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Introdution
  • Payables Turnover = Purchases / Average Trade Payables
 
Question: Which of the following ratios cannot be directly observed in the common size statements?
  1. Inventory turnover
     
  2. Profit Margin
     
  3. Debt / Asset Ratio
Ans: Inventory turnover ratio
 
  • Inventory Turnover = COGS / Average Inventory
     
  • Receivables Turnover = Credit Sales / Average Receivables
     
  • Cash Management

    Bond Equivalent Yield = [(Face value – price)/ price] * (365/days to maturity)
Question: Which of the following is least likely to be bond with modifying maturity?
  1. Callable bonds
     
  2. Putable bonds
     
  3. Treasury bonds
Ans: Treasury bonds
 
Money Market Yield = [(Face value – price)/ price] * (360/day to maturity)
% Discount = (Face value – Price) / Face value

Question : A bond matures in one year and pays interest at maturity. If the face value of the bond and coupon rate is $500,000 & 9% respectively, and the required rate of return is 8%, what should be the present value?
  • >$500,000
     
  • <$500,000
     
  • $500,000
Ans: >$500,000




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