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CHAPTER 1

TRUE/FALSE Question

1. Business analysis is the evaluation of a companys prospects and risks for the
purpose of making business decisions.
ANS : TRUE REF: Subramanyam Edisi 11 halaman 4

2. Financial statement analysis is the theory of analytical tools and techniques to


general-purpose financial statements and related data to derive estimates and
inferences useful in industry analysis.
ANS : FALSE REF : Subramanyam Edisi 11 halaman 4

3. Profitability analysis is the evaluation of a companys return on equity.


ANS : FALSE REF : Subramanyam Edisi 11 halaman 13

4. Quantitative tools help improve forecast accuracy, prospective analysis remains a


relatively subjective process. This is why prospective analysis is sometimes referred
to as an art, not a science.
ANS : TRUE REF : Subramanyam Edisi 11 halaman 14

5. Risk analysis is the evaluation of a companys ability to meet its commitments. Risk
analysis involves assessing the solvency and liquidity of a company along with its
earnings variability.
ANS : TRUE REF : Subramanyam Edisi 11 halaman

Multiple Choice Question

1. The efficient market hypothesis, or EMH for short, deals with the reaction of market
prices to financial and other information. There are common forms of EMH, except
a. The weak form EMH
b. The semiweak form EMH
c. The semistrong form EMH
d. The strong form EMH
ANS : B REF : Subramanyam Edisi 11 halaman 44

2. Business environment and strategy analysis consists of


a. Industry and strategy analysis
b. Industry and business analysis
c. Business and practice analysis
d. Practice and strategy analysis
ANS : A REF : Subramanyam Edisi 11 halaman 11
3. Important sets of tools for financial analysis:
a. Comparative and common-size financial statement analysis
c. Ratio analysis and Cash flow analysis
c. Valuation
d. All of above
ANS : D REF : Subramanyam Edisi 11 halaman 27-28

4. A companys goals and objectives are captured in a business plan that describes the
companys purpose, strategy, and tactics for its activities. A business plan assists
managers in focusing their efforts and identifying expected opportunities and
obstacles. Insight into the business plan considerably aids our analysis of a
companys current and future prospects and is part of the analysis of business
environment and strategy.
a. Companys purpose
b. Strategy
c. Tactics for its activity
d. All of above
ANS : D REF : Subramanyam Edisi 11 halaman 15

5. Financial statement analysis reduces reliance on


a. Hunches
b. Guesses
c. Intuition for business decisions
d. All of above
ANS : D REF : Subramanyam Edisi 11 halaman 4

Matching Question

6. .provide financing to a company in return for a promise, usually in writing, of


repayment with interest (explicit or implicit) on specific future dates.

7. Profitability analysis also includes evaluation of the two major sources of profitability
are

8. Choosing a valuation model is based on in a finite horizon setting.

9. The basis of valuation is. This theory states the value of a debt or equity security
(or for that matter, any asset) is equal to the sum of all expected future payoffs from
the security that are discounted to the present at an appropriate discount rate.

10. Comparative financial statement analysis also is referred to as given the left-right
(or right-left) analysis of account balances as we review comparative statements.

Jawaban:
A. Present value theory
B. Practical considerations
C. Margins and turnover
D. Present value theory
E. Nontrade creditors

1. E. REF : Subramanyam Edisi 11 halaman 8


2. C. REF : Subramanyam Edisi 11 halaman 13
3. B. REF : Subramanyam Edisi 11 halaman 42
4. D. REF : Subramanyam Edisi 11 halaman 40
5. A. REF : Subramanyam Edisi 11 halaman 2
CHAPTER 4

True/False Questions

1. The concept of solvability is important in financial statement analysis. By liquidity,


we mean the amount of cash or cash equivalents the company has on hand and the
amount of cash it can raise in a short period of time. Liquidity provides flexibility to
take advantage of changing market conditions and to react to strategic actions by
competitors.
ANS : FALSE REF : Subramanyam Edisi 11 halaman 229

2. One factor affecting authenticity is the right of merchandise return. Customers in


certain industries, like the magazine, textbook, or toy industries, enjoy a substantial
right of merchandise return. Our analysis must allow for return privileges. Liberal
return privileges can impair quality of receivables.
ANS : TRUE REF : Subramanyam Edisi 11 halaman 232

