First statement: 

It is preferable to use audited financial statements for ratio analysis.

Second statement: The most informative approach to ratio analysis combines cross-
sectional and time-series analyses. 
Select one:
a.
Only first statement is true

b.
Only second statement is true

c.
Both statements are false

d.
Both statements are true

 According to Dr. Dubos J. Masson, to effectively analyze the financial statements of a firm, it
requires an understanding of three key areas, except
Select one:
a.
 The structure of the financial statements

b.
 The strategies the firm pursues to differentiate itself from its competitors.

c.
Projected financial statements

d.
 The economic characteristics of the industry in which the firm operates 
Financial statements presenting financial data for two or more periods are called
Select one:
a.
audited financial statements

b.
Annual financial statements

c.
Interim financial statements
 d.
Comparative financial statements
In this financial statement analysis, trend percentages are computed by taking a base year
and assigning its figures as a value of 100.
Select one:
a.
Ratio analysis

b.
Dupont analysis

c.
Trend analysis

d.
Vertical analysis
 Financial statement analysis is used by this interested party to evaluate the attractiveness of
the investment in the business.
Select one:
a.
management

b.
creditors

c.
shareholders

d.
prospective investors
It involves the conversion of items appearing in financial statement columns into terms of
percentages of a base figure to show the relative significance of the items to facilitate
comparison.The percentage is computed by using this formula:
                           Percentage of base =  Amount of individual item  x 100
                                                                    Amount of base
Select one:
a.
Horizontal analysis
 b.
Ratio analysis

c.
Vertical analysis

d.
Trend analysis

The following are the categories of financial ratios, except

Select one:
a.
liquidity ratios

b.
activity ratios

c.
market ratios

d.
cash ratios?
 They use financial statement analysis to ensure the compliance of publicly traded
companies to various rules and regulations.
Select one:
a.
regulatory authorities

b.
shareholders

c.
management
d.
Creditor
First statement: Liquidity, activity and debt ratios primarily measure return. 
Second statement: Market ratios capture both risk and return.
Select one:
 a.
Only first statement is true

b.
Both statements are false

c.
Only second statement is true

d.
Both statements are true
It involves methods of calculating and interpreting financial ratios to analyze and monitor
the firm's performance.

Select one:
a.
cross-sectional analysis

b.
financial ratio
c.
financial analysisXXXX
d.
ratio analysis
They are concerned with the company’s ability to pay interest and principal when due and
are concerned with the company’s cash flow ability.
Select one:
a.
shareholders

b.
creditors

c.
management

d.
prospective investors
The comparison of different firm's financial ratios at the same point in time is known as

Select one:
 a.
Combined analysis

b.
ratio analysis

c.
Cross-sectional analysis

d.
Time-series analysis
Interested parties use ratio analysis to find information about the following:
I. Profitability of the business firm/
II. The firm’s ability to meet its obligations
III. Safety of the investment in the business
IV. Effectiveness of management in running the firm
Select one:
a.
I, II, III, & IV

b.
I & III
c.
I & II

d.
I, II, & III
 First statement: A single ratio is already enough in providing sufficient information to
judge the overall performance of the firm. 
Second statement: Additional analysis is no longer needed for the ratios that reveal large
deviations from the norm that merely indicate symptoms of a problem.
Select one:
a.
Only first statement is true

b.
Both statements are true

c.
Both statements are false?

d.
Only second statement is true
They are interested to know company’s ability to pay dividend, and growth of dividends and
maximize their wealth.
Select one:
a.
prospective investors

b.
management

c.
shareholders

d.
creditors
They usually use financial statement analysis to analyze the efficiency of operations and
make important business decisions.
Select one:
a.
prospective investors

b.
creditors

c.
shareholders

d.
management

When a firm compare its ratio values to those of a key competitor or group of competitors,
this analysis is known as 

Select one:
a.
Combined analysis

b.
financial analysis

c.
Benchmarking

d.
Ratio analysis
This involves comparison of current to past performance, using ratios, enables analysts to
assess the firm's progress.

Select one:
a.
Time-series analysis

b.
Ratio analysis

c.
Cross-sectional analysis

d.
Financial analysis
The assessment and evaluation of the firm's past performance, present condition, and future
business potential is generally known as

Select one:
a.
Financial statement analysis

b.
Cross-sectional analysis

c.
Ratio analysis

d.
Financial ratio
 The analytical tools used in financial statement analysis are
I.   Comparative financial statements such as horizontal and vertical analysis
II.  Technical analysis
III.   Common-size financial statements
IV.  Trend analysis
V.   Fundamental analysis
VI.  Ratio analysis
Select one:
a.
I, III, V, VI

b.
I, II, III, IV, V, VI

c.
I, II & III

d.
I, III, IV, VI

QUIZ 2

 This ratio of analytical measurement measures the productivity of assets regardless of

capital structures.
Select one:
a.
Debt ratio

b.
Current ratio

c.
Return on total assets?

d.
Quick ratio
First statement: If the firm extended 45-day credit term and their average collection period
is 40 days may indicate a poorly managed credit collection department. 
 Second statement: In times interest earned ratio, the higher its value, the better for the
firm to fulfill its interest obligations.
Select one:
a.
Only second statement is true?
 b.
Only first statement is true

c.
Both statements are true

d.
Both statements are false
This measures the efficiency with which the firm uses all its assets to generate sales.

