Day 51

Question 1

Under Title IV of SOX, what disclosures will be found in an issuers FS?

Answer 1

1. The use of Special Purpose Entities (SPE)
2. Reconciliations of pro forma FS
3. Relationships with subsidiary entities

Note: Only material AJEs are required to be presented on the FS
Immaterial AJEs are not required

MCQ-00241

Question 2

Equation: ROI

Answer 2

= Income / Investment Capital
OR
= Profit Margin × Investment Turnover

MCQ-04809

Question 3

Equation: Residual Income

Answer 3

= Net Income - Required Return

Required Return = Net Book Value (Equity) × Hurdle Rate

MCQ-04809

Question 4

Equation: Avg Inventory for EOQ

Answer 4

EOQ (Reorder Quantity) / 2
+
Safety Stock
= Avg. Inventory

MCQ-04193

Question 5

Equation: Inventory Turnover

Answer 5

= COGS / Avg. Inventory

MCQ-03891

Question 6

The project with the highest NPV =?

Answer 6

The most advantageous project to invest in
As long as the IRR is higher than the Required Rate of Return

MCQ-14824

Question 7

Equation: Reorder Point

Answer 7

= Safety Stock + (Lead Time × Sales During Lead Time)

MCQ-07795

Question 8

Explain: Buying British Pound call option

Answer 8

Call Options - allow,but not required, the purchaser of the call option to buy British Pounds for a specific rate at or before a specified time in the future

If the British Pound Price goes up the purchaser (importer) would exercise the call option, if the price goes down the purchaser would buy at market Rate

MCQ-05310

Question 9

Equation: For the High-Low Method

Answer 9

= ∆Total Costs / ∆Volume = Variable Cost per unit

MCQ-04642