ASHWORTH A04 ONLINE EXAM 5<\/p>\n
Question <\/p>\n
Question 1 of 405.0\/ 5.0 Points<\/p>\n
Strategies to gain a competitive advantage include product differentiation and:<\/p>\n
A. low-cost leadership.<\/p>\n
B. building brand loyalty.<\/p>\n
C. developing superior products.<\/p>\n
D. improving product quality and reliability.<\/p>\n
Question 2 of 405.0\/ 5.0 Points<\/p>\n
An analytical tool that measures a company\u2019s performance against a predetermined standard is a\/an:<\/p>\n
A. benchmark comparison analysis.<\/p>\n
B. profitability analysis.<\/p>\n
C. time-series analysis.<\/p>\n
D. common size statement.<\/p>\n
Question 3 of 405.0\/ 5.0 Points<\/p>\n
Post Corporation purchases from suppliers on net 30 day terms, has an Accounts Receivable Turnover of 8 times, and an Inventory Turnover of 12 times. Cash inflows and outflows are:<\/p>\n
A. evenly matched.<\/p>\n
B. negatively mismatched by 60 days.<\/p>\n
C. positively mismatched by 30 days.<\/p>\n
D. negatively mismatched by 45 days.<\/p>\n
Days = Purchases – A\/R – Inventory = 30 – 45 – 30 = – 45 days<\/p>\n
Question 4 of 405.0\/ 5.0 Points<\/p>\n
In a trend income statement for 2014, where 2012 is the base year, sales are expressed as:<\/p>\n
A. 87.2%.<\/p>\n
B. 100.0%.<\/p>\n
C. 114.7%.<\/p>\n
D. 148.7%.<\/p>\n
Question 5 of 405.0\/ 5.0 Points<\/p>\n
The percentage of assets financed by long-term debt is best described by the:<\/p>\n
A. debt to equity ratio.<\/p>\n
B. interest coverage ratio.<\/p>\n
C. long-term debt to asset ratio.<\/p>\n
D. long-term debt to tangible assets ratio. ?<\/p>\n
Question 6 of 405.0\/ 5.0 Points<\/p>\n
Financial ratio, percentage, and trend comparisons can be distorted by all of the following EXCEPT:<\/p>\n
A. the presence of nonrecurring items among the firms being analyzed.<\/p>\n
B. aggressive revenue recognition practices.<\/p>\n
C. the timing of asset purchases.<\/p>\n
D. accounting for similar economic fundamentals in similar fashion.<\/p>\n
Question 7 of 405.0\/ 5.0 Points<\/p>\n
All of the following are used as financial analysis tools EXCEPT:<\/p>\n
A. managements\u2019 discussion and analysis.<\/p>\n
B. common size statements.<\/p>\n
C. trend statements.<\/p>\n
D. financial ratios.<\/p>\n
Question 8 of 405.0\/ 5.0 Points<\/p>\n
Companies that consistently earn rates of return above the competitive floor in the industry are considered to possess a:<\/p>\n
A. dominant market share.<\/p>\n
B. niche market.<\/p>\n
C. competitive advantage.<\/p>\n
D. monopolistic advantage.<\/p>\n
Question 9 of 405.0\/ 5.0 Points<\/p>\n
In a common size balance sheet, all items are expressed as a percentage of total:<\/p>\n
A. assets.<\/p>\n
B. liabilities.<\/p>\n
C. equity.<\/p>\n
D. sales.<\/p>\n
Question 10 of 405.0\/ 5.0 Points<\/p>\n
Return on Assets (ROA) measures a firm\u2019s:<\/p>\n
A. cost effectiveness of its operating activities.<\/p>\n
B. profitable use of its assets.<\/p>\n
C. profitability of sales.<\/p>\n
D. return on shareholders\u2019 investment.<\/p>\n
Question 11 of 405.0\/ 5.0 Points<\/p>\n
Which one of the following successful strategies will increase the Return on Assets (ROA)?<\/p>\n
A. Increase the investment in assets used in the business<\/p>\n
B. Increase the profit margin<\/p>\n
C. Decrease sales volume<\/p>\n
D. Increase the annual depreciation amounts of long-lived assets<\/p>\n
Question 12 of 405.0\/ 5.0 Points<\/p>\n
Earnings Before Interest (EBI) adjusts net income for which one of the following groups of items?<\/p>\n
A. Nonrecurring items, interest, and distortions related to accounting quality concerns<\/p>\n
B. Nonoperating items, after-tax interest, and distortions related to accounting quality concerns<\/p>\n
C. Nonoperating items, nonrecurring items, and after-tax interest<\/p>\n
D. Nonrecurring items, after-tax interest, and distortions related to accounting quality concerns<\/p>\n
Question 13 of 405.0\/ 5.0 Points<\/p>\n
Although a company\u2019s earnings are important in financial statement analysis, with respect to credit evaluations and lending decisions an analysis of its cash flows is:<\/p>\n
A. optional.<\/p>\n
B. central.<\/p>\n
C. only important if the company has a high debt\/equity ratio.<\/p>\n
D. required by banking regulations.<\/p>\n
Question 14 of 405.0\/ 5.0 Points<\/p>\n
Trend statements are better than common size statements at indicating which of the following?<\/p>\n
