Objective Questions and Answers of Financial Management
1. State whether each of the following statements is True (T) or False(F)
(i) Financial statements are an important source of information to shareholders and stakeholders.
(ii) Both the BS and the IS shows the financial position of fen at the end of the year.
(ii) BS of a company must be prepared in the horizontal format only.
(iv) Preparation of Profit & Loss Appropriation A/c is a requirement under the Companies Act, 1956.
(v) Ratio Analysis is the only technique of analysis of financial statements.
(vi) Methodical presentation of financial statements helps in Nation of various ratios.
(vii) In Common Size Statements, each item is expressed as a percentage of some common items (total).
(viii) Trend Percentage Analysis helps in Dynamic Analysis.
(ix) Liquidity Ratios help in analysing the cash position of the firm.
(x) In calculation of Acid Test Ratio, Inventory is included in current assets.
(xi) Working Capital Turnover Ratio may be classified as an Activity Ratio.
(xii) Debt-Equity Ratio is a measure of long-term solvency of a firm.
(xiii) GP Ratio and NP Ratio give the profitability of the firm from the point of view of the shareholders.
(xiv) Return on Equity and Earnings per Share are one and the same thing.
(xv) DU PONT Analysis looks into the elements of profits.
(xvi) Ratio Analysis provides the solution to the financial problems.
Answers: (i) T, (ii) F, (iii) F, (iv) F, (v) F, (vi) T, (vii) T, (viii) T, (ix) F, (x) F, (xi) T, (xii) T, (xiii) F, (xiv) F, (xv) T, (xvi) F.]