Select one:
a.
debt-to-equity ratio

b.
inventory turnover

c.
total asset turnover

d.
asset-to-equity ratio
A measure of the company’s long-term debt paying ability is
Select one:
a.
Return on assets????????????????XXXXXXXXXXX

b.
Dividend payoutxxxxxxxxxxxxxx

c.
Length of the operating cycle

d.
Times interest earned
Southern Division reported the following results for 2019
            Annual sales                                     P 5,000,000
            Net earnings                                           800,000
            Investment                                           2,500,000
 What is Southern Division’s return on investment?
Select one:
a.
32%

b.
16%xxxxxxxxxxxxxxx

c.
24%xxxxxxxxxxxxxxxx

d.
10%XXXXXXXXXXXXXXX
Selected information from the operating records of Kaya Company is as follows:
     Net sales                                             P 1,800,000
    Cost of goods sold for 2019                   1,200,000
    Inventory at 12/31/2018                            360,000
    Inventory at 12/31/2019                            312,000
 Kay’s inventory turnover for 2019 is
Select one:
a.
3.57 timesxxxxxxxxxxxxxxx

b.
3.57 times

c.
5.36 times???xxxxxxxxxxxxxxx

d.
3.85 timesXXXXXXXXXXXXXX
Below shows the current assets and current liabilities of Tala Company
ASSETS                                                                    LIABILITIES
Current Assets                                                         Current Liabilities
Cash                                            P 2,550,000          Accounts payable                        P
9,500,000
Marketable securities                     2,000,000         Short-term bank loan                 
11,375,000
Accounts receivable                     16,675,000         Total current liabilities               P
20,875,000
Inventories                                    26,470,000
Total current assets                 P 47,695,000
What is the company's quick ratio?

Select one:
a.
1.50

b.
1.20

c.
2.10

d.
1.02
First statement:  If inventory is liquid, the quick ratio is the preferred measure of overall
liquidity. 
Second statement:  The quick ratio provides better measure of liquidity only when a firm's
inventory cannot be easily converted into cash. 
Select one:
a.
Only second statement is true

b.
Only first statement is truexxxxxxxxxxxxxxxxxxx

c.
Both statements are truexxxxxxxxxxxxxxxxxxxxxx

d.
Both statements are falsexxxxxxxxxxxxxxxxxxxx
Southern Division reported the following results for 2019
          Annual sales                            P 5,000,000
          Net earnings                                 800,000
          Investment                                  2,500,000
What is the Southern Division’s return on sales
Select one:
a.
16%?:?????

b.
20%xxxxxxxxxxxxxx

c.
32%

d.
25%
Southern Division reported the following results for 2019
            Annual sales                    P 5,000,000
            Net earnings                         800,000
            Investment                         2,500,000
What is Southern Division’s asset turnover?
Select one:
a.
1 to 1xxxxxxxxxxxxxxx

b.
2 to 1

c.
3.125 to 1

d.
0.5 to 1xxxxxxxxxxxxxxxxxxxxxxxxxxxx
 Lucena Corporation’s books disclosed the following information as of and for the year
ended December 31, 2019:
            Net credit sales                                      P 4,000,000
            Net cash sales                                           1,000,000
            Merchandise purchases                            2,000,000
            Inventory at beginning                             1,200,000
            Inventory at end                                          400,000
            Accounts receivable at beginning               600,000
           Accounts receivable at end                       1,400,000
           Net income                                                   200,000
 Marble’s percent of net income on sales is
Select one:
a.
9%

b.
56%

c.
4%

d.
44%
If a company has P 10 million net income and 4 million outstanding shares, the earnings per
share would be
Select one:
a.
P 10.00

b.
P 40.00

c.
P 0.40

d.
P 2.50
First statement: A lower times interest earned ratio indicates greater capacity to meet
scheduled payments. 
Second statement:  Liquidity refers to the company’s ability to pay its  long-term liabilities
as they fall due. 
Select one:
a.
Only second statement is truexxxxxxxxxxxxxxxxx
 b.
Only first statement is true

c.
Both statements are true??????????????xxxxxxxxxxxxxxx

d.
Both statements are falsexxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Which of the following statements is incorrect?
Select one:
a.
It is appropriate to compare a company’s current financial ratio with same financial ratio for
(1) the company is prior years and/or (2) the ratio for the industry in which the company is
affiliated. ??????xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

b.
 Profitability evaluation ratios have a higher power than solvency determination ratios
predicting for performance for both income and solvency.

c.
Companies where product costs present a high percentage of total costs could be expected
to have a low gross profit percentage.???????xxxxxxxxxxxxxx

d.
 Gross profit percentages do not vary a great deal among industries.

