Statement Analysis Tools - Test Papers

 CBSE Test Paper 01

Statement Analysis Tools


  1. What financial statement lists assets from current to long term?

    1. Statement of retained statement

    2. Income statement

    3. Cash flow statement

    4. Balance sheet

  2. Which of the following is the technique of financial statement analysis?

    1. Trend analysis

    2. Common‐size statement

    3. All of these

    4. Comparative statement

  3. Which of these are limitation of Financial statements:

    1. Measuring of solvency

    2. Measuring of earning capacity or profitability

    3. Measuring of financial strength

    4. Static statements

  4. The tool of Financial analysis is

    1. Trend analysis

    2. Credit decision

    3. Vertical analysis

    4. Horizontal analysis

  5. The lenders provide loan capital to the ________.

    1. None of these

    2. Both of these

    3. Company

    4. Industry

  6. Analyzing changes and trend in the ________ of previous years helps the management in forecasting and planning.

  7. What are the Current Liabilities?

  8. What is the meaning of Common Size Balance Sheet?

  9. Give two objectives of Comparative Financial Statements.

  10. With the help of the following information obtained from the books of Raj Silk Mills, prepare Comparative Statement of Profit and Loss for the year ended 31st March 2016:

    Particulars31st March 201631st March 2015
    Revenue from Operations300% of the Cost of Materials Consumed200% of the Cost of Materials Consumed
    Expenses :  
    Cost of Materials Consumed₹ 12,00,000₹ 10,00,000
    Other Expenses20% of the Cost of Materials Consumed10% of the Cost of Materials Consumed
  11. Prepare Common-size Statement of Profit and Loss from the following information:

    Particulars31st March 201931st March 2018
    Revenue from Operations₹ 10,00,000₹ 7,50,000
    Other Income₹ 1,00,000₹ 75,000
    Purchases of Stock-in-Trade₹ 7,50,000₹ 6,00,000
    Change in Inventories of Stock-in-Trade₹ (50,000)₹ 10,000
    Other Expenses₹ 10,000₹ 7,500
    Rate of Income Tax50%50%
  12. Prepare a Comparative Statement of Profit & Loss of Ahmed Ltd., with the help of the following information:


    Revenue from Operations


    Purchase of Stock in Trade4,20,0002,40,000
    Changes in Inventories80,00060,000
    Employee Benefit Expenses*20,00040,000
    Other Expenses40,00030,000
    Income Tax50%40%

    * Employee Benefit Expenses means expenses incurred on employees. It includes expenses such as salaries and wages, contribution to Provident Fund, staff welfare, etc.

  13. Following are the Balance Sheets of Hind Ltd. for two consecutive years:

    Hind Ltd.
    as at 31st March............. (Figures in thousand ₹)

    ParticularsNote No.31.3.201731.3.2016
     (1) Shareholder’s Funds:   
     {a) Share Capital 3,3002,800
     (b) Reserves and Surplus 1,4001,000
     (2) Non-Current Liabilities:   
     Long-term Borrowings 510600
     (3) Current Liabilities :   
     (a) Short term Borrowings 860600
     (b) Trade Payables 430250
     (1) Non-Current Assets 3,6302,130
     (2) Current Assets   
     (a) Inventory 1,1001,500
     (b) Trade Receivables 1,4001,280
     (c) Cash and Cash Equivalents 370340

    You are required to prepare a Comparative Balance Sheet and Comment upon the changes.

  14. From the following balance sheets of HP Ltd. as at 31st March, 2019 prepare comparative balance sheet:

     Particulars31st March 2019 (Rs.)31st March 2018 (Rs.)
    I.Equity and liabilities  
     1. Shareholders funds  
     (a) Share capital:  
     (i) Equity share capital12,50,0005,00,000
     (ii) Preference share capital2,50,0002,50,000
     (b) Reserves and surplus3,00,0004,50,000
     2. Non-current liabilities  
     Long-term borrowings  
     12% Debentures9,50,0005,50,000
     Loan from directors2,50,0002,00,000
     3. Current liabilities  
     (a) Short-term borrowings3,50,0001,75,000
     (b) Trade payables2,00,0001,00,000
     (c) Short-term provisions50,00025,000
     1. Non-current assets  
     Fixed assets: (Tangible)22,50,00015,00,000
     2. Currents assets  
     (a) Inventories4,50,0002,50,000
     (b) Trade receivables8,00,0004,50,000
     (b) Cash and cash equivalents1,00,00050,000
  15. What is the importance of comparative statements? Illustrate your answer with particular reference to comparative income statement.

CBSE Test Paper 01
Statement Analysis Tools


  1. (d) Balance sheet
    Explanation: Balance sheet
  2. (c) All of these
    Explanation: All of these
  3. (d) Static statements
    Explanation: Static statements
  4. (a) Trend analysis
    Explanation: Trend analysis
  5. (c) Company
    Explanation: Company
  6. Financial data

  7. Current Liabilities are liabilities which are expected to be settled within a year or operating cycle.

  8. A common size balance sheet is a statement in which total of assets or equity & liabilities is assumed to be equal to 100 and all the figures are expressed as percentage of the total.

