D366-PA TEST AND EXTRA EXAM
QUESTIONS WITH COMPLETE
SOLUTIONS
, A financial analyst is analyzing the financial statements of a manufacturing company
that provides five-year warranties for its products.
What should the financial analyst be aware of when analyzing warranties? -
ANSWERSThese are obligations with estimated payment dates and amounts.
What should a financial analyst know when analyzing a company's asset quality index
(AQI)? - ANSWERSThis index does not consider current assets, property, plant, and
equipment, and investments in securities.
A financial analyst analyzing the income statement of an electric vehicle manufacturing
company noticed a restructuring credit in the income from the continuing operations
section.
What does this indicate about the company? - ANSWERSThe company has recorded
large restructuring charges in the earlier years.
A company's asset quality index (AQI) has doubled this year. What does this increase in
AQI suggest? - ANSWERSThe company has drastically increased its net working
capital.
A financial analyst analyzes the annual report of a company that borrows funds from a
special purpose entity (SPE) by transferring its accounts receivables to SPE to fund its
working capital requirements.
When should the financial analyst consider the transferred accounts receivables as a
crucial element in understanding the company's financial position? - ANSWERSWhen
the transfer of the accounts receivables is considered a loan
A financial analyst is estimating the future profitability of a company. The analyst has
decided to exclude the gain on the sale of equipment for the analysis.
Which point should the analyst consider while making the adjustment for the analysis? -
ANSWERSThe analyst should also remove the tax effect of the gain on the sale of
equipment as this item is reported on a pretax basis.
A financial analyst is currently analyzing the income statement of a company for
evaluation of earnings persistence and forecasting future profitability. The analyst has
decided to include the fair value gains and losses on investment securities deemed
available for sale for the analysis.
QUESTIONS WITH COMPLETE
SOLUTIONS
, A financial analyst is analyzing the financial statements of a manufacturing company
that provides five-year warranties for its products.
What should the financial analyst be aware of when analyzing warranties? -
ANSWERSThese are obligations with estimated payment dates and amounts.
What should a financial analyst know when analyzing a company's asset quality index
(AQI)? - ANSWERSThis index does not consider current assets, property, plant, and
equipment, and investments in securities.
A financial analyst analyzing the income statement of an electric vehicle manufacturing
company noticed a restructuring credit in the income from the continuing operations
section.
What does this indicate about the company? - ANSWERSThe company has recorded
large restructuring charges in the earlier years.
A company's asset quality index (AQI) has doubled this year. What does this increase in
AQI suggest? - ANSWERSThe company has drastically increased its net working
capital.
A financial analyst analyzes the annual report of a company that borrows funds from a
special purpose entity (SPE) by transferring its accounts receivables to SPE to fund its
working capital requirements.
When should the financial analyst consider the transferred accounts receivables as a
crucial element in understanding the company's financial position? - ANSWERSWhen
the transfer of the accounts receivables is considered a loan
A financial analyst is estimating the future profitability of a company. The analyst has
decided to exclude the gain on the sale of equipment for the analysis.
Which point should the analyst consider while making the adjustment for the analysis? -
ANSWERSThe analyst should also remove the tax effect of the gain on the sale of
equipment as this item is reported on a pretax basis.
A financial analyst is currently analyzing the income statement of a company for
evaluation of earnings persistence and forecasting future profitability. The analyst has
decided to include the fair value gains and losses on investment securities deemed
available for sale for the analysis.
