(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 words: 1x5=5
(i) Financial statement analysis helps to measure ________ (Operating efficiency/Management efficiency/Employee’s efficiency)
(ii) GAAP stands for _______________.
(iii) Reporting to corporate governance reflects __________. (Company Management/Earning status/Socio economic status).
(iv) The institute of chartered accountants if India (ICAI) has decided to adopt IFRS in India from ____. (2011/2012/2013)
(v) According to IFRS, banking companies are to adopt _______ (Fair value accounting/Historical value accounting).
(b) State whether the following statements are true or false: 1x3=3
(i) Financial statement analysis is an important means of assessing past performance and planning future performance.
(ii) The new name of standards issued the ISAB is international financial reporting standards (IFRS).
(iii) Higher the price earning ratio, better it is, as it indicates growth of the company.
2. Write short notes on any four of the following: 4x4=16
(a) Comparative statements
(b) Significance of solvency ratio
(c) Reporting of corporate governance
(d) RBI guidelines regarding financial reporting of banks
(e) Activity ratio
(f) Value-added statement
3. (a) What is meant by analysis of financial statement? How and in what way prospective investors are benefited through such analysis? 4+7=11
(b) Discuss different types of financial statement. 11
4. (a) From the following balance sheet of Assam Co. Ltd as on 30th June, 2014, calculate the following: 3x4=12
(i) Debt to equity ratio
(ii) Current ratio
(iii) Quick ratio
(iv) Working capital turnover ratio
Balance Sheet of Assam Co. Ltd
AS on 30th June, 2014
Equity Share capital
Provision for taxation
Profit and loss account
Cash in hand
Additional Information: Sales Rs. 25,200
(b) What are the categories under which various ratios are grouped? What purposes are served by profitability ratios? 6+6=12
5. (a) Define financial reporting. Discuss the qualitative characteristics which make financial reporting more useful for its users. 4+7=11
(b) What do you mean by ‘social benefits’ and ‘social costs’? What suggestions would you give to improve the disclosure practices in reporting of corporate social responsibility? 4+4+3=11
6. (a) Discuss the purpose underlying the issue of an accounting standard. How has global accounting standards (IFRS) affected Indian GAAP? 7+4=11
(b) What do you mean by international financial reporting standard (IFRS)? Discuss the role played by the ICAI in convergence of Indian GAAP with IFRS. 5+6=11
7. (a) Discuss the suggestions made by RBI’s advisory group on accounting and auditing in financial reporting of banks and FIs. 11
(b) Explain the following: 6+5=11
(i) IFRS – 4
(ii) Financial reporting of NBFC as per RBI’s Guidelines