FSA Quiz

In quick ratio, why do current assets need to be deducted with prepaid expenses and inventory?

• These assets have no impact on the company's short-term liquidity

• These assets are illiquid assets

• These assets already include current ratio and NWC

• These assets are liquid assets

What are the main objectives of financial forecasting?

• To address potential consequences that could arise

• To assess competitors in market share

• To evaluate shareholder dividends

• To predict interest rate changes

Which of the following is TRUE about index number trend analysis?

• Short term trend comparisons

• Items are expressed as percentages of their values in base year

• Evaluation of internal makeup of financial statements

• Useful for intercompany comparisons

Below are the restrictions of financial forecasting EXCEPT

• Accuracy of historical data

• Unforeseeable events

• Problems with output data

• Time frame

What is the missing item in this formula? 

Return on Equity (ROE) = ____ x Equity multiplier

• ROA

• TATO

• NPM

• ARTO

DuPont analysis only focuses on a company's profitability ratios to determine its overall performance

• True

• False

 Common shareholders will receive a dividend every year

• True

• False

 Which of the following is FALSE about margins in profitability ratio?

• It represents the firm’s ability to translate sales ringgit into profit

• It evaluates a company's financial health and performance

• A measure of how well a company controls its costs

• It measures the relationship between creditors

Current assets, such as cash are expected to be sold between three to five years

• True

• False

Which of the following is FALSE about leverage ratio?

• Used to measure company’s mix of operating expenses

• Banks have regulatory oversight on the level of leverage

• Fuel company’s growth by having lower rate of return

• Assess the ability of company to meet its financial obligations