The most commonly cited financial ratio that measures the firm's ability to measure its
short-term obligations is

Select one:
a.
debt-to-equity ratio

b.
inventory turnover

c.
current ratio

d.
debt ratio
The following are debt ratios except

Select one:
a.
debt-to-equity ratio

b.
equity multiplier

c.
times interest earned

d.
inventory turnove
Amy Corporation’s stockholders’ equity at December 31, 2019, consisted of the following:
       Preferred stock, P 50 par value, 10% noncumulative;
               100,000 shares issued and outstanding                      P 5,000,000
       Common stock, P 10 par value, 800,000 shares
                Issued and outstanding                                                 8,000,000
       Retained earnings                                                                   3,000,000
The preferred stock has a liquidating value of P 55 per share. At December 31,2019 the book
value per share of common stock is
Select one:
a.
P 10?????xxxxxxxxxxxxxxxxxxxxxxxxxxxx

b.
P 13.75

c.
P 14.38

d.
P 13.13
The magnification of risk and return through the use of fixed cost financing, such as debt
and preferred stock is called

Select one:
a.
financial leverage
 b.
profitability

c.
solvency

d.
liquidity
 Below shows the current assets and current liabilities of Tala Company
ASSETS                                                                  LIABILITIES
Current Assets                                                        Current Liabilities
Cash                                    P 2,550,000                 Accounts payable                  P  9,500,000
Marketable securities             2,000,000                 Short-term bank loan              11,375,000
Accounts receivable             16,675,000                 Total current liabilities        P 20,875,000
Inventories                           26,470,000
Total current assets         P 47,695,000
Tala’s current ratio is

Select one:
a.
5.75??????????????xxxxxxxxxxxxxxxxxxxxxxxxxxxxx

b.
2.75xxxxxxxxxxxxxxxxxxx

c.
2.28

d.
2.50
This commonly measures the activity, or liquidity of a firm's inventory 

Select one:
a.
average collection period

b.
total asset turnover

c.
inventory turnover

d.
average payment period
The assessment and evaluation of the firm's past performance, present condition, and future
business potential is generally known as

Select one:
a.
Ratio analysis

b.
Time-series analysis???????????

c.
Cross-sectional analysis

d.
Combined analysis
Net profit margin measures

Select one:
a.
all costs and expenses are deducted

b.
all costs and expenses including interest and taxes are deducted.

c.
all costs and expenses, including interest, taxes, and preferred stock dividends have been
deducted

d.
all costs and expenses other than interest, taxes, and preferred stock dividends are
deducted.
A higher times interest ratio indicates greater capacity to meet scheduled payments.

Select one:
True

False
The most informative approach to ratio analysis combines cross-sectional and time series
analyses.
Select one:
True

False
It's not good for the company to have higher gross profit margin.

Select one:
True

False???
When the firm earns a profit even after making interest payments to creditors and paying
dividends to preferred stockholders, the firm's use of leverage magnifies the return earned
by common stockholders.

Select one:
True

False
A firm's  market value per share of P 3.50 means that the investors are paying P 3.50 for
each P 1.00 of the firm's stock.

Select one:
True???

False
The debt ratio of 35 percent indicates that the company has financed more than half of its
assets with debt.

Select one:
True

False????
This is commonly cited measure of the firm's success with respect to the earnings on sales.

Select one:
a.
Margin of error

b.
Net profit margin
c.
Operating margin
 d.
Gross profit margin
If the firm extended 45-day credit term and their average collection period is 40 days, may
indicate a poorly managed credit collection department.

Select one:
True

False
Return on assets  often called

Select one:
a.
Return on Common Equity

b.
Total asset turnover

c.
Inventory turnover

d.
Return on Investment
It is preferable  to use audited financial statements for ratio analysis.

Select one:
True

False
A single ratio is already enough to provide sufficient information to judge the overall
performance of the firm.

Select one:
True

False
The average collection period is meaningful only in relation to the firm's credit term.

Select one:
True

False
Liquidity, activity and debt ratios primarily measure return.
Select one:
True

False
This measures the percentage of each sales dollar remaining after the firm has paid for its
goods.

Select one:
a.
operating profit margin

b.
net profit margin

c.
gross profit margin

d.
earnings per share
This refers to the  number of pesos earned during the period in behalf of each outstanding
share of common stock.

Select one:
a.
Market ratio

b.
Book value per share

c.
Earnings per share

d.
Price/earnings rati
Earnings per share is the peso amount earned on behalf of each share outstanding.

Select one:
True

False
The ratio that measures the proportion of total assets financed by the creditors

Select one:
 a.
Market ratios

b.
Liquidity ratios

c.
Debt ratios

d.
Profitability ratios
The 10 percent return on assets indicates that that company earned 10 centavos on each
peso of asset invested.

