Matric no: ________ Name: ___________________________ Group:

____Att. List no.___

Tutorial 5: Topics 6 - COMPANIES ANNUAL REPORT &
7 - FINANCIAL
STATEMENT ANALYSIS
DUE DATE: 11 May 2015
1.

Compliance to these regulatory requirements is legally enforced EXCEPT:

A. Bursa Malaysia Listing Requirements.
B. Company Act 1965.
C. Financial Reporting Act 1997.
D. Income Tax Act 1967.

2.

These statements are TRUE:

i. Financial reporting provides a basis of forecasting demand and supply

in the market.
ii. Annual report is a formal comprehensive published business
document given to interested
parties by public companies.
iii. Financial statements must be prepared according to the provision
under Schedule Six,
Company Act 1965.
iv. One objective of financial reporting is to provide useful information in
making rational
investment, credit and similar economic decisions.
A. i, ii and iii only.
B. ii, iii and iv only.
C. i and iii only.
D. ii and iv only.
3. Company directors are required to include in the annual report the companys and its
subsidiaries financial statements as made mandatory in the:
A.
B.
C.
D.

Section 169 (5) Company Act 1965.

International Financial Reporting Standards (IFRS).
Income Tax Act 1967.
Bursa Malaysia Listing Requirement.
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4. The following items are disclosed voluntarily by companies, EXCEPT:

A.
B.
C.
D.

Chairmans statement.
Corporate information.
Notice of annual general meeting.
Important events calendar and corporate activities.

5. Listed companies are required to have statement on corporate governance in their annual
report. What does the statement is about?
A.
B.
C.
D.

A notice of annual general meeting.

A statement on following the principles and practices as outlined by the referred code.
A statement discloses members in the board of directors and respective posts.
None from the above.

6. ______________ must include their opinion on the sufficiency of financial records

kept by
the company, that the companys account are prepared and complied with approved
accounting standards for public assurance.
A.
B.
C.
D.

Directors report
Internal auditors report
Audit committees report
Independent (external) auditors report

7. External users of financial statements ______________________________________

A.
B.
C.
D.

have accessed to detailed records of the business.

are involved in the daily operations of the business.
rely on the financial statements to help make informed decisions.
do not have any other sources for gathering information about a business.

8. If you were analyzing a corporations shareholders equity, and you wanted to determine how
many units of common share were issued during the current year, the best financial statement
to review would be the:
A.
B.
C.
D.

statement of changes in owners equity.

statement of retained earnings.
statement of financial position.
statement of cash flows.

9. Information about the accounting policies adopted in preparing the financial statements are
explained in the:
A.
B.
C.
D.

statement of changes in owners equity.

notes to the financial statements.
statement of cash flow.
corporate governance statement.

10. How often is the annual report being issued?

A.
B.
C.
D.

Every six month.

Every month.
Once a year.
None of the above is correct.

Use the following information for questions 11 to 13:

The Statement of Financial Position for Azali Bhd is given below:
Account
2013
Cash
RM 200,000
Account receivable
1,200,000
Inventory
1,840,000
Total current assets
3,240,000
Fixed assets
3,200,000
Total assets
RM 6,440,000

2014
RM
50,000
950,000
1,500,000
2,500,000
3,000,000
RM 5,500,000

Account payable
Bank loan
Total current liabilities
Bonds payable
Total liabilities
Common shares (130,000 units)
Retained Earnings
Total liabilities and equity

720,000
100,000
820,000
1,000,000
1,820,000
300,000
3,380,000
RM 5,500,000

800,000
600,000
1,400,000
900,000
2,300,000
300,000
3,840,000
RM 6,440,000

11. The companys current ratio for 2014 is:

A.
B.
C.
D.

2.31
1.87
2.22
2.46

12. The companys debt ratio for 2014 is:

A.
B.
C.
D.

3.00
0.33
2.8
0.36

13. The companys return on common equity for 2014 is:

A.
B.
C.
D.

153.33%
353.85%
12.8%
29.54%

14. Working capital is defined as:

A. total assets less intangible assets.

B. current assets divided by current liabilities.
C. current assets less current liabilities.
D. total assets less current assets.

