100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Fina 470 Final Discussion Q's Post-Ch.7 (3) Practice Questions and Answers $9.99   Add to cart

Exam (elaborations)

Fina 470 Final Discussion Q's Post-Ch.7 (3) Practice Questions and Answers

 0 view  0 purchase
  • Course
  • 2024/2025
  • Institution
  • 2024/2025

Fina 470 Final Discussion Q's Post-Ch.7 (3) Practice Questions and Answers How is return on invested capital used as an internal management tool? - Ans:-these returns are made up of the results achieved by individual product lines and projects, and well managed companies exercise rigorous contr...

[Show more]

Preview 2 out of 6  pages

  • October 23, 2024
  • 6
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • 2024/2025
  • 2024/2025
avatar-seller
GraceAmelia
©GRACEAMELIA 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED

FIRST PUBLISH OCTOBER 2024




Fina 470 Final Discussion Q's Post-Ch.7
(3) Practice Questions and Answers


How is return on invested capital used as an internal management tool? - Ans:✔✔-these returns are

made up of the results achieved by individual product lines and projects, and well managed companies

exercise rigorous control over the returns achieved by each of its profit centers, and it rewards the

managers on the basis of such results. When evaluating new investments in assets or projects, mgmt will

compute the estimated returns it expects to achieve and use these estimates as a basis for its decision


Why is return on invested capital one of the most relevant measures of company performance? How do

we use this measure in our analysis of financial statements? - Ans:✔✔-profit generation is the first and

foremost purpose of a company. the effectiveness of operating performance determines the ability of

the company to survive financially, to attract suppliers of funds, and to reward them adequately. Return

on invested capital is the prime measure of company performance. analysts use it as an indicator of

managerial effectiveness and/or a measure of the company's ability to earn a satisfactory return on

investment


Why is interest expense ignored when computing return on net operating assets (RNOA)? - Ans:✔✔-the

exclusion of interest from income deductions is due to its being regarded as a payment for the use of




Page 1/6

, ©GRACEAMELIA 2024/2025 ACADEMIC YEAR. ALL RIGHTS RESERVED

FIRST PUBLISH OCTOBER 2024




money from the suppliers of debt capital. If the investment base is defined as Net operating assets, than

Net Operating Profit After Tax (NOPAT) is used


Why is liquidity important in analysis of financial statements? Explain its importance from the view of

more than one type of user - Ans:✔✔-liquidity is an indicator of an entity's ability to meet its current

obligations. an entity in a weak short-term liquidity position will have difficulty in meeting short-term

obligations. Viewpoints:


1. Equity Investor - in this case, the company is likely unable to avail itself of favorable discounts and to

take advantage of profitable business opportunities, and could even mean loss of control an eventual

partial/total loss of capital investment


2. Creditors - in this case, delay in collection of interest and principle due would be expected and there is

a possibility of the partial or total loss of the amounts due to them


What is window-dressing of current assets and liabilities? How can we recognize whether financial

statements are window-dressed? - Ans:✔✔-"window-dressing" refers the the adjustment of year-end

account balances of current assets and liabilities to show a more favorable current ration than is

otherwise warranted.


The analyst should go beyond year-end reported amounts and try to obtain as many interim readings of

the current ratio as possible.




Page 2/6

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller GraceAmelia. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $9.99. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

62890 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 14 years now

Start selling
$9.99
  • (0)
  Add to cart