1. All of these are limitations of financial ratio analysis except:

a. suitable yardsticks may not be available with which to compare results. b. excessive information disclosed in company annual reports. c. year-end data is not necessarily typical of the position during the year. d. it is past performance that is being analysed.

2. How many of these are limitations of financial analysis? I The past is an imperfect guide to the future II The effect of inflation is not considered III Undisclosed changes in accounting policies IV Inconsistent classification

a. One b. Two c. Three d. Four

3. Which of these are limitations of financial analysis? I. The past is an imperfect guide to the future II. Historical cost financial reports are not adjusted for inflation III. Non-quantitative factors are not considered IV. Ratio results often contain errors in calculations V Comparisons may not be valid

a. I, II, III, V b. I, II, IV, V c. II, III, IV, V d. I, III, IV, V

4. Which statement about capital market research and financial statement analysis is correct?

a. If share markets are inefficient financial analysis is of little use to investors. b. Analysts relying on financial statement analysis assume that share markets are inefficient. c. The evidence of share market research on the efficiency of the market is conclusive. d. Little research has been carried out as to whether share markets are efficient or not.

5. Which statement is incorrect?

a. Fundamental analysis assumes that an analyst can study all the published information in relation to an entity and determine whether its shares are under/over-valued. b. Fundamental analysis assumes that an analyst should concentrate on studying data about an entity from a primary source and give little weight to secondary sources of information. c. Fundamental analysis is engaged in by many analysts. d. Fundamental analysis assumes that an analyst can study all the published information in relation to an entity and determine whether its shares are correctly valued.