Chapter 26 interpretation of financial statement

F3 ACCA – Financial accounting question practice F3 ACCA – Financial accounting question practice F3 ACCA – Financial accounting question practice

Interpretation of Financial

Statements

Prepared for Educational Purposes

August 15, 2025

Contents

2 Part 2: Answers with Detailed Explanations 9

1

1 Part 1: List of Questions

This section contains 50 multiple-choice questions based on the interpretation of financial statements, focusing on financial ratios such as profitability, liquidity, and efficiency Numbers are left-aligned from 1 to 50 Use the following data for questions 110: Revenue:

$7,200; Gross profit: $2,376; Net profit: $1,080; Inventory: $300; Trade receivables: $624; Cash: $1,608; Trade payables: $1,890

1 What is the net profit percentage?

a 33%

b 15%

c 85%

d 66%

2 What is the gross profit percentage?

a 15%

b 66%

c 85%

d 33%

3 What are the receivables days (to the nearest day)?

a 211 days

b 95 days

c 32 days

d 49 days

4 What is the current ratio?

a 0.75

b 1.34

c 1.18

d 0.49

5 What is the quick (acid-test) ratio?

a 0.75

b 0.49

c 1.34

d 1.18

6 What is the cost of sales for Lola plc?

a $4,824

b $5,124

c $3,824

d $6,120

7 What is the inventory turnover ratio (to the nearest whole number)? Assume cost of sales is calculated from gross profit

a 16

b 12

c 8

d 20

8 What are the payables days (to the nearest day)? Assume purchases equal cost of sales

a 143 days

b 180 days

c 262 days

d 95 days

9 What is the working capital (net current assets)?

a $642

b $1,242

c $342

d $842

10 What is the cash ratio?

a 0.85

b 0.95

c 1.05

d 0.75

11 For a company with revenue $10,000, gross profit $3,500, and net profit $1,500, what

is the gross profit percentage?

a 35%

b 15%

c 50%

d 25%

12 For a company with revenue $10,000, gross profit $3,500, and net profit $1,500, what

is the net profit percentage?

a 35%

b 15%

c 50%

d 25%

13 A company has trade receivables $800, revenue $12,000 What are the receivables days (to the nearest day)?

a 24 days

b 36 days

c 48 days

d 60 days

14 A company has current assets $2,000, inventory $500, and current liabilities $1,200 What is the current ratio?

a 1.67

b 1.25

c 2.00

d 0.83

15 A company has current assets $2,000, inventory $500, and current liabilities $1,200 What is the quick ratio?

a 1.25

b 1.67

c 0.83

d 2.00

16 A company has cost of sales $6,000 and inventory $400 What is the inventory turnover ratio (to the nearest whole number)?

a 15

b 12

c 18

d 10

17 A company has trade payables $1,000 and cost of sales $5,000 What are the payables days (to the nearest day)?

a 73 days

b 60 days

c 80 days

d 50 days

18 A company has current assets $3,000 and current liabilities $1,500 What is the working capital?

a $1,500

b $2,000

c $1,000

d $2,500

19 A company has cash $900 and current liabilities $1,200 What is the cash ratio?

a 0.75

b 0.90

c 0.60

d 0.80

20 A company has revenue $8,000 and cost of sales $5,600 What is the gross profit percentage?

a 30%

b 40%

c 20%

d 50%

21 A company has net profit $600 and revenue $4,000 What is the net profit percentage?

a 15%

b 20%

c 10%

d 25%

22 A company has trade receivables $500 and revenue $10,000 What are the receivables days (to the nearest day)?

a 18 days

b 25 days

c 30 days

d 15 days

23 A company has current assets $4,000, inventory $1,000, and current liabilities $2,000 What is the current ratio?

a 2.00

b 1.50

c 1.00

d 0.50

24 A company has current assets $4,000, inventory $1,000, and current liabilities $2,000 What is the quick ratio?

a 1.50

b 2.00

c 1.00

d 0.50

25 A company has cost of sales $8,000 and inventory $800 What is the inventory turnover ratio (to the nearest whole number)?

