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Qualitative Questions Series 86 questions and answers verified 2024
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Qualitative Questions Series 86 questions and answers verified 2024
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Qualitative Questions Series 86An analyst is discussing widget production with the plant manager at
Worldwide Widgets, an industry leader. What's the MOST important factor to
discuss with the plant manager? - correct answer ✔Supply chain bottlenecks
Kendall Corporation is contemplating an acquisition of Fulham Brothers Inc.
What is the BEST measurement as to whether the acquisition will create value
for shareholders? - correct answer ✔Whether the ROIC exceeds the WACC
Earnings before interest and taxes (EBIT) is a measure of: - correct answer
✔Earnings before interest and taxes (EBIT) is a measure of the cash available
to pay creditors. Free cash flow is based on net income and measures the
cash available to shareholders.
When attempting to value an initial public offering of securities, an analyst
would NOT use: - correct answer ✔Comparable transaction analysis
When attempting to value an initial public offering of securities, an analyst
would NOT use:When aT use:ttempting to value an initial public offering of
securities, an analyst would NO - correct answer ✔
What changes when a company pays a stock dividend? - correct answer
✔EPS
To BEST determine whether an acquisition is likely to be impactful, what
should a person look for in a company's financial statements? - correct
answer ✔Asset Utilization
, The Flanders Company has issued debt to finance the construction of a
factory. As construction begins, the price of the stock has remained
unchanged. Which of the following statements best describes the impact on
operating income and P/E? - correct answer ✔There will be no impact on
operating income or P/E
A company that uses GAAP will include which of the following choices as
expense items? - correct answer ✔Stock option expenses
Which of the following ratios is a key factor in the calculation of ROE? -
correct answer ✔Asset turnover ratio
If a company has investments which are classified as "available-for-sale" and
those securities have been sold, which of the following statements is TRUE? -
correct answer ✔The company will account for any realized gain or loss on
these investments by adjusting the income statement, but not the balance
sheet.
When the economy is nearing the peak of the economic cycle, which
companies will have the highest earnings momentum? - correct answer
✔Cyclicals
Consumer Durables
Which of the following choices will generally cause a manufacturing
company's stock price to rise? - correct answer ✔Insider Purcahses
A company is involved in an industry in which having high operating leverage
is a very important valuation metric. The company's capital structure consists
of 50% debt and 50% equity. Which of the following will have the GREATEST
impact on the company's stock valuation? - correct answer ✔Slowing sales
growth
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