CIMA Financial Reporting and Analysis 2

Question 1

Which of the following is a non-cash item that must be added back to net income in the operating section of the indirect cash flow statement?

Accepted Answer

Depreciation expense

Answer

Dividend payments

Answer

Capital expenditures

Answer

Repayment of long-term debt

Question 2

The acid-test (quick) ratio excludes which current asset from the numerator?

Accepted Answer

Inventory

Answer

Trade receivables

Answer

Cash and cash equivalents

Answer

Short-term investments

Question 3

Under IAS 36, an impairment loss is recognized when an asset's carrying amount exceeds its:

Accepted Answer

Recoverable amount

Answer

Historical cost

Answer

Replacement cost

Answer

Revalued amount

Question 4

Earnings per share (EPS) is calculated by dividing:

Accepted Answer

Net income by weighted average shares outstanding

Answer

Operating income by total shares issued

Answer

Gross profit by ending shares outstanding

Answer

EBITDA by average shares outstanding

Question 5

A company's gearing ratio measures:

Accepted Answer

The proportion of debt financing relative to equity or total capital

Answer

How efficiently assets generate sales revenue

Answer

The company's ability to pay short-term obligations

Answer

Profitability relative to total assets

Question 6

Under IFRS 15, revenue is recognized when:

Accepted Answer

A performance obligation is satisfied

Answer

Cash is received from the customer

Answer

An invoice is issued to the customer

Answer

A signed contract is in place

Question 7

The gross profit margin ratio is calculated as:

Accepted Answer

Revenue minus cost of goods sold, divided by revenue

Answer

Net profit divided by revenue

Answer

Operating profit divided by total assets

Answer

Gross profit divided by total equity