Select one:
True

False
In times interest earned ratio, the higher its value, the better for the firm to fulfill its interest
obligations.

Select one:
True

False
These ratios give insight into how well investors in the market place feel the firm is doing in
terms of risk and return.
Select one:
a.
Profitability ratios

b.
Market ratios

c.
Liquidity ratios
d.
Debt ratios
The average sales per day equals annual sales divided by twelve months.

Select one:
 True

False
To compute for debt ratio, you have to divide current assets by current liabilities.

Select one:
True

False
If the inventory is liquid, the quick ratio is the preferred measure of overall liquidity.

Select one:
True

False
 In this kind financial statement analysis, trend percentages are computed by taking a base
year and assigning its figures as a value of 100.
Select one:
a.
Ratio analysis

b.
Dupont analysis

c.
Trend analysis

d.
Vertical analysis
Provides an assessment of how investors view firm's performance

Select one:
a.
Earnings per share

b.
Market ratio

c.
Price/earnings ratio

d.
Book value per share
This is commonly used to assess the owner's appraisal of share value.

Select one:
a.
Earnings per share

b.
Price/earnings ratio

c.
Book value per share

d.
Market ratio
A lower times interest earned ratio indicates greater capacity to meet scheduled payments.

Select one:
True 

False
This commonly measures the activity, or liquidity of the firm's inventory

Select one:
a.
Inventory turnover xxxx

b.
Total asset turnover ?????????????

c.
Average collection period

d.
Average payment period
Operating profit margin measures the percentage of each peso sales remaining after

Select one:
a.
all costs and expenses, including interest, taxes, and preferred stock dividends have been
deducted. xxxxxxxxxxxx

b.
all costs and expenses including interest and taxes are deducted.
 c.
all costs and expenses other than interest, taxes, and preferred stock dividends are
deducted. ????????????????

d.all costs and expenses are deducte

The assessment and evaluation of the firm's past performance, present condition, and future
business potential is generally known as

Select one:
a.
Ratio analysis

b.
Time-series analysis

c.
Cross-sectional analysis

d.
Combined analysis

MIDTERM

 The Dupont analysis looks at three main components of the ROE ratio, except
Select one:
a.
Total asset turnover

b.
 Inventory turnover

c.
Net profit margin

d.
Financial leverage
 As profit margin decreases, every sale will bring more money to a company’s bottom line,
resulting in a higher overall return on equity.
Select one:
True
 False
As asset turnover decreases, a company will generate more sales per asset owned, resulting
in a higher overall return on equity.
Select one:
True

False
As asset turnover increases, a company will generate more sales per asset owned, resulting
in a higher overall return on equity.
Select one:

True
Norte Company reported the following results for 2019:
          Annual sales            P5,000,000
          Net earnings                800,000
          Investment                2,500,000
What is Norte Company’s asset turnover?
Select one:
a.
1 to 1

b.
3.125 to 1

c.
2 to 1

d.
0.5 to 1 xxxxxxx
 First statement: Decrease in financial leverage will lead to an increase in return on equity.
Second statement:  By splitting ROE into three parts, companies can more easily understand
changes in their returns on equity over time.
Select one:
a.
Only second statement is true

b.
Only first statement is true

c.
Both statements are false

d.
Both statements are true
Horizontal analysis is also referred to common-size analysis.

Select one:
True

False
The following common size income statement are available for A.M.Y Corporation for two
years ended December 31, 2019, and 2018:
                                                                 2019              2018                                   The trend
percentages for sales are as follows:
      Sales                                                   100%            100%                                            2017                   
130%
     Cost of sales                                          55                 70                                               2016 
100%
     Gross profit                                           45                 30           
     Operating expenses                              20                 18    
     Net income                                           25%               12% 
What should be the trend percentage for gross profit on sales for 2019?

Select one:
a.
195%

b.
130% ??? xxxxxxx

c.
150%

d.
58.5%
 First statement:  As profit margin increases, every sale will bring more money to a
company’s bottom line, resulting in a higher overall return on equity.
Second statement: As asset turnover increases, a company will generate more sales per
asset owned, resulting in a higher overall return on equity.
Select one:
a.
Only first statement is true

b.
Both statements are true

c.
Only second statement is true

d.
Both statements are false
 Decrease in financial leverage will lead to an increase in return on equity.
Select one:
True

False
Horizontal analysis is also referred to
Select one:
a.
trend analysis

b.
vertical analysis

c.
common-size analysis
In 2018, ASB Corporation’s net income was P 1,600,000 and in 2019  it was P 400,000. What
percentage increase in net income must ASB achieve in 2020  to offset 2019 decline in net
income?
Select one:
a.
600%

b.
400%

c.
300% ???

d.
60%
Comparative statements are
Select one:
a.
 long form reports

b.
Notes to FS

c.
 financial statements presenting financial data for two or more periods

d.
 financial ratios
 It refers to the practice of financing assets with borrowed capital.
Select one:
a.
leverage

b.
arbitrage

c.
discounting
d.
mortgage
The technique of securing funds for investment at a fixed rate of return to fund suppliers to
enhance the well being of common stockholders.  
Select one:
a.
Financial arbitrage xxxxxxxxx

b.
 Fund management xxxxxxxxxx

c.
Prudent borrowing
 d.
Financial leverage
A financial ratio based on the return on equity ratio that is used to analyze a company’s
ability to increase its return on equity.

