1.The operating cash flow as reported by a company is LEAST likely to be misleading in which of the below cases

When company buys back shares to offset dilution that can occur because of exercising of ESOPs

When trade payable decreases.

When trade receivables are securitized with recourse

3. Which of the following statements about financial ratios is most accurate

Any firm with a high net profit margin will have a high EBITDA margin and vice versa.

Interest Paid from the P&L / Total Debt

A company that has an inventory turnover of 8 times, a receivables turnover of 10 times, and a payables turnover of 15 times will have a cash conversion cycle of approximately 58 days.

4. If a company makes profits in 2017, makes losses in the next 2 years, and then makes the same profits in 2020, and it does not pay dividends, then, the ROE of the company in 2020 when compared to 2017 (all other things being equal) would be

Higher

Lower

Same

5. Interest Coverage Ratio would usually get understated in all of the following cases except

When the company has a foreign debt

When the company capitalizes interest

When the company borrows from domestic bond markets

6. P/E of a company is 20. If the cost of debt for the firm is 7%, and tax rate is 30%, in the event of a share repurchase using 100% debt funds would result in

EPS going down after the repurchase

EPS going up after the repurchase

EPS remaining unchanged after the repurchase