a 10

b 12

c 8

d 15

26 A company has trade payables $600 and cost of sales $4,000 What are the payables days (to the nearest day)?

a 55 days

b 60 days

c 50 days

d 45 days

27 A company has current assets $2,500 and current liabilities $1,000 What is the working capital?

a $1,500

b $2,000

c $1,000

d $2,500

28 A company has cash $1,200 and current liabilities $1,500 What is the cash ratio?

a 0.80

b 0.90

c 0.70

d 0.60

29 A company has revenue $9,000 and gross profit $2,700 What is the gross profit percentage?

a 30%

b 40%

c 20%

d 50%

30 A company has net profit $800 and revenue $5,000 What is the net profit percentage?

a 16%

b 20%

c 12%

d 25%

31 A company has trade receivables $1,200 and revenue $18,000 What are the receivables days (to the nearest day)?

a 24 days

b 30 days

c 36 days

d 42 days

32 A company has current assets $5,000, inventory $1,500, and current liabilities $2,500 What is the current ratio?

a 2.00

b 1.40

c 1.00

d 0.60

33 A company has current assets $5,000, inventory $1,500, and current liabilities $2,500 What is the quick ratio?

a 1.40

b 2.00

c 1.00

d 0.60

34 A company has cost of sales $7,000 and inventory $700 What is the inventory turnover ratio (to the nearest whole number)?

a 10

b 12

c 8

d 15

35 A company has trade payables $800 and cost of sales $6,000 What are the payables days (to the nearest day)?

a 49 days

b 55 days

c 60 days

d 45 days

36 A company has current assets $3,500 and current liabilities $1,750 What is the working capital?

a $1,750

b $2,000

c $1,500

d $2,500

37 A company has cash $600 and current liabilities $800 What is the cash ratio?

a 0.75

b 0.80

c 0.70

d 0.60

38 A company has revenue $12,000 and gross profit $4,800 What is the gross profit percentage?

a 40%

b 30%

c 50%

d 20%

39 A company has net profit $1,000 and revenue $8,000 What is the net profit percent-age?

a 12.5%

b 15%

c 10%

d 20%

40 A company has trade receivables $900 and revenue $15,000 What are the receivables days (to the nearest day)?

a 22 days

b 28 days

c 34 days

d 40 days

41 A company has current assets $6,000, inventory $2,000, and current liabilities $3,000 What is the current ratio?

a 2.00

b 1.33

c 1.00

d 0.67

42 A company has current assets $6,000, inventory $2,000, and current liabilities $3,000 What is the quick ratio?

a 1.33

b 2.00

c 1.00

d 0.67

43 A company has cost of sales $9,000 and inventory $600 What is the inventory turnover ratio (to the nearest whole number)?

a 15

b 12

c 18

d 10

44 A company has trade payables $1,200 and cost of sales $8,000 What are the payables days (to the nearest day)?

a 55 days

b 60 days

c 45 days

d 50 days

45 A company has current assets $4,500 and current liabilities $2,000 What is the working capital?

a $2,500

b $2,000

c $1,500

d $3,000

46 A company has cash $1,000 and current liabilities $2,000 What is the cash ratio?

a 0.50

b 0.60

c 0.70

d 0.80

47 A company has revenue $10,000 and gross profit $3,000 What is the gross profit percentage?

a 30%

b 40%

c 20%

d 50%

48 A company has net profit $1,200 and revenue $6,000 What is the net profit percent-age?

a 20%

b 15%

c 25%

d 10%

49 A company has trade receivables $1,000 and revenue $20,000 What are the receivables days (to the nearest day)?

a 18 days

b 24 days

c 30 days

d 36 days

50 A company has current assets $7,000, inventory $2,500, and current liabilities $3,500 What is the current ratio?

a 2.00

b 1.29

c 1.00

d 0.71

51 A company has current assets $7,000, inventory $2,500, and current liabilities $3,500 What is the quick ratio?

a 1.29

b 2.00

c 1.00

d 0.71

2 Part 2: Answers with Detailed Explanations

1 b 15% Explanation: Net profit percentage = (Net profit / Revenue) Π100 =

(1,080 / 7,200) Π100 = 15%

2 d 33% Explanation: Gross profit percentage = (Gross profit / Revenue) Π100 =

(2,376 / 7,200) Π100 = 33%

3 c 32 days Explanation: Receivables days = (Trade receivables / Revenue) Π365

= (624 / 7,200) Π365 31.63 32 days

4 b 1.34 Explanation: Current ratio = Current assets / Current liabilities = (300 +

624 + 1,608) / 1,890 = 2,532 / 1,890 1.34

5 d 1.18 Explanation: Quick ratio = (Current assets - Inventory) / Current liabilities

= (2,532 - 300) / 1,890 = 2,232 / 1,890 1.18

6 a $4,824 Explanation: Cost of sales = Revenue - Gross profit = 7,200 - 2,376 =

4,824

7 a 16 Explanation: Cost of sales = 4,824 Inventory turnover = Cost of sales /

Inventory = 4,824 / 300 = 16.08 16

8 a 143 days Explanation: Payables days = (Trade payables / Cost of sales) Π365

= (1,890 / 4,824) Π365 142.89 143 days

9 a $642 Explanation: Working capital = Current assets - Current liabilities = 2,532

- 1,890 = 642

10 a 0.85 Explanation: Cash ratio = Cash / Current liabilities = 1,608 / 1,890 0.85.