Select one:
a.
Break-even point analysis

b.
Technical analysis

c.
 Dupont analysis

d.
Fundamental analysis
This is an indirect analysis of a company's use of debt to finance its assets. This is also called
equity multiplier.
Select one:
a.
 Total asset turnover

b.
Financial leverage

c.
Net profit margin

d.
 Inventory turnover
Horizontal, vertical, and common-size analyses are techniques that are used by analysts in
understanding the financial statements of companies. Which of the following is an example
of vertical, common-size analysis?
Select one:
a.
Commission expense in 2019  is 5% of sales

b.
 A comparison in financial ratio between two or more firms in the same industry

c.
A comparison in financial form between two or more firms in the same industry

d.
 Commission expense in 2019 is 10% greater than it was in 2018. ????? xxxxxxxx
First statement:  As profit margin decreases, every sale will bring more money to a
company’s bottom line, resulting in a higher overall return on equity.
Second statement:  As asset turnover decreases, a company will generate more sales per
asset owned, resulting in a higher overall return on equity.
Select one:
a.
Only second statement is true

b.
Both statements are true

c.
Both statements are false

d.
Only first statement is true
Which of the following does not belong to the list?
Select one:
a.
. Financial ratios xxxxxxxx

b.
Common-size financial statement xxxxxxx

c.
Long-form report

d.
Peso and percentage changes on financial statements

An income statement showing only  component percentages is known as

Select one:
a.
Common pesos statement

b.
Common-size income statement

c.
 Condensed income statement

d.
Comparative income statement
Horizontal, vertical, and common-size analyses are techniques that are used by analysts in
understanding the financial statements of companies. Which of the following is an example
of vertical, common-size analysis?

Select one:
a.
 A comparison in financial ratio between two or more firms in the same industry.

b.
 A comparison in financial ratio between two or more firms in the same industry.

c.
 Commission expense in 2018 is 5% of sales

d.
Commission expense in 2018 is 10% greater than it was in 2017.
 Examiners should determine earnings by

Select one:
a.
looking at interest rate risk sensitivity, availability of assets that can easily be converted to
cash, dependence on short-term volatile financial resources.

b.
observing how lending to specific industries affects an institution.

c.
assessing the company's growth, stability, valuation allowances, net interest margin, net
worth level and the quality of the company's existing assets.

d.
checking if institutions comply with regulations pertaining to risk-based net worth
requirement.
First statement: Investment banks do not take deposits.
Second statement:  In CAMEL rating system, banks that are given scores greater than three
are considered to be high-quality institutions.

Select one:
a.
Both statements are false

b.
Both statements are true

c.
Only first statement is true

d.
Only second statement is true

The financial institution that is responsible for the oversight and management of all other
banks is

Select one:
a.
Central bank

b.
Investment bank

c.
Credit union

d.
Commercial bank
 Insurance companies are financial institutions that

Select one:
a.
help individuals transfer risk of loss

b.
assist individuals and institutions in buying and selling securities among available investors.

c.
 extend loans for investment with the aim of earning profit.

d.
 perform the functions of accepting deposits from the general public
They are the suppliers of funds
I.  Lenders
II. Borrowers
III. Savers
IV. Investors
V. Intermediary

Select one:
a.
I & II

b.
I, II, III, & IV

c.
1 & III

d.
I, II, & V
This is a company engaged in the business of dealing with financial and monetary
transactions such as deposits, loans, investments, and currency exchange.
Select one:
a.
Stock market
b.
Financial institution

c.
Capital market

d.
Financial market

In CAMEL rating system, banks that are given scores greater than three are considered to be
high-quality institutions.

Select one:
True

False
To assess a company's liquidity, the examiners should
 

Select one:
a.
 observe how lending to specific industries affects an institution.

b.
 look at interest rate risk sensitivity, availability of assets that can easily be converted to
cash, dependence on short-term volatile financial resources.

c.
 assess the company's growth, stability, valuation allowances, net interest margin, net worth
level and the quality of the company's existing assets.

d.
check if institutions comply with regulations pertaining to risk-based net worth requirement
Index numbers would probably be most interested in which ratio?

Select one:
a.
Common-size statements

b.
Vertical analysis

c.
Trend analysis

d.
Ratio analysis xxxxxxxxx
 A financial statement analysis technique that shows changes in the amounts of
corresponding financial statement items over a period of time.

