The Language and Tools of Financial Analysis Answer. In this post you will get Quiz & Assignment Answer Of The Language and Tools of Financial Analysis
The Language and Tools of Financial Analysis
Offered By ”The University of Melbourne”
Week 1 graded quiz
1.
Question 1
The asset section of the balance sheet summarizes:
1 point
Cash transactions
Revenues and expenses
What the company owns
What the company owes
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2.
Question 2
Total assets equal:
1 point
Current assets + non-current assets
Residual claim after all liabilities are repaid
Cash + accounts receivable
Current assets + property plant equipment
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3.
Question 3
Which of the following would NOT be found in the liabilities section of the balance sheet?
1 point
Property plant & equipment
Pension liability
Accounts payable
Notes payable
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4.
Question 4
Which of the following equations represents the calculation of a firm’s liabilities?
1 point
Assets – Equity
Equity – Assets
Assets – Liabilities – Equity
Assets + Equity
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5.
Question 5
Which of the following is a key characteristic of a public corporation?
1 point
Private company
Shareholders are also debtholders
Full government ownership
Separate ownership and management of assets
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6.
Question 6
Which of the following equations represent the residual claim on a firm’s assets?
1 point
Assets – Equity
Assets – Liabilities – Equity
Assets – Liabilities
Equity + Liabilities
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7.
Question 7
The ‘bottom line’ in a profit and loss statement is:
1 point
Net income (or earnings)
Expenses
Gross income
Revenues
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8.
Question 8
Which of the following is NOT included in the operating profit figure?
1 point
Cost of goods sold
Net sales
Interest expense
Selling, general and administrative expenses
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9.
Question 9
Which of the following is equal to gross profit?
1 point
EBT – tax
Net sales – cost of goods sold
Operating profit + other income
EBIT – interest
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10.
Question 10
Net income equals:
1 point
EBT – tax
EBITDA
EBIT – interest
Operating income
Week 2 graded quiz
1.
Question 1
Operating margin equals:
1 point
Gross profit/Assets
Operating income/Sales
Operating income/Cost of goods sold
Gross profit/Owners equity
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2.
Question 2
ROA equals:
1 point
Gross profit/Owners equity
Net income/[(average) BV of equity]
Gross profit/assets
Net income/[(average) BV of assets]
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3.
Question 3
Earnings per share equals:
1 point
Gross profit/Owners equity
Net income/Average outstanding number of shares
Net income/Liabilities
Gross profit/Assets
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4.
Question 4
What are the most often quoted and related financial ratios?
1 point
Earnings per share and Price/Earnings
Earnings per share and Price/Sales
Price/Earnings and gross margin
Operating margin and gross margin
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5.
Question 5
Debt-equity ratio equals:
1 point
Total equity/Total debt
Total debt/Total assets
Total debt/Total equity
Total assets/Total debt
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6.
Question 6
The current ratio equals:
1 point
Gross profit/Sales
Equity/ Current liabilities
Total debt/Total equity
Current assets/Current liabilities
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7.
Question 7
The quick ratio will always be equal to, or larger than, the cash ratio.
1 point
False
True
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8.
Question 8
Debt is generally considered a cheaper form of funding than equity funding?
1 point
False
True
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9.
Question 9
What do efficiency “activity” ratios capture?
1 point
The firms ability to manage current assets and current liabilities
The firms ability to effectively use its assets in generating revenue
Stock price movements
The firms ability to meet short term liabilities
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10.
Question 10
Total asset turnover equals:
1 point
Sales/(average)Total assets
Total debt/Total equity
Gross profit/Sales
Current assets/Current liabilities
Week 3 graded quiz
1.
Question 1
How do accountants arrive at the book value for an asset?
1 point
Accountants don’t record assets at book value or market value
Historical cost, less accumulated depreciation
Accountants only use market value to value assets
Historical cost
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2.
Question 2
Market value is commonly referred to as the book value.
1 point
True
False
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3.
Question 3
What is a disadvantage of accrual accounting?
1 point
There are no disadvantages
Matches cash received to expenses made
Requires monitoring cash flow separately
Makes business more flexible
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4.