    1. To make the data simpler and more understandable:- The main aim of preparing comparative financial statements is to put the data for a number of years in simpler and comparable form.
    2. To indicate the trend:- Another aim of comparative financial statements is to indicate the trend of change by putting the figures of production, revenue from operations, expenses, and profits, etc. for a number of years side-by-side.
    for the years ended 31st March 2015 and 2016

    ParticularsNote No.31st March 201531st March 2016Absolute Change (Increase or Decrease)Percentage Change (Increase or Decrease)
     1 2345
       AB(B-A = C)C/A × 100 = D
    I.Revenue from Operations 


    II.Less: Expenses     
     (a) Cost of Materials Consumed 10,00,00012,00,0002,00,00020.00
     (b) Other Expenses 1,00,0002,40,0001,40,000140.00
     Total Expenses 11,00,00014,40,0003,40,00030.91
    III.Profit before Tax (I - II) 9,00,00021,60,00012,60,000140.00
    IV.Less: Tax 4,50,00010,80,0006,30,000140.00
    V.Profit after Tax (III-IV) 4,50,00010,80,0006,30,000140.00
  10. COMMON-SIZE STATEMENT OF PROFIT AND LOSS for the years ended 31st March 2018 and 2019

    ParticularsNote No.Absolute AmountsPercentage of Revenue from
    Operations (Net Sales)
      31st March,
    2018 (₹)
    31 st March,
    2019 (₹)
    31st March,
    2018 (%)
    31st March,
    2019 (%)
    1. Revenue from Operations 7,50,00010,00,000100.00100.00
    II. Other Income 75,0001,00,00010.0010.00
    III. Total Revenue (I + II) 8,25,00011,00,000110.00110.00
    IV. Expenses     
    (a) Purchases of Stock-in-Trade 6,00,0007,50,00080.0075.00
    (b) Change in Inventories of Stock-in-Trade 10,000(50,000)1.33(5.00)
    (c) Other Expenses 7,50010,0001.001.00
    Total Expenses 6,17,5007,10,00082.3371.00
    V. Profit before Tax (III - IV) 2,07,5003,90,00027.6739.00
    VI. Less: Income Tax 1,03,7501,95,00013.8319.50
    VII. Profit after Tax (V - VI) 1,03,7501,95,00013.8419.50
  11. Ahmed Ltd.
    for the years ended 31st March 2017 and 2018

    ParticularsNote No.2016-172017-18Absolute Change (Increase or Decrease)Percentage Change (Increase or Decrease)
     1 2345
       AB(B -A = C)C/A × 100 = D
    I.Revenue from Operations 5,00,0008,00,0003,00,00060.00
    II.Less: Expenses     
     Purchase of Stock in Trade 2,40,0004,20,0001,80,00075.00
     Change in Inventories* 60,00080,00020,00033.33
     Employee Benefit Expenses 40,00020,000(20,000)(50.00)
     Other Expenses 30,00040,00010,00033.33
     Total Expenses 3,70,0005,60,0001,90,00051.35
    III.Profit before Tax (I - II) 1,30,0002,40,0001,10,00084.62
    IV.Less: Tax 52,0001,20,00068,000130.77
    V.Profit after Tax (III - IV) 78,0001,20,00042,00053.85

    *Changes in Inventories means Opening Stock less Closing Stock.

  12. Hind Ltd.
    as at 31st March 2016 and 2017 (Figures in thousand ₹)

    ParticularsNote No.31.3.201631.3.2017Absolute Change (Increase or Decrease)Percentage Change (Increase or Decrease)
     1 2345
       AB(B-A = C)C/A × 100 = D
     (1) Shareholder’s Funds:     
     (a) Share Capital 2,8003,30050017.86
     (b) Reserves and Surplus 1,0001,40040040.00
     (2) Non-Current Liabilities :     
     Long term Borrowings 600510(90)(15.00)
     (3) Current Liabilities     
     (a) Short term Borrowings 60086026043.33
     (b) Trade Payables 25043018072.00
     TOTAL 5,2506,5001,25023.81
     (1) Non-Current Assets 2,1303,6301,50070.42
     (2) Current Assets:     
     (a) Inventory 1,5001,100(400)(26.67)
     (b) Trade Receivables 1,2801,4001209.38
     (c) Cash and Cash Equivalents 340370308.82
     TOTAL 5,2506,5001,25023.81
  13. Comparative Balance Sheet

    Particulars31.03.201831.03.2019Absolute change%age change
     (A)(B)(C) = (B-A)(D) = (C/A) x 100
    I. Equity and liabilities    
    1. Shareholders funds:    
    (a) Share capital:    
        Equity share capital5000001250000750000150%
        Preference share capital250000250000..........
    (b) Reserves and surplus450000300000(150000)(33.33%)
    2. Non-current liabilities:    
    (a) Long-term borrowings:    
        12% Debentures55000095000040000072.73%
         Loan from directors2000002500005000025%
    3. Current liabilities300000600000300000100%
    II. Assets    
    1. Non-current assets:    
    (a) Fixed assets:    
        Tangible assets1500000225000075000050%
    2. Currents assets:    
    (a) Inventories25000045000020000080%
    (b) Trade receivables45000080000035000077.77%
    (b) Cash and cash equivalents5000010000050000100%
  14. The following are the importance of Comparative Statements.

    1. Easy to Forecast: The Comparative analysis of profitability and operational efficiency of a business over a period of time helps in analysing the trend and also assists the management to forecast and draft various future plans and policy measures accordingly.
    2. Easy for Drawing Conclusion: The presentation of comparative statement is so effective that it enables the analyst to draw conclusion quickly and easily and that too without any ambiguity.
    3. Easy Detection of Problems: By comparing the financial data of two or more years, the financial management can easily detect the problems. While comparing the data, some items may have increased while others have decreased or remained constant. The comparative analysis not only enables the management in locating the problems but also helps them to put various budgetary controls and corrective measures to check whether the current performance is aligned with that of the planned targets.
    4. Simple Presentaion: The Comparative Statements present the financial data in a simpler form. Moreover, the year-wise data of the same items are presented side-by-side, which not only makes the presentation clear but also enables easy comparisons (both intra-firm and inter-firm) conclusive.