Financial Analysis Quiz
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According to the provided information, what is the correct formula to calculate the book value of equity?

  • Total Liabilities + Intangible Assets
  • Total Liabilities - Inventories
  • Total Assets + Total Liabilities
  • Total Assets - Total Liabilities (correct)
  • In fundamental analysis, what is considered a factor that may indicate a 'speculative thinking' environment?

  • Emphasis on traditional financial statement analysis (FSA)
  • Increased focus on historical financial data.
  • De-emphasizing the importance of profits and focusing on price-to-sales ratios. (correct)
  • High importance placed on traditional price-to-earnings ratios.
  • What is a primary sales characteristic of a typical 'dot.com' company, as described in the text?

  • Stable sales growth over time.
  • Slow and steady sales growth.
  • Moderate sales growth.
  • Explosive sales growth. (correct)
  • What is a typical characteristic of a manufacturer?

    <p>Relatively stable or high costs compared to sales. (B)</p> Signup and view all the answers

    If a company has Total Assets of $100 million and Total Liabilities of $30 million, what is its Equity (Book Value)?

    <p>$70 million (C)</p> Signup and view all the answers

    During the dot-com bubble, what was an unusual characteristic of internet companies regarding Price-to-Sales ratios?

    <p>They registered a P/S ratio of 33x, well above the hisotrical average 1x ratio. (A)</p> Signup and view all the answers

    Based on the text, which company would most likely be described as having a balanced asset-to-liability (A/L) ratio?

    <p>Beta (D)</p> Signup and view all the answers

    What was a typical financial characteristic of dot.com companies within the dot.com bubble?

    <p>They were reporting losses. (A)</p> Signup and view all the answers

    What is the formula for calculating net working capital based on the content?

    <p>Cash plus Trade Receivables plus Inventory (A)</p> Signup and view all the answers

    According to the calculation described, if an item is purchased for $100, what is the selling price?

    <p>$150 (C)</p> Signup and view all the answers

    How is profit calculated according to the content provided?

    <p>Revenue minus purchase cost (D)</p> Signup and view all the answers

    How is cash flow generated calculated based on the content?

    <p>Revenue minus costs over time (B)</p> Signup and view all the answers

    Under normal conditions, where would a firm expect to classify amount owed by a credit customer?

    <p>An asset under trade receivables (B)</p> Signup and view all the answers

    Why would an amount owed by a customer not be recognised as an asset?

    <p>If the customer is unable to pay. (B)</p> Signup and view all the answers

    Which segment of RCI Banque is responsible for activities related to the distribution network and final customers?

    <p>Sales Financing (C)</p> Signup and view all the answers

    What type of asset is a purchased patent considered and why?

    <p>An intangible asset, because it represents exclusive rights (D)</p> Signup and view all the answers

    Where in the Company/Security Tab can you locate the number of employees?

    <p>Snapshot (B)</p> Signup and view all the answers

    If a purchased patent allows a new product, what is the primary reason the patent would be recognised as an asset?

    <p>It gives the company rights to produce and expected increase in profit (C)</p> Signup and view all the answers

    What is the total Cost Of Goods Bought (COG) for the year 2018?

    <p>$20 (A)</p> Signup and view all the answers

    What action should you take to ensure that only currently listed companies are included in an equity screen?

    <p>Checking all boxes in Criteria Options (B)</p> Signup and view all the answers

    What is the total Cost Of Goods Sold (COGS) for the period shown in the content?

    <p>$20 (B)</p> Signup and view all the answers

    How is the Net Financial Position (NFP) calculated?

    <p>Financial Liabilities minus Cash &amp; Cash Equivalents (B)</p> Signup and view all the answers

    If there were no goods sold in 2019, what would be the total ending inventory value at the end of 2019?

    <p>$30 (A)</p> Signup and view all the answers

    Which of these items would be classified as an operating asset?

    <p>Trade Receivables (B)</p> Signup and view all the answers

    What is the total sales revenue generated from the sale of 2 goods?

    <p>$22 (D)</p> Signup and view all the answers

    When adding parameters to an Equity Screen, what is the first step you should take to add a qualitative parameter?

    <p>Choose the category on the left. (B)</p> Signup and view all the answers

    Which of the options represents the item found on the income statement?

    <p>Cost of Goods Bought (D)</p> Signup and view all the answers

    Which brands are associated with the Mobility Services segment?