A. Stability<\/p>\n
B. Monetary changes<\/p>\n
C. Profitability<\/p>\n
D. Growth and decline<\/p>\n
Question 15 of 405.0\/ 5.0 Points<\/p>\n
The financial statement reporting \u201cfilter\u201d is:<\/p>\n
A. SEC reporting regulations that vary from GAAP for publicly traded companies.<\/p>\n
B. SEC required reporting regulations for all entities.<\/p>\n
C. management\u2019s manipulation of accounting data.<\/p>\n
D. management\u2019s discretion to choose alternative accounting procedures within GAAP.<\/p>\n
Question 16 of 405.0\/ 5.0 Points<\/p>\n
The inventory turnover for 2014 is (rounded) __________ times.<\/p>\n
A. 2.61<\/p>\n
B. 3.12<\/p>\n
C. 3.45<\/p>\n
D. 3.80<\/p>\n
Question 17 of 405.0\/ 5.0 Points<\/p>\n
The total assets turnover ratio for 2014 is (rounded) __________ times.<\/p>\n
A. 1.7<\/p>\n
B. 2.0<\/p>\n
C. 2.2<\/p>\n
D. 2.4<\/p>\n
Question 18 of 405.0\/ 5.0 Points<\/p>\n
Which one of the following helps the analyst remove the effects of an information filter?<\/p>\n
A. Financial statements<\/p>\n
B. SEC Form 10K<\/p>\n
C. Note disclosures in financial statements<\/p>\n
D. Trend analysis<\/p>\n
Question 19 of 405.0\/ 5.0 Points<\/p>\n
In a common size cash flow statement, all items are expressed as a percentage of:<\/p>\n
A. sales.<\/p>\n
B. total assets.<\/p>\n
C. net income.<\/p>\n
D. total equity.<\/p>\n
Question 20 of 405.0\/ 5.0 Points<\/p>\n
Financial ratios used to determine credit risk include an assessment of:<\/p>\n
A. liquidity and asset utilization.<\/p>\n
B. asset utilization and profitability.<\/p>\n
C. solvency and liquidity.<\/p>\n
D. profitability and solvency.<\/p>\n
Part 2 of 2 -95.0\/ 100.0 Points<\/p>\n
Question 21 of 405.0\/ 5.0 Points<\/p>\n
The interest rate on a revolving loan will usually:<\/p>\n
A. be below prime interest.<\/p>\n
B. be equal to prime interest.<\/p>\n
C. remain fixed.<\/p>\n
D. float.<\/p>\n
Question 22 of 405.0\/ 5.0 Points<\/p>\n
The reciprocal of the risk-adjusted equity cost of capital used is the:<\/p>\n
A. return on assets.<\/p>\n
B. return on common equity.<\/p>\n
C. price earnings ratio.<\/p>\n
D. profit margin on sales.<\/p>\n
Question 23 of 405.0\/ 5.0 Points<\/p>\n
Preparing comprehensive financial statement forecasts involves six steps. Among these steps are all of the following EXCEPT:<\/p>\n
A. project sales revenue for each period in the forecast horizon.<\/p>\n
B. forecast depreciation expense and tax expense for each period.<\/p>\n
C. forecast the company\u2019s financial structure and dividend policy for each period.<\/p>\n
D. All of the above are steps typically taken when preparing financial <\/p>\n
statement forecasts.<\/p>\n
Question 24 of 405.0\/ 5.0 Points<\/p>\n
A qualitative assessment of the business, its customers and suppliers, and management\u2019s character and capability is known as: ?<\/p>\n
A. covenant waivers.<\/p>\n
B. due diligence.<\/p>\n
C. indenture evaluation.<\/p>\n
D. a debenture.<\/p>\n
Question 25 of 405.0\/ 5.0 Points<\/p>\n
Income from continuing operations, excluding special or nonrecurring items, is generally regarded as:<\/p>\n
A. permanent earnings.<\/p>\n
B. transitory earnings.<\/p>\n
C. value-irrelevant earnings.<\/p>\n
D. quiet.<\/p>\n
Question 26 of 405.0\/ 5.0 Points<\/p>\n
The interest rate charged on bank loans must be sufficient to cover all of the following EXCEPT:<\/p>\n
A. a risk premium when loans are personally guaranteed by the borrower.<\/p>\n
B. the lender\u2019s cost of borrowing funds.<\/p>\n
C. the costs of administering, monitoring, and servicing the loan.<\/p>\n
D. a premium for exposure to default risk.<\/p>\n
Question 27 of 405.0\/ 5.0 Points<\/p>\n
The implied total earnings multiple of Firm A is:<\/p>\n
A. 1.00.<\/p>\n
B. 4.10.<\/p>\n
C. 5.00.<\/p>\n
D. 10.00<\/p>\n
Question 28 of 405.0\/ 5.0 Points<\/p>\n
Recent research indicates that stock returns correlate better with:<\/p>\n
A. accrual earnings than realized operating cash flows.<\/p>\n
B. cash basis earnings than realized operating cash flows.<\/p>\n
C. realized operating cash flows than accrual earnings.<\/p>\n
D. future operating cash flows than accrual earnings.<\/p>\n
Question 29 of 405.0\/ 5.0 Points<\/p>\n
As per GAAP, fair value\u2014for accounting purposes\u2014is:<\/p>\n
A. an entry price.<\/p>\n
B. an exit price.<\/p>\n
C. the market price in a forced sale.<\/p>\n