.
15. In financial statement analysis, ratios are:
A. the only type of analysis where industry data are available.
B. absolute numbers converted to a common base.
C. fractions usually expressed in percent or times.
D. the only indication of the financial position of the firm.
16. Return on total assets is a function of:
A.
B.
C.
D.

interest rates and pre-tax profits.

the debt-equity ratio.
the after-tax profit margin and the asset turnover ratio.
sales and fixed assets.

17. Which of the following ratios gives information on the amount of profits reinvested in the
firm over the years?
A.
B.
C.
D.

Sales/total assets.
Debt/total assets.
Debt/equity.
Retained earnings/total assets.

18.The primary purpose of the liquidity ratios is to determine:

A.
B.
C.
D.

how much working capital is tied up in inventory.

the relative level of short-term debt.
how well a firm is able to pay off short-term obligations.
more than one of the above.

19. What type of analysis is indicated by the following?

Account
Current assets
Property, plant and equipment
Total assets
A.
B.
C.
D.
20.

Amount (RM)
150,000
450,000
600,000

Percent (%)
15
75
100

Vertical analysis
Horizontal analysis
Liquidity analysis
Profitability analysis

Use the following information and horizontal analysis to compute the percentage
increase in sales: 2013 sales were RM200,000 and 2014 sales were RM250,000.
A.
B.
C.
D.

Sales increased by 80%

Sales increased by 20%
Sales increased by 125%
Sales increased by 25%

Use the following information for questions 21 to 23;

Pelangi Sdn Bhd had sales of RM10 million; operating income of RM3 million; after
tax income of RM1 million; assets of RM8 million; owners equity of RM5 million;
and a total debt of RM3 million.
21.

What is Pelangi's return on assets?

A.
B.
C.
D.

22.

37.5%
12.5%
30.0%
25.0%

What is Pelangi's return on equity?

A.
B.
C.

37.5%
10.0%
20.0%
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D.

23.

What is Pelangi's profit margin?

A.
B.
C.
D.

24.

10.0%
20.0%
30.0%
33.0%

Typically, which of the following would be considered to be the most indicative of a firm's shortterm debt paying ability?
A.
B.
C.
D.

25.

60.0%

working capital.
current ratio.
acid test.
cash ratio.

The debt ratio indicates:

A.
B.
C.
D.

the ability of the firm to pay its current obligations.

the efficiency of the use of total assets.
the magnification of earnings caused by leverage.
a comparison of liabilities with total assets.

26. The following financial statement data are taken from Xeron Bhd's 2014 annual report:
Current assets
Investments
Intangibles
Tangible assets (net)
Current liabilities
Long-term debt
Stockholders' equity

(in millions)
RM12.6
9.4
6.8
58.1
6.4
39.7
40.8

Compute the debt ratio:

A. 196.9%
B. 113.0%
6

C. 53.0%
D. 45.7%

27. Total asset turnover measures the ability of a firm to:

A.
B.
C.
D.

generate profits on sales.

generate sales through the use of assets.
buy new assets.
move inventory.

28. The price/earnings ratio:

A. measures the past earning ability of the firm.
B. is a gauge of future earning power as seen by investors.
C. relates price to dividends.
D. relates price to total net income.
29. Which of the following ratios represents dividends per common share in relation to market
price per common share?
A. dividend payout.
B. dividend yield.
C. price/earnings.
D. book value per share.
30. Smart Bhd reported the following for 2014:
Beginning market price
Average market price
Ending market price
Earnings per share of common stock 1.60

RM20.00
24.00
26.00

The price earnings ratio was:

A. 16.25
B. 12.50
C. 17.00
D. 15.00

END OF QUESTIONS

Name: ____________________Matric no: _________ Group: ______

Attendance list no: ___________

Tutorial 5: Topics 6 - COMPANIES ANNUAL REPORT &

7 - FINANCIAL
STATEMENT ANALYSIS
DUE DATE: 11 May 2015

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