    <p>Renault, Dacia, LADA, Alpine and Mobilize (D)</p> Signup and view all the answers

    After adding a quantitative filter to an equity screen, what action will verify that the number of resulting companies has decreased?

    <p>Press Enter (D)</p> Signup and view all the answers

    Which of the following best describes the nature of 'equity' in a firm's financial structure?

    <p>The claim of the owners against the business. (A)</p> Signup and view all the answers

    Which of the following is the most accurate description of a 'Current Asset'?

    <p>An asset that is expected to be converted to cash within a year, held for trading or consumption in the business’s operating cycle (A)</p> Signup and view all the answers

    Under which condition would a liability be classified as a 'Current Liability'?

    <p>If settlement is due within a year after the balance sheet date or within the operating cycle. (B)</p> Signup and view all the answers

    What is the primary role of the income statement (IS)?

    <p>To report a business's financial performance (profit) over a period of time. (C)</p> Signup and view all the answers

    If a business buys a machine with a life span of 10 years, how should this asset usually be classified on the balance sheet?

    <p>As a non-current asset since its operational use is long-term. (C)</p> Signup and view all the answers

    Which of the following is an example of a current liability?

    <p>A short-term loan due in 9 months. (B)</p> Signup and view all the answers

    Which of these best describes a fixed asset?

    <p>An asset not expected to be converted to cash within one year, for operational use. (A)</p> Signup and view all the answers

    A business has a seasonal operating cycle that lasts 15 months, how should the classification of liabilities be determined?

    <p>All amounts due within the 15-month cycle would be classified as current liabilities. (B)</p> Signup and view all the answers

    What was the value of the opening inventory for the year 2019?

    <p>20 (A)</p> Signup and view all the answers

    What was the total cost of goods available for sale in 2019?

    <p>30 (D)</p> Signup and view all the answers

    What is the calculated Cost of Goods Sold (COGS) for the year 2018?

    <p>0 (A)</p> Signup and view all the answers

    If a company uses non-fungible goods, how would they treat each good?

    <p>Each good is specific and different, with its own identifying number (B)</p> Signup and view all the answers

    What was the value of ending inventory on the balance sheet on December 31, 2019?

    <p>10 (B)</p> Signup and view all the answers

    How many units were sold during 2019?

    <p>2 (B)</p> Signup and view all the answers

    What is the difference between fungible and non-fungible goods?

    <p>Fungible goods are interchangeable, while non-fungible goods are unique and specific. (C)</p> Signup and view all the answers

    Flashcards

    Total Assets

    The total value of a company's assets, such as property, plants & equipment, and intangible assets.

    Total Liabilities

    The total amount of money a company owes to others, including loans and other liabilities.

    Equity (Book Value)

    The difference between a company's total assets and total liabilities. It represents the value of the company belonging to its owners.

    Price (Market Capitalization)

    The market value of a company's outstanding shares. It reflects the current market perception of the company's value.

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    Fundamental Analysis

    A method of evaluating a company's financial health and future prospects based on its fundamental financial data.

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    Speculation

    An investment strategy driven by market sentiment and short-term price fluctuations rather than a company's fundamentals.

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    Value Investing

    An investment strategy that focuses on identifying companies with strong underlying financial performance and growth potential, regardless of short-term market fluctuations.

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    Price-to-Sales (P/S) Ratio

    A measure of a company's market value relative to its sales revenue. It reflects investor sentiment and expectations for future growth.

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    Cost of Goods Bought (COG)

    The cost of purchasing inventory, before considering any markups or markdowns.

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    Cost of Goods Sold (COGS)

    The direct costs associated with producing the goods that were actually sold during a specific period.

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    Sales Revenue

    The amount of money a company receives from selling its goods to customers, expressed as the selling price per unit multiplied by the number of units sold.

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    Opening Inventory (Op Inv)

    The value of unsold goods at the beginning of an accounting period. It reflects the starting inventory available for sale.

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    Ending Inventory (End Inv)

    The value of unsold goods at the end of an accounting period. It represents the inventory left over after sales have been made.

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    Liabilities

    Claims of others against a firm, arising from past transactions, such as providing goods or loans.

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    Equity

    The owners' claim on a business. Represents funds contributed by the owners.

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    Current Assets

    Assets held for short-term use, expected to be converted to cash within a year.

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    Fixed Assets

    Assets held for long-term operations, not classified as current assets.