D. always easily determinable.<\/p>\n
Question 30 of 405.0\/ 5.0 Points<\/p>\n
The implied share price of Firm C\u2019s stock is:<\/p>\n
A. $18.00.<\/p>\n
B. $63.00.<\/p>\n
C. $72.00.<\/p>\n
D. $90.00.<\/p>\n
Question 31 of 405.0\/ 5.0 Points<\/p>\n
The fundamental valuation approach to business valuation uses basic accounting measures to assess the amount, timing, and __________ cash flows or earnings.<\/p>\n
A. certainty of a company\u2019s past operating<\/p>\n
B. certainty of a company\u2019s future non-operating<\/p>\n
C. uncertainty of a company\u2019s future operating<\/p>\n
D. uncertainty of a company\u2019s future non-operating<\/p>\n
Question 32 of 405.0\/ 5.0 Points<\/p>\n
In general, the growth rate in earnings will depend on the portion of earnings reinvested each period and the:<\/p>\n
A. earnings retention rate.<\/p>\n
B. rate of return earned on new investment.<\/p>\n
C. company\u2019s cost of equity capital.<\/p>\n
D. company\u2019s weighted average cost of capital.<\/p>\n
Question 33 of 405.0\/ 5.0 Points<\/p>\n
To obtain a better current price, the net present value of future growth opportunities (NPVGO) can be calculated and __________ the price per share calculated from the P\/E ratio.<\/p>\n
A. added to<\/p>\n
B. subtracted from<\/p>\n
C. multiplied by<\/p>\n
D. divided into<\/p>\n
Question 34 of 405.0\/ 5.0 Points<\/p>\n
An adjustment to income due to an extraordinary item is regarded as:<\/p>\n
A. permanent earnings.<\/p>\n
B. transitory earnings.<\/p>\n
C. value-irrelevant earnings.<\/p>\n
D. quiet.<\/p>\n
Question 35 of 405.0\/ 5.0 Points<\/p>\n
The degree to which cash needs can be satisfied during periods of fiscal stress is known as:<\/p>\n
A. credit availability.<\/p>\n
B. credit worthiness.<\/p>\n
C. working capital.<\/p>\n
D. financial flexibility.<\/p>\n
Question 36 of 405.0\/ 5.0 Points<\/p>\n
Assume that Firm A can increase earnings by $4,000 by cutting costs. Abnormal earnings would be:<\/p>\n
A. $(1,000).<\/p>\n
B. $0.<\/p>\n
C. $1,000.<\/p>\n
D. $1,500.<\/p>\n
Question 37 of 405.0\/ 5.0 Points<\/p>\n
A component that is valuation-relevant, but is NOT expected to persist into the future is a __________ component.<\/p>\n
A. permanent earnings<\/p>\n
B. transitory earnings<\/p>\n
C. noise<\/p>\n
D. quiet<\/p>\n
Question 38 of 405.0\/ 5.0 Points<\/p>\n
Assume that Firm B can divest itself of $20,000 of unproductive capital with earnings falling by only $3,000. Abnormal earnings are:<\/p>\n
A. $200.<\/p>\n
B. $400.<\/p>\n
C. $600.<\/p>\n
D. $800.<\/p>\n
Question 39 of 405.0\/ 5.0 Points<\/p>\n
Through the use of accruals and deferrals, accrual accounting:<\/p>\n
A. produces a cash flow number that smoothes out the unevenness in year-to-year earnings.<\/p>\n
B. produces information about current cash receipts and payments.<\/p>\n
C. enables management to estimate future free cash flows.<\/p>\n
D. produces an earnings number that smoothes out the unevenness in year-to-year cash flows.<\/p>\n
Question 40 of 400.0\/ 5.0 Points<\/p>\n
When determining the fair value of an asset using an exit price approach:<\/p>\n
A. fair value is determined by how the company uses the asset.<\/p>\n
B. management may choose to reduce the fair value of the asset by the <\/p>\n
approximate amount of expected transaction costs (i.e., costs to dispose <\/p>\n
of the asset) if such costs are deemed to be material.<\/p>\n
C. transaction costs do not reduce the asset\u2019s fair value.<\/p>\n
D. transaction costs reduce the asset\u2019s fair value.<\/p>\n","protected":false},"excerpt":{"rendered":"
ASHWORTH A04 ONLINE EXAM 5 Question Question 1 of 405.0\/ 5.0 Points Strategies to gain a competitive advantage include product differentiation and: A. low-cost leadership. B. building brand loyalty. C. developing superior products. D. improving product quality and reliability. Question Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-50027","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/50027","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=50027"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/50027\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=50027"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=50027"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=50027"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}