Question 4
Most well-known large firms use cash basis accounting instead of accrual accounting as it helps to keep track of their large and complex cash positions
1 point
False
True
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5.
Question 5
Which of the following is of less concern when choosing cash basis accounting as opposed to accrual accounting?
1 point
Business gets paid immediately for goods/services
An in-depth accounting understanding is required for accrual accounting
Payment terms for supplier invoices
Accrual accounting is more complicated than cash accounting
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6.
Question 6
Wealth maximization focuses on:
1 point
Revenues
Profit
Accruals
Cash flows
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7.
Question 7
What do businesses focus on when evaluating various business propositions?
1 point
Discount rates
Net present value of future cash flows
Terminal value
Cost of capital
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8.
Question 8
The current ratio formula is:
1 point
Current assets/Current liabilities
Total debt/Total equity
Gross profit/Sales
Equity/ Current liabilities
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9.
Question 9
What is the key reason for managers to engage in earnings management?
1 point
Smooth earnings over time to avoid volatility
There is no key reason
Smooth cash flow
To increase the company’s total assets
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10.
Question 10
Which of the following doesn’t represent an earnings management method?
1 point
Alterations in shipment schedules
Delaying research and development (R&D) expenditures
Acceleration of sales
Minimizing cash expenses
Week 4 graded quiz
1.
Question 1
Which of the following does the discount rate r (eg: 4% p.a.) NOT account for?
1 point
risk-free interest rate
the expected value of the cash flow
expected inflation
opportunity cost
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2.
Question 2
If I invest $600 today at an annual interest rate of 5% p.a. (interests reinvested), after 8 years my investment will be worth more than $850
1 point
True
False
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3.
Question 3
The quality of an analyst’s earnings forecast does NOT depend on which of the following:
1 point
The analyst’s interpretation of historical information
Unexpected future events that are unpredictable in nature
The quality of the analyst’s financial model
The analyst’s interpretation of ‘environmental’ information (eg: macroeconomic news)
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4.
Question 4
At which of the following discount rates would the following investment ‘break even’:
Initial cost of $11,000, cash flows of $6,000 for two years
1 point
4%
5%
6%
7%
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5.
Question 5
According to NPV analysis, should the following project be undertaken?
Initial gain of $10,500; negative cash flows of $6,000 for two years with a 8% p.a. discount rate
1 point
Yes
No
We are indifferent (NPV = $0)
We do not have enough information
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6.
Question 6
At which of the following discount rates would the following investment ‘break even’:
Initial cost of $3,000, cash flows of $1,682.5 for 2 years
1 point
6% p.a.
7% p.a.
8% p.a.
9% p.a.
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7.
Question 7
Calculate the NPV of a project with an initial cost of $1,000,000; and positive cash flows of $300,000 for the next 5 years with a 10% p.a. discount rate:
1 point
$327,343
$137,236
$500,000
$97,579
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8.
Question 8
Calculate the NPV of a project that has no initial cost ($0) however will provide the following cash flows with a discount rate of 8% p.a.
Yr1: $4,000
Yr2: -$3,000
Yr3: $80,000
1 point
$64,638
$81,000
$56,743
$61,699
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9.
Question 9
If a firm is considering 2 independent investment proposals (Investment A: NPV $4,000 & Investment B: NPV $2,500), both of which take the same time to complete, then it is correct to say the firm should invest in A instead of investing in B.
1 point
False
True
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10.
Question 10
Calculate the NPV of a project that has an initial cost of $10,000 and three years of positive $3,000 cash flows with a discount rate of 0% p.a.
1 point
We cannot calculate this with the information given
$1,563
-$1,000
-$436
Course Final Exam
1.
Question 1
$1000 expected in two years’ time with a discount rate of 10% p.a. is worth what today?
1 point
$980
$874
$826
$909
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2.
Question 2
What is the future value of $1,000 today in 3 years’ time, assuming a discount rate of 7% p.a.
1 point
$1,378
$4,913
$1,225
$1,070
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3.
Question 3
$4,000 expected in 3 years at a discount rate of 4% p.a. is worth less than $3,500 in today’s terms.
1 point
True
False
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4.
Question 4
How many years would it take to triple an initial investment with an interest rate of 14% p.a.
