a) Describe the main categories of financial ratios and discuss how financial ratios can facilitate the financial analysis. [10 marks]

b) Discuss the effect of FIFO (First In First Out) and LIFO (Last In First Out) methods on the balance sheet and income statement during periods of inflation.

c) Describe what are the common-size financial statements and explain why corporations use them.

d) Under what circumstances can a firm increase its share price by cutting its dividend and increasing its investment?

e) How does the growth rate used in the total payout model differ from the growth rate used in the dividend-discount model?

f) State the efficient market hypothesis. What are the implications of the efficient market hypothesis for corporate managers?

g) Explain what is a firms weighted average cost of capital (WACC). Explain why it is often used as a discount rate to evaluate projects.

h) What inputs do we need to estimate a firms equity cost of capital using the Capital Asset Pricing Model (CAPM)?

i) Explain in detail why projects within the same firm may have different costs of capital.