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    Current Liabilities

    Obligations due for settlement in the short-term, typically within a year.

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    Long-Term Liabilities

    Obligations not meeting the criteria for current liabilities, due for settlement in the longer term.

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    Classified Balance Sheet

    A balance sheet presenting assets, liabilities, and equity categorized into subclasses.

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    Income Statement

    A financial statement measuring a business's profit or loss over a period.

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    Balance Sheet (BS)

    A financial statement showing a company's assets, liabilities, and equity at a specific point in time.

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    Asset

    An item of economic value owned by a business that is expected to provide future economic benefits.

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    Trade Receivable

    An amount owed to a business by customers for goods or services that have been delivered but not yet paid for.

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    Intangible Asset

    An asset that cannot be physically touched, such as a patent or copyright.

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    Patent

    A legal right granted to an inventor to exclude others from making, using, or selling an invention.

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    Doubtful or Bad Debt

    This occurs when a customer owing money cannot pay their debt.

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    Write-off

    A loss that a company incurs when a customer is unable to repay a debt.

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    Defaulted Debt

    A debt that a customer is unlikely to repay.

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    Sales Financing

    The segment within a company that handles financial services related to the distribution network and end customers.

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    Mobility Services

    This segment focuses on services for new mobility options, encompassing brands like Renault, Dacia, and Mobilize.

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    Financial Liabilities

    Financial obligations that a company owes to others, such as bonds and loans.

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    Operating Liabilities

    Liabilities that arise from the company's normal business operations, like unpaid invoices from suppliers and other short-term obligations.

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    Operating Assets

    Assets that are directly involved in the company's core business activities, such as inventory, receivables, and production facilities.

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    Non-Operating Assets

    Assets that aren't directly used in the company's main business activities, for example, a building that's not currently being rented out for business.

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    Net Financial Position (NFP)

    A measure of a company's financial position calculated by subtracting Cash & Cash Equivalents from its Financial Liabilities.

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    Opening Inventories (Op Inv)

    Inventories at the beginning of the accounting period.

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    Cost of Goods Purchased (COG)

    The value of goods purchased during the accounting period, used in COGS calculation.

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    Ending Inventories (End Inv)

    Inventories remaining at the end of the accounting period.

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    Interchangeable Goods

    Goods that are interchangeable with others of the same type. Each unit is indistinguishable.

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    Non-Fungible Goods

    Goods that are unique and distinguishable from others, often with distinct identification numbers.

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    End Inv Valued at Cost (Purchase Price)

    The purchase price of the goods is directly used to value ending inventory.

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    Average Cost Method

    The value of the ending inventory is determined by calculating the average cost of goods available.

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    Study Notes

    Financial Statement Analysis

    • Financial statements are used to track business activities and assess valuation.
    • They include balance sheets, income statements, and cash flow statements.
    • These statements offer insights into profitability, growth, and credit risk.

    Investing, Valuation, and Analysis

    • Accounting aims to collect, analyze, and communicate financial information.
    • Financial statements are the primary source of this information.
    • Investors, governments, employees, advisors, courts, lenders, regulators, suppliers, analysts, and expert witnesses use financial statements.
    • Financial statement analysis is a method to extract relevant information to answer specific investment questions.

    Investment Styles and Fundamental Analysis

    • Investment decision-making depends on the investor's role (intuitive, passive, fundamental).
    • Intuitive investors rely on gut feelings, passive investors adopt a buy-and-hold strategy, and fundamental investors analyze financial data before investing.
    • Fundamental analysis prioritizes understanding the investment's intrinsic value over its market price.

    Financial Ratios

    • Financial statements describe a company's assets, liabilities, and equity (Assets = Liabilities + Equity.)
    • Net profit is the difference between revenues and expenses (Profit = Revenues – Expenses).
    • Financial statements analysis may employ important ratios, such as price-to-earnings (P/E) and price-to-sales (P/S).

    Fundamental Analysis: A Tool to Face Speculation

    • Speculative thinking often overemphasizes short-term gains.
    • Traditional financial statement analysis may not be effective for this perspective.
    • Inherent asset values, or intangible assets, are essential in long-term analysis, and project-based values support speculation.

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    Description

    This quiz covers various aspects of financial analysis, including book value of equity and characteristics of companies like dot-com firms. Test your understanding of key financial formulas and indicators. Ideal for students and professionals alike seeking to enhance their knowledge in finance.

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