Belta manufacturers in China manufactures car engines. They have been in the business for almost 20 years. They have been profitable enough to employ more staff and increase their production. But with a recent loan taken to facilitate automation, investors want to know how the company is doing. Their total assets are worth $3,500,000 while they have a working capital of $ 4,200,000. Their liabilities stand at $ 5,000,000 while retained earnings amount to $800,000. Earnings Before Interest and Tax come to $ 6,500,000. Sales total $ 8,300,000 while the market value of equity is $ 7000,000. Apply the ALTMAN model for predicting bankruptcy and calculate the Z score of the company to solve QUESTION 1 and Question 2

Question 1

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Based on the above case, the company falls under which of the following risk category?

a.

Red zone

b.

Grey zone

c.

Green zone

d.

Blue zone

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Question 2

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The Z score of the company based on the above case is

a.

11.097

b.

13.091

c.

12.310

d.

11.241

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Question 3

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When a financial analyst carries out a trend analysis to study the series of changes in the financials of the company, he

a.

Makes Comparisons of the cash inflows with the cash outflow.

b.

Computes a company’s financial performance across time

c.

Makes Comparison of the items of the financial statements

d.

Makes Comparisons of the cash inflows with the cash outflow.

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When a financial analyst compares various financial factors of a company under his study over a period of time, he is carrying out

a.

Industry average comparison

b.

Inter-industry comparison

c.

Intra- firm comparison

d.

Inter-firm comparison

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The financial analysts carry out Trend analysis with the main intention of

a.

Capital Budgeting

b.

Profit planning

c.

Capital rationing

d.

Forecasting and budgeting

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A firm has earnings before interest of RO 2000 and the tax rate is assumed to be 20 percent. The company has 10 percent, RO 10,000 debentures. The Interest coverage ratio is.

a.

6

b.

2

c.

1

d.

5

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Question 7

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A share which is traded in the Muscat Securities market has the following details. The price per share in the market is RO 1.5 and Earnings per share is RO 0.250, price to earnings is.

a.

8 times

b.

6 times

c.

5 times

d.

7 times

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A company has the following information in the financial statements. Cash amounted to RO 5000, Debtors stood at RO 3000, Receivables amounted to RO 2000, Inventories amounted to RO 3000, Bank overdraft amounted to RO 5000, Payables stood at RO 5000 and the creditors are RO 1500. The current ratio of the firm is

a.

1.13

b.

2.50

c.

1.56

d.

2.23

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A ratio that compares investors and creditors stake in a company is called as

a.

Debt Ratio

b.

Equity ratio

c.

Investor creditor ratio

d.

Debt to equity ratio

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1. The resultant after deducting all the indirect expenses from the Gross profit is called

a.

Gross Profit

b.

Operating Profit

c.

Net Profit

d.

Total Profit

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The Income statement of Alpha company showed the following details. Opening Inventory is RO 10,000, the closing inventory amounted to RO 15000 and the purchases amounted to RO 60,000. The Inventory Turnover ratio is.

a.

4.4 times

b.

3.2 times

c.

2.3 times

d.

6.1 times

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A company has a ratio of Net income to number of equity shares is RO 2.5. This means that

a.

Dividend per share of the company is RO 2.5

b.

Earnings per share of the company is RO 2.5

c.

The company has got a Net profit ratio of 2.5

d.

The company has earned a P.E Ratio of RO 2.5

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The Current Ratio of Alpha group of companies is 2:5, the current liability is RO 30,000. The net working capital of the company is

a.

RO -45000

b.

RO -18,000

c.

RO 45000

d.

RO 18000

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A company has a total sales of RO 400000. The cash sales are 60% of the total Sales. The opening balance of accounts receivables is RO 10,000 and the closing balance of Accounts receivable is RO 15000. The receivable turnover ratio is

a.

12.63

b.

12.22

c.

9.14

d.

12.80

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In which of the following tool, each item in the statement is stated as a percentage of the aggregate, of which that item is a part

a.

Ratio Analysis

b.

Common size Statement

c.

Trend Analysis

d.

Comparative Income Statement

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Question 16

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Return on common stock holder’s equity is calculated as

a.

Income available to common stock holders divided by total stake holders equity

b.

Income available to common stock holders divided by common stock holder’s equity

c.

Net income divided by common stake holders equity

d.

Net income divided by total stock holder’s equity

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Question 17

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Assume that you are carrying out trend analysis for a company for the years 2016 to 2020. The base year in the years considered for the data is

a.

2019

b.

2016

c.

2017

d.

2018