Select one:
a.
Common-size statements

b.
Vertical analysis

c.
Trend analysis

d.
Ratio Analysis
Investment banks do not take deposits.
Select one:
True

False
 Examiners assess institutions' capital adequacy through
Select one:
a.
assessing the company's growth, stability, valuation allowances, net interest margin, net
worth level and the quality of the company's existing assets.

b.
observing how lending to specific industries affects an institution.

c.
checking if institutions comply with regulations pertaining to risk-based net worth
requirement.

d.
 looking at interest rate risk sensitivity, availability of assets that can easily be converted to
cash, dependence on short-term volatile financial resources and ALM technical competence.
Answer: A
A.M.Y. Company is preparing its common-size financial statements and revealed the
following:
                                                      (in thousands of pesos)
Accounts receivable                               20,000
Inventory                                                40,000
Total current assets                                70,000
Total assets                                           168,000  
Bonds payable                                        42,000
Retained earnings                                  14,000
Sales revenue                                        150,000
Cost of goods sold                                124,000
Income tax expense                                22,000
 How would A.M.Y.’s  inventory appear on a common-size balance sheet?
Select one:
a.
11.9%

b.
 23.8%
 c.
57.15% xxxxx

d.
65.3%
First statement: Assessing asset quality involves rating investment risk factors that the
company may face and comparing them with the company's capital earnings.
Second statement:  Asset quality covers an institutional loan's quality, which reflects the
earnings of the institution.
Select one:
a.
Both statements are true

b.
Only first statement is true

c.
Only second statement is true

d.
Both statements are false
A.M.Y. Company is preparing its common-size financial statements and revealed the
following:                                                             (in thousands of pesos)
Accounts receivable                                 20,000
Inventory                                                  40,000
Total current assets                                  70,000
Total assets                                             168,000  
Bonds payable                                          42,000
Retained earnings                                     14,000
Sales revenue                                          150,000
Cost of goods sold                                  124,000
Income tax expense                                  22,000
 How’s would A.M.Y’s retained earnings appear on a common-size balance sheet?
Select one:
a.
9.4% xxxxxxx

b.
8.3%

c.
33.3%

d.
20.0%
 They are the users of funds
I. Lenders
II. Borrowers
III. Savers
IV. Investors
V. Intermediary

Select one:
a.
III, IV & V

b.
I & II

c.
II & IV

d.
III & IV
 The main reasons to use common-size analysis are enumerated below, except
     I.    to evaluate information from one period to the next within a company
     II.   to evaluate a company relative to its competitors.
     III.  to evaluate the trend situation 

Select one:
a.
III
 b.
I

c.
I & III

d.
II
The following common size income statement are available for A.M.Y Corporation for two
years ended December 31, 2019, and 2018:
                                                                                  2019                 2018
Sales                                                                          100%                100%
Cost of sales                                                                55                     70  
Gross profit on sales                                                   45                     30
Operating expenses (including
          income tax expense)                                         20                     18  
Net income                                                                 25%                12% 
 The trend percentages for sales are as follows:
                2017                               130%
                2016                              100%
What should be the trend percentage for gross profit on sales for 2019?
Select one:
a.
 150%

b.
130%

c.
195%

d.
 58.5%
In vertical analysis all the items in a particular statement are represented as a percentage of
a particular item.
Select one:
 True

False
First statement: The statements for two or more periods are used in horizontal analysis.
Second statement: In vertical analysis all the items in a particular statement are represented
as a percentage of a particular item.
Select one:
a.
Both statements are true

b.
Only first statement is true

c.
Only second statement is true xxxxx

d.
Both statements are false
In using CAMEL rating system, banks that are given an average score of less than two are
considered to be less-than-satisfactory. 
Select one:
True

False
In using CAMEL rating system, banks with scores greater than three are considered to be
less-than-satisfactory.
Select one:
True

False
 A financial institution (FI) is a company engaged in the business of dealing with financial
and monetary transactions such as deposits,  loans, investments, and currency exchange.
Select one:
a.
Financial institution

b.
 Financial market
 c.
Capital market

d.
 Stock market
An institution's ability to create appropriate returns to be able to expand, retain
competitiveness, and add capital is a key factor in rating its continued viability.
Select one:
True

False
The primary purpose of investment banks and investment companies is making loans to its
members, usually for the purchase of real estate or homes.

Select one:
True

False

FINALS

This refers to putting money to work to start or expand a project  or to purchase an asset or
interest where those funds are then put to work, with the goal to income and increased
value over time.
Select one:
a.
Stocks

b.
Portfolio

c.
Investing

d.
Investment
The class of stock which has a claim on assets before common stock is known as
Select one:
a.
treasury stock

b.
common stock

c.
preferred stock

d.
no-par value stoc
These are assets held by an entity for accretion of wealth through distribution such as
interest, royalties, dividends and rentals, for capital appreciation of for other benefits to the
investing entity such as those obtained through trading relationships.

