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D076 Pre-Assessment test(44 questions and answers).
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D076 Pre-Assessment test(44 questions and answers).
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D076 Pre-Assessment
test(44
questions and
answers)
Which principle of ratio analysis means that ratios
are open for analyst interpretation, are not
governed by rules, and allow creativity to work
according to a particular company or asset? -
answer Flexibility
Comparing a firm's ratios across time. - answer
Trend Analysis
Comparing a firm's financial ratios to other firms'
ratios or industry averages. - answer Cross-
sectional Analysis
, As an active investor, Maria is analyzing her
portfolio to decide if there are any stocks she
should remove from her pool of financial securities.
A company she has invested in, Quiet Flag
Industries, just released its annual report.
Which kind of method should Maria use to see if
the company has improved? - answer Trend
analysis
An investment analyst is concerned about a
construction company's ability to sell its inventory
to meet current obligations, because much of the
inventory (commercial buildings) it builds and sells
takes longer than a year to construct.
Which ratio should this analyst use to consider the
effect of the firm's inventory on the firm's ability to
meet current obligations? - answer Quick ratio
Why are ratios considered flexible? - answer
Because they are not regulated and can be
changed or invented according to a firm's needs
Which statement below is an example of how ratios
are used in the field of finance? - answer A firm's
ratios are compared with those of a benchmark
peer group to determine the firm's relative
strength and performance.
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