1 point
3 Years
5.7 Years
9.8 Years
8.4 Years
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5.
Question 5
If we could only choose one, which of the following projects should be selected according to an NPV analysis?
1 point
NPV = $4 million
NPV = $0
NPV = $8 million
NPV = -4 million
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6.
Question 6
Calculate the NPV of a project which has an initial cost of $20,000 and will provide cash flows of $15,000 for the next 2 years with a discount rate of 6% p.a.
1 point
$12,254
$10,000
$5,501
$7,501
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7.
Question 7
According to NPV analysis, should the following project be undertaken?
Initial cost of $15,000; cash flows of $7,000 for three years with a 6% p.a. discount rate
1 point
Yes
No
We are indifferent (NPV = $0)
We do not have enough information
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8.
Question 8
Calculate the NPV of a project that has no initial cost ($0) however will provide the following cash flows with a discount rate of 5% p.a.
Yr1: $5,000
Yr2: -$7,000
Yr3: $6,000
1 point
$3,879
$4,000
$4,134
$3,596
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9.
Question 9
According to NPV analysis, should the following project be undertaken?
Initial gain of $10,000; negative cash flows of $4,000 for three years with a 6% p.a. discount rate
1 point
We are indifferent (NPV = $0)
No
We do not have enough information
Yes
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10.
Question 10
If no positive NPV projects are available, it is correct to say a firm should invest in the least negative project available.
1 point
False
True
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11.
Question 11
Price to book ratio equals:
1 point
Market capitalization/Book value of equity
Gross Profit/Owners Equity
Market capitalization/Book value of assets
Gross Profit/Assets
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12.
Question 12
What is market value also known as?
1 point
Fair value
Historical cost
Acquisition cost
Book value
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13.
Question 13
In what scenario should cash-basis accounting generally not be used?
1 point
If all sales are in cash
If expenses are paid in cash
If sales are on credit
If expenses are paid immediately
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14.
Question 14
What is an advantage of accrual accounting?
1 point
There are no advantages
Income statement may hide cash flow problems
Matches cash received to expenses incurred
Requires monitoring cash flow separately
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15.
Question 15
An advantage of cash basis accounting is that is matches clearly the cash received for goods sold to the expenses incurred in making the goods
1 point
True
False
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16.
Question 16
Most small and young business tend to use historical cost accounting
1 point
True
False
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17.
Question 17
Corporations looking after the interests of shareholders should focus on:
1 point
Minimizing expenses at all costs
Any business operation regardless of whether it is sustainable or not
Short term business decisions
Wealth maximization
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18.
Question 18
Direct evidence of wealth maximization can most clearly be signaled by changes in:
1 point
Market value of equity
The commodity market
The currency market
Market value of debt
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19.
Question 19
A rise in market capitalization (without any associated equity raisings) signals evidence of wealth creation by the firm
1 point
False
True
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20.
Question 20
Who do corporation owners rely mostly on to further their interests?
1 point
Executive management
Governments
Competitors
Employees
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21.
Question 21
Gross margin equals:
1 point
Gross profit/Sales
Gross profit/Assets
Gross profit/Owners equity
Gross profit/Liabilities
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22.
Question 22
Gross margin measures the:
1 point
Firms’ ability to sell a product for more than the direct cost of production
Gross sales of the firm
Firms ability to sell a product for more than the indirect cost of production
Gross profit of the firm
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23.
Question 23
Price/Earnings ratio equals:
1 point
Share price/Liabilities
Share price/Earnings per share
Share price/Earnings
Share price/Asset
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24.
Question 24
Are forward-looking Price/Earnings ratios stable?
1 point
Sometimes. Only when dividend payout ratios are constant in the market
No. They are volatile
Only after the GFC
Yes. They are constant
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25.
Question 25
Profitability focuses on:
1 point
Return to government
Return to owners
Return to debt holders
Return to suppliers
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26.
Question 26
High levels of debt can create:
1 point
Higher distress risk
Lower distress risk
Flexibility to pay dividends
Flexibility to invest in positive NPV projects
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27.
Question 27
What do we divide revenues by in order to estimate a firm’s total asset turnover?
1 point
Net income
(average) Total assets
Interest expense
EBIT
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28.