Select one:
a.
Investment

b.
Stocks

c.
Investing

d.
Portfolio
  First statement: The borrower is the bond holder.
Second statement:    The lender is the bond issuer.

Select one:
a.
Both statements are false
 b.
Only first statement is true

c.
Only second statement is true

d.
Both statements are true
It refers to the amount of money for investing for a particular purpose.

Select one:
a.
stocks

b.
petty cash fund

c.
investment fund

d.
bonds
First Statement:  Investing involves the purchase of assets with the intent of holding them
for the long term.
Second Statement: Speculation involves attempting to capitalize on market inefficiencies
for short-term profit.

Select one:
a.
Both statements are false

b.
Only first statement is true

c.
Both statements are true

d.
Only second statement is true
Stocks are

Select one:
a.
annuities

b.
debt securities

c.
Dividends ??????

d.
equity securities
 First statement: Investing in government bonds means you are lending money to the
government.
Second statement: Investing in government bonds means that you are borrowing money
from the government

Select one:
a.
Both statements are false
b.
Both statements are true
c.
Only second statement is true
d.
Only first statement is true

The class of stock issued by all corporations and which represents the real equity account
capital is

Select one:
a.
treasury stock

b.
common stock

c.
preferred stock

d.
no-par value stock

First statement:  Fixed annuities are regulated by state insurance commissioners.

Second statement:  In variable annuity, the insurance company allows to direct annuity
payments to different investment options, usually mutual funds.
Select one:
a.
Only first statement is true
b.
Both statements are true

c.
Only second statement is true

d.
Both statements are false
The risk that the issuer may fail to make timely interest or principal payments and thus
default on its bonds is known as
Select one:
a.
liquidity risk

b.
credit risk

c.
call risk

d.
Inflation risk
The place where buyers and sellers meet to decide on the price to buy or sell equity
securities,usually with the assistance of a broker.
select one:

a.
stock market

b.
mortgage market

c.
bond market

d.
money market
If the corporation issued only one kind of stock, it should be

Select one:
a.
no-par value stock

b.
preferred stock

c.
treasury stock

d.
common stock

These are agreements to buy or sell a specific quantity of a commodity at a specified price
on a particular date in the future.

Select one:
a.
security futures contracts

b.
commodity futures contracts
 c.
annuities

d.
options
A company-sponsored retirement account that employees can contribute to

Select one:
a.
401(k) plan

b.
pension

c.
lump-sum

d.
101(k) plan
 First statement: The majority of investment fund assets belong to close-end mutual funds. 
Second statement:   Close-end funds are managed investment funds that issue a fixed
number of shares, and trade on an exchange.

Select one:
a.
Only second statement is true

b.
Both statements are true

c.
Both statements are false

d.
Only first statement is true
This refers to the risk that investors won’t find a market for the bond, potentially preventing
them from buying or selling when they want.
Select one:
a.
credit risk

b.
call risk

c.
liquidity risk

d.
inflation risk
This annuity combines features of securities and insurance products.

Select one:
a.
Annuity

b.
Fixed annuity

c.
Variable annuity

d.
Indexed annuity
A legally binding agreement between two parties to buy or sell a specific quantity of shares
of an individual stock or a narrow-based security index at a specified price, on a specified
date in the future.

Select one:
a.
security futures contracts

b.
annuities

c.
commodity futures contracts

d.
options
Bonds are

Select one:
a.
debt securities
b.
equity securities
c.
annuities

d.
dividends
A grouping of financial assets such as stocks, bonds, commodities, currencies and cash
equivalents, as well as their fund counterparts, including mutual, exchange-traded and
closed funds is called

Select one:
a.
Portfolio
b.
Leverage

c.
Investment

d.
Investing
These are some of the tools that professional analysts use to look at a company’s
fundamentals, except

Select one:
 a.
Times interest earned ratio

b.
. Dividend payout ratio

c.
Price to earnings ratio (P/E)

d.
Earnings per share (EPS)

Stocks that have earnings growing at a faster rate than the market average are called

Select one:
a.
Value stocks

b.
Income stocks

c.
Growth stocks

d.
Blue-chip stock
Category of stocks that pay dividends consistently

Select one:
a.

Growth stocks

b.
Income stocks

c.
Blue-chip stocks

d.
Value stocks
First statement: Common stockholders can attend at annual general meeting to cast vote
or use a proxy.
Second statement:  Non-cumulative preferred stock is preferred stock for which the right to
receive a basic dividend accumulates if the dividend is not paid.

Select one:
a.
Both statements are true

b.
Both statements are false

c.
Only second statement is true

d.
Only first statement is true
hese are shares in large, well-known companies with a solid history of growth. They
generally pay dividends.

Select one:
a.
Growth stocks

b.
Income stocks

c.
Blue-chip stocks

d.
Value stocks

This means that the data can be measured and stated in a numerical way.

