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1、Level 2 Study Session 09 Equity Investments Industry and Company Analysis160 questionsLevel 2: Study Session 09: Equity Investments: Industry and Company Analysis160 questions. Introduction by the Author : Hi there, CFA fellows, here you are . You see , it doesnt need to be an expensive prepcourse t
2、o get first class preparation for the CFA exams. The following questions are original CFA AIMR questions and not just composed by prepcourse providers. They all come with a clear answer. In order to understand why the questions are commented by ;answer is correct / incorrect; itis important to know
3、that all questions have automatically been responded with the first (andonly the first ) answer. Your CFA-aficionado cfa- cfa-aficionadoflashmail4 And now , here we go . Acme, Incorporated is a small manufacturing firm. The firms income statement indicates acost of goods sold amount of $150,000. The
4、 average balance sheet shows an averageaccounts payable amount of $15,000. What is Acmes average days payable outstanding? * 30 days * 36.5 days * 52.7 days * 10 days * 28.4 daysThat answer is incorrect.Correct answer:36.5 days The payables turnover ratio is cost of goods sold (COGS) divided by aver
5、age accountspayable. In this case $150,000 / $15,000 = 10.0. To convert this into average days payableoutstanding, divide 365 by 10.0. 365 / 10.0 = 36.5 days. There are several factors that influence an industrys pricing patterns. Which factor isdescribed as a firms ability to differentiate its prod
6、uct over varying market segments, andthus charge different prices? * Product segmentation * Price volatility of key supply inputs * Industry concentration * Ease of industry entryThat answer is correct! There are several factors that influence an industrys pricing practices including productsegmenta
7、tion, industry concentration, ease of entry, and price volatility of key inputs. Productsegmentation refers to a firms ability to differentiate its product across varying marketsegments, and charging differential prices. A cross sectional analysis is one where: * The firms ratios are tested to see i
8、f they meet certain econometric thresholds * A firms ratios are standardized which is completed by dividing them into either total assetsor total sales * A firms ratios are compared against an average of all firms in the economy * A firms ratios are compared to its own ratios from previous periods *
9、 A firms ratios are compared to other firms in the industryThat answer is incorrect.Correct answer:A firms ratios are compared to other firms in the industry A time series analysis is completed by contrasting a firms ratios with its own historical ratios.Cross sectional analysis is when the ratios o
10、f similar firms are compared. Industries typically go through life cycle phases. Which of the following phases ischaracterized by a period when a product or service is established? During this period theindustry growth may be faster than the economy in general and the proper execution of astrategy w
11、ill lead to accelerating sales and earnings. * Decline phase * Pioneer phase * Maturity phase * Growth phaseThat answer is incorrect.Correct answer:Growth phase The four typical phases that an industry will go through include the pioneer phase, growthphase, mature phase, and decline phase. During th
12、e growth phase, proper execution of awell-conceived strategy will lead to accelerating sales and earnings. Industry growth duringthis period may be faster than the economy as a whole and growth companies in the industrymay prosper in all stages of the business cycle. Return on equity equals: * (Net
13、profit margin)(Total asset turnover)(Financial leverage multiplier)(1 + tax rate) * (Net profit margin)(Total asset turnover)(Interest expense rate)(1 - tax rate) * (Net profit margin)(Total asset turnover)(Interest expense rate) * (Operating profit margin)(Total asset turnover)-(Interest expense ra
14、te)(Financial leveragemultiplier)(Tax retention rate) * (Net profit margin)(Total asset turnover)(Financial leverage multiplier)(1 - tax rate)That answer is incorrect.Correct answer:(Operating profit margin)(Total asset turnover)-(Interest expense rate)(Financial leveragemultiplier)(Tax retention ra
15、te) The 5 component duPont analysis is: (Operating profit margin)(Total asset turnover)-(Interest expense rate)(Financial leverage multiplier)(Tax retention rate). The quick ratio for Acme Inc., is 1.3 times. If inventory is purchased with cash the quick ratiowill change if which of the following ma
16、nners? * Not enough information * Remain unchanged * Increase * DecreaseThat answer is incorrect.Correct answer:Decrease The quick ratio equals cash, marketable securities, plus receivables divided by currentliabilities. Since cash is included in the quick ratio while inventory is not, the purchase ofinventory with cash will decrease the quick ratio. Consider the following information for firm A
