Financial Statement Analysis Question Paper May' 2016, Dibrugarh University Question Papers

Course: 602
(Financial Statement Analysis)
Full Marks: 80
Pass Marks: 32
Time: 3 hours
The figures in the margin indicate full marks for the questions
1. (a) Fill in the blanks with appropriate word(s):                               1x5=5
                                 i.            Comparative statement analysis is also known as ____ (vertical analysis/static analysis/horizontal analysis)
                               ii.            The ____ of a company has primary responsibility for the corporation’s external financial reporting functions (management/members/board of directors).
                              iii.            At present ASB of ICAI formulates the AS based on ____ (GAAP/IFRS/IAS).
                             iv.            Ratio of net profit before interest and taxes to sales is ____ ratio (net profit/profit/operative profit)
    (b) State whether the following statements are True or False:                                1x3=3
                                 i.            Analysis of financial statements ignores the issue of price level changes.
                               ii.            Capital gearing is a term used to express the relationship between ordinary share capital and fixed interest bearing securities of a company.
                              iii.            The IRDA was incorporated as statutory body in April 1999.

2. Write short notes on the following (any four):                               4x4=16

a)      Common size statement.
b)      Trend analysis.
c)       Acid test ratio.
d)      Financial Accounting Standard Board (FASB)
e)      Sustainability reporting.

3. (a) Explain the concept of interpretation and criticism of Financial Statement. What are the significances of Financial Statement Analysis?                       5+6=11
    (b) Critically examine the merits and demerits of various techniques used for interpreting Financial Statements. What are the limitations of such tools?                      6+5=11

4. (a) Discuss ratio analysis as a tool and technique of financial management. State the ratios which may be very useful for studying efficiency of a manufacturing concern and also explain how these will be used.               6+6=12
    (b) The following is the Balance Sheet of Jagjeevan Industries Ltd. as on 31st March, 2016:
Figures as at the end of current period (in Rs.)
I. Equity and Liabilities:
Shareholder’s Fund
Equity Share Capital
Reserve and Surplus

Non Current Liabilities:
10% Debentures

Current Liabilities:
Bank Overdraft
Sundry Creditors




II. Assets:
Non-Current Assets:
Fixed Assets

Current Assets:
Investments (short term)
Sundry Debtors




Other Information:
Sales – Rs. 1,11,60,000
Gross Profit – Rs. 11,16,000
You are required to calculate the following ratios:                             3x4=12
a)      Debt-Equity Ratio.
b)      Proprietary Ratio.
c)       Debtors’ Turnover Ratio.
d)      Stock Turnover Ratio.

5. (a) Write a note on Corporate Social Reporting. What are the essentials of a perfect corporate social responsibility report?                 5+6=11
    (b) Define Financial Reporting. What are the benefits derived from Financial Reporting?                            4+7=11

6. (a) Discuss the important provisions need to be considered for financial reporting of Banking Companies and Insurance Companies.                        6+5=11
    (b) Discuss the guidelines of IRDA regarding disclosure of financial statements of Insurance Companies. Explain the RBI’s guidelines on the Financial Reporting of NBFCs.                                 6+5=11

7. (a) “Accounting Standards aim to protect the users of financial reports in providing reliable and comparable accounting information.” Explain how these Accounting Standards do help accountants and auditors.            6+5=11

    (b) Discuss the need of International Financial Reporting Standards (IFRS). What are the differences between International Financial Reporting Standards and Accounting Standards?                 5+6=11