CFA Exam questions
Equity equals: - ANSWER-Assets - Liabilities = Equity
(4)Shareholders' equity reported on the balance sheet is most likely to differ from the market value of shareholders' equity because: - ANSWER-B)Some factors that affect the generation of future cash flows are excluded.
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(4)Shareholders' equity reported on the balance sheet is most likely to differ from the market value of
shareholders' equity because: - ANSWER-B)Some factors that affect the generation of future cash flows
are excluded.
(8)All of the following are current assets except: - ANSWER-B)goodwill.
(9)The most likely costs included in both the cost of inventory and property, plant, and equipment are: -
ANSWER-C) delivery costs.
(10)Debt due within one year is considered: - ANSWER-A)current.
(13)The carrying value of inventories reflects: - ANSWER-C) the lower of historical cost or net realizable
value.
(15)Accrued expenses (accrued liabilities) are: - ANSWER-C) expenses that have been reported on the
income statement but not yet paid.
(17)Defining total asset turnover as revenue divided by average total assets, all else equal, impairment
write-downs of long-lived assets owned by a company will most likelyresult in an increase for that
company in: - ANSWER-C)both the debt-to-equity ratio and the total asset turnover.
(23)The item "retained earnings" is a component of: - ANSWER-C)shareholders' equity.
(24)When a company buys shares of its own stock to be held in treasury, it records a reduction in: -
ANSWER-B)both assets and shareholders' equity.
, (25)Which of the following would an analyst most likely be able to determine from a common-size
analysis of a company's balance sheet over several periods? - ANSWER-B)An increase or decrease in
financial leverage.
(26)An investor concerned whether a company can meet its near-term obligations is most likely to
calculate the: - ANSWER-A)current ratio.
(27)The most stringent test of a company's liquidity is its: - ANSWER-A)cash ratio.
(28)An investor worried about a company's long-term solvency would most likely examine its: - ANSWER-
C) debt-to-equity ratio.
(31)Based on Exhibit 1, which statement is most likely correct? - ANSWER-C)Company A has made one or
more acquisitions.
(33)Based on Exhibit 1, the financial leverage ratio for Company B is closest to: - ANSWER-C)2.22.
(34)Based on Exhibit 1, which ratio indicates lower liquidity risk for Company A compared with Company
B? - ANSWER-A)Cash ratio
1. The three factor DuPont Analysis is comprised of - ANSWER-a. Asset turnover, profit margin, financial
leverage
1. Within the Dupont Analysis - ANSWER-a. An increase in financial leverage is met with an increase in
the use of debt.
1. In DuPont Analysis where the financial leverage has consistently increased over the past several years -
ANSWER-a. The ROE will be higher than the ROA.
1. The current ROA of a firm is 13% and it has an Equity Multiplier of 3.0. The resulting ROE will be
approximately - ANSWER-a. 39%
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