, QUESTION 21 Which of the following statements relating to financial statement analysis is NOT true? O 1.1f a firm's net borrowing cost (NBC) is higher than the return on its net operating assets (NOA), the use of debt financing will enhance the return to the common shareholder 2. One of the critical aspects of undertaking sensitivity analysis is to ensure that the proposed changes to the financial ratios are feasible 3. One of the reasons that the measure of leverage based on the reported accounting figures (debt-to-equity) will typically be higher than the comparable figure based on the reformulated financial statements (FLEV) is because the debt-to-equity ratio ignores financial assets 4. Typically, the return to the firm calculated based on reported accounting figures (ROA) will be lower than the comparable measure based on the reformulated financial statements (RNOA) QUESTION 22 Which of the following statements relating to financial statement analysis is NOT true? 1. The operating spread measures the return that the firm is earning on its investment in assets above its financing costs 2. To determine the asset turnover ratio (ATO) implied by the forecasted turnover ratios for each of the individual item on the Balance Sheet, these forecasted turnover ratios must be inverted 3. ROCE is a levered measure of profitability 04 4. For forecasting purposes, profitability ratios should be based on the reported accounting amounts to ensure that the figures are reliable QUESTION 23 If for the most recent year, a firm's RNOA is 12.0%, its sales were $2,400,000, its asset turnover is 1.5, its net financial obligations (NFO) balance is $550,000, and its net financial expenses after tax are $16,500, what is its ROCE? 01.25.1% 02.18.3% 3.29.24 04.16.7% QUESTION 24 If for the most recent year, a firm's ROCE is 25.0%, its sales were $1,500,000, its asset turnover is 2.5, its Shareholders' Equity balance is $250,000, and its net cost of borrowing after tax (NBC) is 4%, what is its RNOA? 1.8.8% 2.5.7% 3.10.4% 4.8.1% QUESTION 25 The following balances and turnover ratios for individual operating assets and operating liabilities have been calculated using end-of-year figures based on Kamloops Inc.'s reformulated 2020 Balance Sheet: Balance Turnover Operating cash $ 150,000 26.67 Accounts receivable S 250.000 16.00 Inventory S 500.000 8.00 Property, plant & equipment S 900,000 4.44 Accounts payable $ 275,000 14.35 Provisions $ 175.000 22.86 Net Operating Assets $1,350,000 $ 2.96 turnover increases to 9, and the Accounts Payable turnover increases to 187 1. It is not possible to determine how the changes will affect Kamloops' RNOA based on the Information provided. 2. Kamloops' RNOA will remain the same 3. Kamloops' RNOA will decrease 4. Kamloops' RNOA will increase , QUESTION 21 Which of the following statements relating to financial statement analysis is NOT true? O 1.1f a firm's net borrowing cost (NBC) is higher than the return on its net operating assets (NOA), the use of debt financing will enhance the return to the common shareholder 2. One of the critical aspects of undertaking sensitivity analysis is to ensure that the proposed changes to the financial ratios are feasible 3. One of the reasons that the measure of leverage based on the reported accounting figures (debt-to-equity) will typically be higher than the comparable figure based on the reformulated financial statements (FLEV) is because the debt-to-equity ratio ignores financial assets 4. Typically, the return to the firm calculated based on reported accounting figures (ROA) will be lower than the comparable measure based on the reformulated financial statements (RNOA) QUESTION 22 Which of the following statements relating to financial statement analysis is NOT true? 1. The operating spread measures the return that the firm is earning on its investment in assets above its financing costs 2. To determine the asset turnover ratio (ATO) implied by the forecasted turnover ratios for each of the individual item on the Balance Sheet, these forecasted turnover ratios must be inverted 3. ROCE is a levered measure of profitability 04 4. For forecasting purposes, profitability ratios should be based on the reported accounting amounts to ensure that the figures are reliable QUESTION 23 If for the most recent year, a firm's RNOA is 12.0%, its sales were $2,400,000, its asset turnover is 1.5, its net financial obligations (NFO) balance is $550,000, and its net financial expenses after tax are $16,500, what is its ROCE? 01.25.1% 02.18.3% 3.29.24 04.16.7% QUESTION 24 If for the most recent year, a firm's ROCE is 25.0%, its sales were $1,500,000, its asset turnover is 2.5, its Shareholders' Equity balance is $250,000, and its net cost of borrowing after tax (NBC) is 4%, what is its RNOA? 1.8.8% 2.5.7% 3.10.4% 4.8.1% QUESTION 25 The following balances and turnover ratios for individual operating assets and operating liabilities have been calculated using end-of-year figures based on Kamloops Inc.'s reformulated 2020 Balance Sheet: Balance Turnover Operating cash $ 150,000 26.67 Accounts receivable S 250.000 16.00 Inventory S 500.000 8.00 Property, plant & equipment S 900,000 4.44 Accounts payable $ 275,000 14.35 Provisions $ 175.000 22.86 Net Operating Assets $1,350,000 $ 2.96 turnover increases to 9, and the Accounts Payable turnover increases to 187 1. It is not possible to determine how the changes will affect Kamloops' RNOA based on the Information provided. 2. Kamloops' RNOA will remain the same 3. Kamloops' RNOA will decrease 4. Kamloops' RNOA will increase
