Which of the following statements is true of trend analysis?

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Which of the following statements best describes the trend analysis?
Which of the following is not true of trend analysis?
Which of the following is an example of trend analysis?
Which of the following is the most important consideration when doing trend analysis?

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777 solutions

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Student Resources

Part 4: Analysis and interpretation of financial statements

Multiple choice questions

Try the multiple choice questions below to test your knowledge of this part. Once you have completed the test, click on 'Submit Answers for Grading' to get your results.

Note: there are no chapter-specific multiple choice questions as the chapters in this part essentially deal with one subject matter.

This activity contains 30 questions.

James & Jazz's financial statements show the following items:

Net sales	€ 3,000
Cost of sales	€ 1,800
Beginning inventory	€ 340
Purchases	€ 1,752
Ending inventory	€ 292
Trade receivables, net of VAT	€ 500
Bad debt provision	€ 100
Trade payables, net of VAT	€ 240

James & Jazz's DIO, DSO and DPO are, respectively:

Lollo & Luca Spa is a company listed on the Milan Stock Exchange. Given below is an extract from its income statement for the year ended 30 June 2006:

EBT

€ 15,200

Income taxes

€ 6,000

EAT

€ 9,200

Lollo & Luca Spa paid an ordinary dividend of € 600 and a dividend on its redeemable preference shares of € 1,200.

Lollo & Luca Spa had € 2,000 of € 0.50 ordinary shares in issue throughout the year and authorised share capital of 200,000 ordinary shares.

According to IAS 33 - 'Earnings per Share', the basic EPS is:

The following information is drawn from James & Jazz's financial statements for the year ended 31 March 2006:

EAT	€ 200,000
Ordinary dividends paid per share	€ 0.40
Irredeemable preference share dividends paid per share	€ 0.18
Ordinary shares in issue at 1 April 2005	240,000
Irredeemable preference shares in issue at 1 April 2005 and 31 March 2006	80,000

On 1 July 2005 there was a 1 for 4 bonus issue.
On 1 October 2005 the company issued 40,000 new ordinary shares for cash.
For the year ended 31 March 2005, EPS had been shown in the financial statements as € 0.24.

Determine the following in accordance with IAS 33 - 'Earning per Share':

(a) the weighted average number of ordinary shares for the year

(b) the earnings figure that would be used when calculating basic EPS

(c) the comparative EPS figure that should be shown for the year ended 31 March 2005 in the financial statements for the year to 31 March 2006

Some questions in this exercise may have more than one correct answer. To answer such questions correctly, you must select all the correct answers. Also note that answer choices in this exercise appear in a different order each time the page is loaded.

Which of the following statements best describes the trend analysis?

Option (a) is the correct answer Trend analysis is helpful in future prediction, so expressing each year's figure as a percentage of the base year figure will give an idea about the trend, and it can be helpful for future planning.

Which of the following is not true of trend analysis?

Answer and Explanation: The correct answer is option (c). Trend analysis is not for analyzing information other than that found on the balance sheet and income statement, such as supplemental information reported in annual reports.

Which of the following is an example of trend analysis?

Examples of Trend Analysis Examining sales patterns to see if sales are declining because of specific customers or products or sales regions; Examining expenses report claims for proof of fraudulent claims. Examining expense line items to find out if there are any unusual expenditures in a reporting period.

Which of the following is the most important consideration when doing trend analysis?

Industry cost factors: One of the most important aspect that any organization should take into primary consideration is the cost fluctuation in the market. The cost factor comes into play if a similar product is available in the market at a lower cost.