3. Plant assets include cash and other assets that are convertible to cash, usually within
the operating cycle of the company.
ANS : FALSE REF : Subramanyam Edisi 11 halaman 228

4. The lower-of-cost-or-market rule implies that if inventory declines in market value


below its cost for any reason, including obsolescence, damage, and price changes,
then inventory is written down to reflect this loss.
ANS : TRUE REF : Subramanyam Edisi 11 halaman 242

5. Special methods of depreciation are found in certain industries like steel and heavy
machinery. The most common of these methods links depreciation charges to
activity or intensity of asset use.
ANS : TRUE REF : Subramanyam Edisi 11 halaman 249

Multiple Choice Question

6. Full information to assess collection risk for receivables is not usually included in
financial statements. Useful information must be obtained from other sources or
from the company. Analysis tools for investigating collectibility include:
a. Comparing competitors receivables as a percentage of sales with those of the
company under analysis.
b. Examining customer concentrationrisk increases when receivables are
concentrated in one or a few customers.
c. Computing and investigating trends in the average collection period of
receivables compared with customary credit terms for the industry.
d. All of above
ANS : D REF : Subramanyam Edisi 11 halaman 231

7. Intangible assets are rights, privileges, and benefits of ownership or control. Two
common characteristics of intangibles are
a. High uncertainty of future benefits
b. Lack of physical existence.
c. All of above
d. None of above
ANS : C REF : Subramanyam Edisi 11 halaman 254

8. Below are the analysis issues arising with impairment, except


a. evaluating the appropriateness of the amount of the impairment
b. evaluating the appropriateness of the timing of the impairment
c. analyzing the effect of the impairment on receivable
d. analyzing the effect of the impairment on income
ANS : C REF : Subramanyam Edisi 11 halaman 253

9. Management estimates the allowance for uncollectibles based on


a. Experience
b. Customer fortunes
c. Economy and industry expectations and collection policies.
d. All of above
ANS : D REF : Subramanyam Edisi 11 halaman 230

10. Under IFRS on, a prior impairment can be reversedfor both tangible and
intangible assetsif the impaired assets value subsequently increases.
a. IAS 24
b. IAS 26
c. IAS 28
d. IAS 30
ANS : B REF : Subramanyam Edisi 11 halaman 258

Matching Question

11. For LIFO inventories, however, ending inventories can be reported at much older
costs that may be significantly lower or higher than current costs. In periods of rising
prices, this reduction in inventory quantities, known as, results in an increase in
gross profit that is similar to the effect of FIFO inventory costing.

12. From our, two distortions arise from asset impairment are conservative biases
distort long-term asset valuation because assets are written down but not written up
and large transitory effects from recognizing asset impairments distort net income.

13. When costs are capitalized for identifiable tangible and intangible assets, they must
be subsequently over the benefit periods for these assets. The length of a benefit
period depends on the type of intangible, demand conditions, competitive
circumstances, and any other legal, contractual, regulatory, or economic limitations.

14. IFRS (IAS 16) permits a company to write-up the carrying value of long-term assets
even above its depreciated historical cost. For this, a company must adopt a for the
entire class of assets to which the particular asset belongs. Under the revaluation
model, a company needs to estimate the fair values of the all assets in the adopted
class on a periodic basis and continually write-up or write-down the asset values to
reflect the current fair values.

15. The excess of current assets over current liabilities is called. Working capital is a
double-edged swordcompanies need working capital to effectively operate, yet
working capital is costly because it must be financed and can entail other operating
costs, such as credit losses on accounts receivable and storage and logistics costs for
inventories.

Jawaban:
A. analysis perspective
B. working capital
C. LIFO liquidation
D. Amortized
E. revaluation model

1. ANS: C. REF : Subramanyam Edisi 11 halaman 238-239


2. ANS: A. analysis perspective REF : Subramanyam Edisi 11 halaman 244
3. ANS: D. amortized REF : Subramanyam Edisi 11 halaman 255
4. ANS: E. revaluation model REF : Subramanyam Edisi 11 halaman 258
5. ANS: B. working capital REF : Subramanyam Edisi 11 halaman 228-229

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