Unlock the secrets to mastering financial analysis with our comprehensive AFA Quiz! This document is designed specifically for business and management students seeking to deepen their understanding of financial principles and enhance their exam preparation. It covers key topics including company fi...
Circle the letter of the Answer that corresponds to the displayed Question.
1
Question: what influences the way that the company is financed?
a) its profitability and its risk - and consequently affects the value of its shares
b) 1. income analysis - of different sources of income, composition of income 2. expenditure analysis -
composition & evolution, study of discretionary of expenses, classification into fixed, variable and
break-even analysis
c) 1. unit sales price 2. number of units sold 3. unit cost of sales
d) sales volume that make operating result equal to 0, and where it begins to become positive - greater
it is, greater risk that sales can't reach profits - rest costs be covered by gross margin (not enough, can't
fund future expenses & repay capital)
Correct Answer: its profitability and its risk - and consequently affects the value of its shares
Explanation: The way a company is financed depends on its profitability and risk profile, which
directly impacts the value of its shares.
2
Question: when is the result of a higher quality?
a) 1. permanent capital = must obtain necessary liquidity at a reasonable level of risk 2. indebtedness =
convenient to favour highest possible profitability, within a reasonable level of risk
b) - when conservative criteria are applied - has sufficient provisions and risk coverage (discretionary
expenses) - considered that greater variability of benefits, lowers the quality
c) uncertainty vs sales forecasts = sales change = operating income varies = need to determine volume
of sales necessary for assets to generate profits (profitability/break-even point), and analyse the
sensitivity of operating income with sales (leverage)
d) 1. costs aren't clear to split 2. variable costs assumed proportional to sales 3. fixed costs within
margins & change by a management decisions 4. sales unit prices & composition are constant 5. factor
prices don't change 6. no inventory variations
Correct Answer: when conservative criteria are applied - has sufficient provisions and risk coverage
(discretionary expenses) - considered that greater variability of benefits, lowers the quality
Explanation: A higher quality result is achieved when conservative criteria are applied, ensuring
sufficient risk coverage and reducing variability.
3
Question: what do variations of gross margin depend on?
a) 1. unit sales price 2. number of units sold 3. unit cost of sales
b) 1. is it adequate and of quality? 2. what elements are the most reliable to make forecasts? 3. degree
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