$1$an $-$ Which one of the following alternatives is correct regarding the main objective of financial statement analysis?

a$.$

To assess the entity$$s performance and financial position in relation to risk.

b$.$

To eliminate the need for internal financial audits.

c$.$

To ensure compliance with financial reporting standards.

d$.$

To provide a detailed forecast of the entity$$s future revenue only.

e$.$

To exclusively analyse the entity's past management style without future planning.

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$1$c$-$ Which one of the following alternatives is correct about the main objective of a Statement of Cash Flows?

a$.$

It offers detailed insights into the entity$$s equity changes over the fiscal year.

b$.$

It is used to calculate the entity$$s tax obligations.

c$.$

It provides information primarily on the profitability from operations.

d$.$

It only details the entity's future financial expectations.

e$.$

It provides information on the cash inflows and outflows during the year.

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$2$an $-$ Which one of the following alternatives is correct regarding profitability ratios?

a$.$

They measure the entity's long$-$term financial stability.

b$.$

They provide measures of success in generating comprehensive income.

c$.$

They indicate how profitable the company's investments are for its debtors.

d$.$

They are primarily concerned with the entity$$s ability to pay dividends and donations.

e$.$

They compare current assets to long$-$term liabilities$\mathrm{.}2$c$-$ Which one of the following alternatives is correct regarding the relationship between a Statement of Cash Flows and other financial statements?

a$.$

It complements other financial statements and uses information from them.

b$.$

It does not relate to or use information from other financial statements.

c$.$

It serves as a substitute for the income statement.

d$.$

It is derived exclusively from the statement of financial position.

e$.$

It is an independent report that does not connect with the entity's overall financial performance.

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$3$an $-$ Which one of the following statements is correct about the liquidity ratios?

a$.$

They only include the debt$-$equity and times interest earned ratios.

b$.$

Liquidity ratios assess the profitability of a company.

c$.$

They are irrelevant to short$-$term creditors of the entity.

d$.$

They provide information about an entity's ability to meet its short$-$term financial obligations.

e$.$

They measure the entity$$s ability to meet long$-$term financial obligations.

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$3$c$-$ Which one of the following statements is correct regarding non$-$cash transactions in a Statement of Cash Flows?

a$.$

All entries in a Statement of Cash Flows are considered non$-$cash.

b$.$

Depreciation is an example of a non$-$cash transaction that is adjusted for in the cash flow statement.

c$.$

Non$-$cash transactions include cash received from the sale of machinery.

d$.$

Non$-$cash transactions reflect the actual cash available at the end of the period.

e$.$

Non$-$cash transactions are primarily reported in the operating activities section$\mathrm{.}4$c$-$ What does the indirect method of preparing a Statement of Cash Flows primarily involve?

a$.$

Adjusting the net profit for non$-$cash transactions and changes in working capital.

b$.$

Focusing solely on cash transactions related to financing activities.

c$.$

Only using data directly extracted without adjustments from the statement of profit or loss.

d$.$

Directly listing cash receipts and payments from operating activities.

e$.$

Calculating cash flows by only considering changes in cash and cash equivalents.

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$5$an $-$ Which of the following best describes the significance of the debt$-$equity ratio in financial analysis?

a$.$

It calculates how long it takes for an entity to pay its creditors.

b$.$

It determines the number of times an entity's inventory is sold and replaced over a year.

c$.$

It measures the proportion of equity to debt used to finance an entity's assets.

d$.$

It measures the amount of comprehensive income generated per dollar of sales.

e$.$

It indicates the total amount of assets financed by shareholders$\mathrm{.}5$c$-$ Which one of the following is an advantage of having a detailed Statement of Cash Flows?

a$.$

It eliminates the need for an audit.

b$.$

It provides insight into the entity's liquidity and cash management during the period.

c$.$

It replaces the need for an income statement.

d$.$

It shows the exact profit or loss for the financial year.

e$.$

It simplifies compliance with international financial reporting standards.