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Advanced Wealth Management Course (IIBF) - Paper 3

Part III: Ch 6: Company Analysis

Q1.

Current Ratio is calculated by:

Current Assets/Current Liabilities

Current Liabilities/Current Assets

Cash and Market Securities/Current Liabilities

Net Profit/Current Liabilities

Q2.

Higher the Interest Coverage Ratio, higher the chance of the company defaulting on its fixed obligations.

True

False

Q3.

Operating Profit Margin is calculated by:

Net Sales/Operating Profits

Operating Profits/Net Sales

Operating Profits/Gross Sales

Gross Sales/Operating Profits

Q4.

(I) Capital efficiency ratios indicate how efficiently a company is using the capital or assets employed in its business (II) Indicators of profitability determine how much the company is earning for its capital providers.

Both the statements are correct

Only statement (I) is correct

Only statement (II) is correct

Both the statements are wrong

Q5.

(I) Quick Ratio = Cash and Market Securities/Current Liabilities (II) Cash Ratio = (Cash + Market Securities + Receivables)/Current Liabilities

Both the statements are correct

Only statement (I) is correct

Only statement (II) is correct

Both the statements are wrong

Q6.

Total Asset Turnover is calculated by:

Average Total Net Assets/Net Sales

Net Profit/Net Sales

Net Sales/Average Total Net Assets

Net Sales/Net Profit

Q7.

(I) Lower Operating leverage will lead to higher business risk. (II) Operating efficiency indicators help us in determining how efficiently a company is managing its operating process.

Both the statements are correct

Only statement (I) is correct

Only statement (II) is correct

Both the statements are wrong

Q8.

ROE = Net Profit Margin * Total Asset Turnover * Financial Leverage

True

False

Q9.

Return on Equity is calculated by:

Average Total Net Worth/Net Profit

Net Profit/Average Total Net Worth

Net Profit/Average Total Net Assets

Average Total Net Assets/Net Profit

Q10.

Interest Coverage Ratio is calculated by:

Earnings After Interest and Tax/Interest Expense

Earnings Before Interest and Tax/Interest Expense

Total Net Worth/Interest Expenses

Net Sales/Interest Expenses

Q11.

An asset turnover ratio higher than that of the peer group indicates that the company is using its assets more efficiently.

True

False

Q12.

(I) Inventory Turnover = Net Annual Sales/Average Inventory (II) Payable Payment Period = 365/Payables Turnover

Both the statements are correct

Only statement (I) is correct

Only statement (II) is correct

Both the statements are wrong

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