
obligations.
- C) The company invests aggressively in growth.
- D) All of the above.
ANS: B) The company may have difficulties meeting short-
term obligations.
Rationale: Negative working capital suggests that a
company's current liabilities exceed its current assets, signaling
potential liquidity issues.
©2024/2025
,3. Which of the following is NOT included in the calculation of
EBITDA?
- A) Depreciation
- B) Interest Expense
- C) Taxes
- D) Operating Revenues
ANS: D) Operating Revenues
Rationale: EBITDA (Earnings Before Interest, Taxes,
Depreciation, and Amortization) focuses on earnings without the
impacts of non-operational costs.
4. The P/E ratio is best used to evaluate which of the following?
- A) A company's liquidity.
- B) How expensive a stock is relative to its earnings.
- C) A firm's profitability margin.
- D) A company's debt levels.
ANS: B) How expensive a stock is relative to its earnings.
Rationale: The Price-to-Earnings ratio compares a company's
current share price to its earnings per share, serving as an
indicator of valuation.
©2024/2025
, 5. Which financial statement would you analyze to assess a
company's operating performance over a specific period?
- A) Balance Sheet
- B) Cash Flow Statement
- C) Income Statement
- D) Statement of Shareholders' Equity
ANS: C) Income Statement
Rationale: The income statement details revenues and
expenses over a period, highlighting operating income and
profitability.
Fill-in-the-Blank Questions
6. The ________ measures the percentage of revenue that
exceeds total costs, indicating a company's financial health.
ANS: Profit Margin
Rationale: Profit margin represents how much of every dollar
of sales a company actually keeps.
7. A company’s ________ ratio indicates its reliance on debt
financing.
ANS: Debt-to-Equity
Rationale: This ratio assesses a company’s financial leverage
by comparing total liabilities to shareholders' equity.
©2024/2025
Financial Statement Analysis
Finals Exam (Qns & Ans)
2025
General Instructions
1. Read All Questions Carefully: Make sure you understand each question.
2. Time Management: You have a specific amount of time to complete the exam.
Keep an eye on the clock and pace yourself.
3. Allowed Materials: Only use materials that are explicitly allowed. Unauthorized
materials can lead to disqualification.
4. ANS Format: Follow the required format for your ANS. For example, multiple-
choice questions might need you to select the best ANS, while essay questions
require detailed responses.
5. Academic Integrity: Adhere to the university's honor code. Any form of cheating or
plagiarism is strictly prohibited.
6. Technical Requirements: Ensure your computer and internet connection are
stable. For online exams, you might need a webcam and microphone for proctoring
purposes.
7. Submission: Submit your ANS before the time expires. Late submissions might
not be accepted.
©2024/2025
,1. Which of the following ratios measures a company's ability to
meet its short-term obligations?
- A) Return on Equity (ROE)
- B) Current Ratio
- C) Debt to Equity Ratio
- D) Price to Earnings Ratio
ANS: B) Current Ratio
Rationale: The current ratio evaluates whether a company
can cover its short-term liabilities with its short-term assets.
2. What does a negative working capital indicate?
- A) The company is highly liquid.
- B) The company may have difficulties meeting short-term
obligations.
- C) The company invests aggressively in growth.
- D) All of the above.
ANS: B) The company may have difficulties meeting short-
term obligations.
Rationale: Negative working capital suggests that a
company's current liabilities exceed its current assets, signaling
potential liquidity issues.
©2024/2025
,3. Which of the following is NOT included in the calculation of
EBITDA?
- A) Depreciation
- B) Interest Expense
- C) Taxes
- D) Operating Revenues
ANS: D) Operating Revenues
Rationale: EBITDA (Earnings Before Interest, Taxes,
Depreciation, and Amortization) focuses on earnings without the
impacts of non-operational costs.
4. The P/E ratio is best used to evaluate which of the following?
- A) A company's liquidity.
- B) How expensive a stock is relative to its earnings.
- C) A firm's profitability margin.
- D) A company's debt levels.
ANS: B) How expensive a stock is relative to its earnings.
Rationale: The Price-to-Earnings ratio compares a company's
current share price to its earnings per share, serving as an
indicator of valuation.
©2024/2025
, 5. Which financial statement would you analyze to assess a
company's operating performance over a specific period?
- A) Balance Sheet
- B) Cash Flow Statement
- C) Income Statement
- D) Statement of Shareholders' Equity
ANS: C) Income Statement
Rationale: The income statement details revenues and
expenses over a period, highlighting operating income and
profitability.
Fill-in-the-Blank Questions
6. The ________ measures the percentage of revenue that
exceeds total costs, indicating a company's financial health.
ANS: Profit Margin
Rationale: Profit margin represents how much of every dollar
of sales a company actually keeps.
7. A company’s ________ ratio indicates its reliance on debt
financing.
ANS: Debt-to-Equity
Rationale: This ratio assesses a company’s financial leverage
by comparing total liabilities to shareholders' equity.
©2024/2025
