C . The company installed a new inventory management system but experienced some operational

difficulties resulting in duplicate orders being placed with suppliers.

9 . Which of the following would best explain an increase in receivables turnover?

A . The company adopted new credit policies last year and began offering credit to customers with

weak credit histories.

B . Due to problems with an error in its old credit scoring system, the company had accumulated a

substantial amount of uncollectible accounts and wrote off a large amount of its receivables.

C . To match the terms offered by its closest competitor, the company adopted new payment terms

now requiring net payment within 30 days rather than 15 days, which had been its previous requirement.

10 . Brown Corporation had average days of sales outstanding of 19 days in the most recent fiscal year. Brown wants to improve its credit policies and collection practices and decrease its collection period in the next fiscal year to match the industry average of 15 days. Credit sales in the most recent fiscal year were $300 million, and Brown expects credit sales to increase to $390 million in the next fiscal year. To achieve Brown's goal of decreasing the collection period, the change in the average accounts receivable balance that must occur is closest to: A . +$0.41 million. B . -$0.41 million. C . -$1.22 million.

11 . An analyst observes the following data for two companies:

about the two companies' ability to pay their current and long- term obligations?

Which of the following choices best describes reasonable conclusions that the analyst might make A . Company A's current ratio of 4.0 indicates it is more liquid than Company B, whose current ratio is only l.2, but Company B is more solvent, as indicated by its lower debt-to-equity ratio.

B . Company A's current ratio of 0.25 indicates it is less liquid than Company B, whose current ratio is 0.83, and Company A is also less solvent, as indicated by a debt- to-equity ratio of 200 percent compared with Company B's debt- to-equity ratio of only 30 percent.

C . Company A's current ratio of 4.0 indicates it is more liquid than Company B, whose current ratio is only l.2, and Company A is also more solvent, as indicated by a debt-to-equity ratio of 200 percent compared with Company B's debt- to-equity ratio of only 30 percent.

The following information relates to Questions 12-15

The data in Exhibit 1 appear in the five-year summary of a major international company. A business combination with another major manufacturer took place in FY13.

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12 . The company's total assets at year-end FY9 were GBP 3,500 million. which of the following

choices best describes reasonable conclusions an analyst might make about the company's efficiency?

A . Comparing FY14 with FYl0, the company's efficiency improved, as indicated by a total asset

turnover ratio of 0.86 compared with 0.64.

B . Comparing FYl4 with FY10, the company's efficiency deteriorated, as indicated by its current

ratio.

C . Comparing FY14 with FYl0, the company's efficiency deteriorated due to asset growth faster

than turnover revenue growth.

13 . Which of the following choices best describes reasonable conclusions an analyst might make about

the company's solvency?

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A . Comparing FYl4 with FYI0, the company's solvency improved, as indicated by an increase in

its debt-to-assets ratio from 0.14 to 0.27.

B . Comparing FYl4 with FYl0,the company's solvency deteriorated, as indicated by a decrease in

interest coverage from 10.6 to 8.4.

C . Comparing FY14 with FY10, the company's solvency improved, as indicated by the growth in

its profits to GBP 645 million.

14 . Which of the following choices best describes reasonable conclusions an analyst might make about the company's liquidity?

A . Comparing FYl4 with FYl0, the company's liquidity improved, as indicated by an increase in

its debt-to-assets ratio from 0.14 to 0.27.

B . Comparing FYl4 with FYIO, the company's liquidity deteriorated, as indicated by a decrease

in interest coverage from 10.6 to 8.4.

C . Comparing FYl4 with FYl0, the company's liquidity improved, as indicated by an increase in

its current ratio from 0.71 to 0.75.

15 . Which of the following choices best describes reasonable conclusions an analyst might make about the company's profitability?

A . Comparing FY14 with FY10, the company's profitability improved, as indicated by an

increase in its debt-to-assets ratio from 0.14 to 0.27.

B . Comparing FY14 with FYl0, the company's profitability deteriorated, as indicated by a

decrease in its net profit margin from 11.0 percent to 5.7 percent.

C . Comparing FY14 with FYl0, the company's profitability improved, as indicated by the growth

in its shareholders' equity to GBP 6,165 million.

16 . Assuming no changes in other variables, which of the following would decrease ROA? A . A decrease in the effective tax rate B . A decrease in interest expense. C . An increase in average assets.

17 . An analyst compiles the following data for a company:

FY15, the company's:

A . net profit margin and financial leverage have decreased. B . net profit margin and financial leverage have increased.

C . net profit margin has decreased but its financial leverage has increased 18 . A decomposition of ROE For Integra SA is as follows:

Based only on the information above, the most appropriate conclusion is that, over the period FY13 to

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this ROE decomposition?

A . Profitability and the liquidity position both improved in FY12.

Which of the following choices best describes reasonable conclusions an analyst might make based on

B . 'The higher average tax rate in FY12 offset the improvement in profitability leaving ROE

unchanged.

C . The higher average tax rate in FY12 offset the improvement in efficiency, leaving ROE

unchanged.

19 . A decomposition of ROE for Company A and Company B is as follows:

An analyst is most likely to conclude that:

A . Company A's ROE is higher than Company B's in FY15, and one explanation consistent with

the data is that Company A may have purchased new, more efficient equipment.

B . Company A's ROE is higher than Company B's in FY15, and one explanation consistent with

the data is that Company A has made a strategic shift to a product mix with higher profit margins.

C . The difference between the two companies' ROE in FYl5 is very small and Company A's ROE

remains similar to Company B's ROE mainly due to Company A increasing its financial leverage.

20 . What does the P/E ratio measure?

A . The \ B . 7rhe relationship between dividends and market prices. C . The earnings for one common share of stock.

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