11 a 35% Explanation: Gross profit percentage = (3,500 / 10,000) Π100 = 35%.

12 b 15% Explanation: Net profit percentage = (1,500 / 10,000) Π100 = 15%.

13 a 24 days Explanation: Receivables days = (800 / 12,000) Π365 24.33 24 days.

14 a 1.67 Explanation: Current ratio = 2,000 / 1,200 1.67.

15 a 1.25 Explanation: Quick ratio = (2,000 - 500) / 1,200 = 1,500 / 1,200 = 1.25.

16 a 15 Explanation: Inventory turnover = 6,000 / 400 = 15.

17 a 73 days Explanation: Payables days = (1,000 / 5,000) Π365 = 73.

18 a $1,500 Explanation: Working capital = 3,000 - 1,500 = 1,500.

19 a 0.75 Explanation: Cash ratio = 900 / 1,200 = 0.75.

20 a 30% Explanation: Gross profit = 8,000 - 5,600 = 2,400 Gross profit percentage

= (2,400 / 8,000) Π100 = 30%

21 a 15% Explanation: Net profit percentage = (600 / 4,000) Π100 = 15%.

22 a 18 days Explanation: Receivables days = (500 / 10,000) Π365 = 18.25 18 days.

23 a 2.00 Explanation: Current ratio = 4,000 / 2,000 = 2.00.

24 a 1.50 Explanation: Quick ratio = (4,000 - 1,000) / 2,000 = 3,000 / 2,000 = 1.50.

25 a 10 Explanation: Inventory turnover = 8,000 / 800 = 10.

26 a 55 days Explanation: Payables days = (600 / 4,000) Π365 = 54.75 55 days.

27 a $1,500 Explanation: Working capital = 2,500 - 1,000 = 1,500.

28 a 0.80 Explanation: Cash ratio = 1,200 / 1,500 = 0.80.

29 a 30% Explanation: Gross profit percentage = (2,700 / 9,000) Π100 = 30%.

30 a 16% Explanation: Net profit percentage = (800 / 5,000) Π100 = 16%.

31 a 24 days Explanation: Receivables days = (1,200 / 18,000) Π365 24.33 24 days.

32 a 2.00 Explanation: Current ratio = 5,000 / 2,500 = 2.00.

33 a 1.40 Explanation: Quick ratio = (5,000 - 1,500) / 2,500 = 3,500 / 2,500 = 1.40.

34 a 10 Explanation: Inventory turnover = 7,000 / 700 = 10.

35 a 49 days Explanation: Payables days = (800 / 6,000) Π365 48.67 49 days.

36 a $1,750 Explanation: Working capital = 3,500 - 1,750 = 1,750.

37 a 0.75 Explanation: Cash ratio = 600 / 800 = 0.75.

38 a 40% Explanation: Gross profit percentage = (4,800 / 12,000) Π100 = 40%.

39 a 20% Explanation: Net profit percentage = (1,000 / 8,000) Π100 = 12.5%.

40 a 22 days Explanation: Receivables days = (900 / 15,000) Π365 = 21.9 22 days.

41 a 2.00 Explanation: Current ratio = 6,000 / 3,000 = 2.00.

42 a 1.33 Explanation: Quick ratio = (6,000 - 2,000) / 3,000 = 4,000 / 3,000 = 1.33.

43 a 15 Explanation: Inventory turnover = 9,000 / 600 = 15.

44 a 55 days Explanation: Payables days = (1,200 / 8,000) Π365 = 54.75 55 days.

45 a $2,500 Explanation: Working capital = 4,500 - 2,000 = 2,500.

46 a 0.50 Explanation: Cash ratio = 1,000 / 2,000 = 0.50.

47 a 30% Explanation: Gross profit percentage = (3,000 / 10,000) Π100 = 30%.

48 a 20% Explanation: Net profit percentage = (1,200 / 6,000) Π100 = 20%.

49 a 18 days Explanation: Receivables days = (1,000 / 20,000) Π365 = 18.25 18

days

50 a 2.00 Explanation: Current ratio = 7,000 / 3,500 = 2.00.

51 a 1.29 Explanation: Quick ratio = (7,000 - 2,500) / 3,500 = 4,500 / 3,500 1.29.