Question 28
Inventory turnover equals:
1 point
Cost of goods sold/ (average) Inventory
Sales/Total assets
Current assets/Current liabilities
Gross profit/Sales
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29.
Question 29
What does accounting liquidity measure?
1 point
Long term solvency
Efficiency
Short term solvency
Productivity
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30.
Question 30
In the quick ratio fraction, “near cash” includes:
1 point
Cash
Short-term investments and accounts receivable
Pre-paid expenses
Inventory
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31.
Question 31
Which of the following is a non-current asset?
1 point
Inventory
Accounts receivable
Goodwill
Cash
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32.
Question 32
Which of the following equations represents the calculation of an asset’s book value?
1 point
Current assets – Current liabilities
Investment purchase price – Book value of investment
Acquisition cost – (Accumulated) Depreciation expense
Investment purchase price – Current liabilities
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33.
Question 33
Which of the following is a current liability?
1 point
Long-term debts
Accounts payable
Deferred income taxes
Pension liabilities
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34.
Question 34
Which of the following is a non- current liability?
1 point
Notes payable
Pension liability
Current maturities of long-term debt
Prepaid short-term expenses
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35.
Question 35
Total liabilities equals:
1 point
Current liabilities
Non-current liabilities
Current liabilities + non-current liabilities
Equity – Assets
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36.
Question 36
Which measures are needed to compute the market value of equity?
1 point
Retained earnings & number of shares
Retained earnings
Current assets & number of shares
Share price & number of shares
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37.
Question 37
Which of the following is a key characteristic of being a shareholder?
1 point
Shareholders must receive interest payments
Shareholders own debt in companies and not equity
Shareholders can never sell their shares
Shareholders may sell their shares
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38.
Question 38
Which of the following is NOT included in deductions?
1 point
Customer discounts
Tax expense
Allowances
Returns
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39.
Question 39
Which of the following items would be listed the furthest down a profit & loss statement?
1 point
Operating profit
Interest expenses
Cost of goods sold
Income taxes
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40.
Question 40
Which of the following must be disclosed in the notes to the profit and loss statement?
1 point
Income tax
Selling expenses
Disposals of property, plant and equipment or investments
Sales revenue
Peer-graded Assignment: Peer Assessment – This contributes 10% towards your final grade
[Attention]: – To get any assignment File you must need to click here to subscribe to YouTube and after that fill up this google form]
Peer Assessment Calculations
1.
Question 1
What is the Gross Margin (%) for 2012?
Note: Just enter the round numbers making up the percentage (%) of your answer. e.g. 78 (not 78% or 77.5)
1 point
Enter answer here
| 7 |
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2.
Question 2
What is the EPS for 2012?
Note: Just enter the numbers making up your answer to two decimal places. e.g. 9.12 or 12.03
1 point
Enter answer here
| 2.68 |
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3.
Question 3
What is the Debt/Assets Ratio for 2012?
Note: Just enter the numbers making up your answer to two decimal places. e.g. 9.12 or 12.03
1 point
Enter answer here
| 5.8 |
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4.
Question 4
What is the Total Asset Turnover for 2012?
Note: Just enter the numbers making up your answer to two decimal places. e.g. 9.12 or 12.03 or 4.10
1 point
Enter answer here
| 33.96 |
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5.
Question 5
What is the Current Ratio for 2012?
Note: Just enter the numbers making up your answer to two decimal places. e.g. 9.12 or 12.03 or 0.09
1 point
Enter answer here
| .74 |
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6.
Question 6
Consider the following investment proposal for a 6-year project.
The investment has an upfront cost of $1,500,000.
The proposal is expected to generate cash inflows for 6 years according to the following schedule: Year 1: $750,000; Year 2: $1,500,000; Year 3: $2,000,000; Year 4: $1,250,000; Year 5: $1,000,000; Year 6: $500,000.
Each year of operation you must also pay the cost of labour attached to the project – a cash outflow of $750,000 per year.
You have estimated that the appropriate discount rate for the project is 11% per annum.
Which of the following is closest to the calculated NPV of the project:
1 point
$366,774
– $368,455
$515.423
$518,525
$752,252
$1,866,774