Select one:
 a.
Quantitative fundamental analysis

b.
competitive analysi

c.
Comparative analysis

d.
Qualitative fundamental analysis
First statement:  Penny stocks do not pay dividends and are highly speculative
Second statement:  Corporations raise funds by selling preferred and common stock to
individuals; and other investors who are owners or shareholders in the firm.

Select one:
a.
Only second statement is true

b.
Both statements are true

c.
Only first statement is true

d.
Both statements are false
This is another ratio that compares the yearly dividend to a share price.

Select one:
a.
dividend yield

b.
divided
 c.
dividend payable

d.
dividend payout ratio
The following are the qualitative factors for stock analysis, except

Select one:
a.
Competitive analysis

b.
Corporate governance

c.
Cash flow statement

d.
Business model
Price to Book Ratio or P/B

Select one:
a.
is a ratio that looks at the current sales price of a company as a whole and then compares it
to the per-share earnings.

b.
defines the price to equity and compares the stock’s book value to its market price

c.
this gives the total return on equity

d.
 projects the one-year earnings and growth rate of a company’s stock price.
Shares in very small companies are sometimes called
Select one:
a.
micro-cap stocks

b.
penny stocks

c.
large-cap stocks

d.
mid-cap stocks
 The underlying assumption of fundamental analysis is that the price on the market does
not reflect the stock’s actual value. This is called  

Select one:
a.
extrinsic value

b.
assessed value

c.
market value

d.
intrinsic value
The very lowest priced stocks are known as

Select one:
a.
micro-cap stocks

b.
mid-cap stocks

c.
penny stocks
 d.
small-cap stocks
 This term refers to the market dealing with the resale and purchase of securities or other
titles to property or commodities.

Select one:
a.
money market

b.
auction market

c.
secondary market

d.
primary market

First statement: If the stock’s intrinsic or fair market value is higher than the current price
on the market, then the stock is said to be "undervalued".
Second statement: If the fair market value is lower than the price on the market, then it is
“overvalued".

Select one:
a.
Both statements are true

b.
Only first statement is true

c.
Both statements are false

d.
Only second statement is true
When securities are issued and offered by the corporation for the first time to the public,
buyers of such issues are referred to
Select one:
a.
money market

b.
primary market

c.
secondary market

d.
auction market
The data that relates to the quality or character of something, such as how well a company
is managed or whether a company has poor customer satisfaction ratings 

Select one:
a.
Quantitative fundamental analysis

b.
Competitive analysis

c.
Technical analysis

d.
Qualitative fundamental analysis
Projected Earnings Growth or PEG

Select one:
a.
projects the one-year earnings and growth rate of a company’s stock price.

b.
defines the price to equity and compares the stock’s “book” value to its market price
 c.
this gives the total return on equity

d.
 is a ratio that looks at the current sales price of a company as a whole and then compares it
to the per-share earnings.
Price to Earnings Ratio or P/E

Select one:
a.
defines the price to equity and compares the stock’s “book” value to its market price

b.
is a ratio that looks at the current sales price of a company as a whole and then compares it
to the per-share earnings.

c.
projects the one-year earnings and growth rate of a company’s stock price.

d.
 this gives the total return on equity
First statement: Understanding fundamental analysis is necessary to determine whether a
stock is valued correctly in the market.
Second statement: Analysts typically look at macro and micro factors to identify stocks that
are trading at higher and lower prices.

Select one:
a.
Only second statement is true

b.
Both statements are true
c.
Only first statement is true

d.
Both statements are false
It is used to measure the flow of volume of stocks in positives and negatives over a period
of time.

Select one:
a.
On-Balance Volume

b.
Simple moving average

c.
Relative strength index

d.
 Moving average convergence/ divergence
First statement:  Technical analysts believe that stock prices move in trends.
Second statement: Fundamental analysts usually look at the supply and demand for a
particular stock in the market and identify patterns.

Select one:
a.
Both statements are true

b.
Both statements are false

c.
Only first statement is true

d.
Only second statement is true
Other terms for government bonds are enumerated below, except

Select one:
a.
treasury bills tbills
 b.
treasury bonds

c.
treasury notes

d.
commercial paper
Fundamental analysts focus more on quantitative measures listed below, except

Select one:
a.
earnings

b.
expenses
c.
assets

d.
revenues
The security futures contract specifications include

Select one:
a.
contract size, contract month, and manner of settlement only

b.
contract size, contract month, last trading day and manner of settlement only

c.
contract size and contract month only

d.
contract , contract month and last trading day only
First statement:  When you invest in corporate bonds, it means that you are borrowing
money to a corporation.
Second statement: Corporate bonds are sometimes called long-term commercial papers.
Select one:
a.
Only second statement is true ????///

b.
Both statements are false xxxxxxxx

c.
Only first statement is true

d.
Both statements are true