Part 2 mock 1 Questions and Answers

Mock Exam #1 – CMA Part 2 Question 1: Birch Corporation had income available to common shareholders for the year of $101,504 and a simple capital structure. At the beginning of the year, there were 24,000 shares outstanding. On March 1, 5,400 new shares were issued for cash. On July 1, 6,600 new shares were issued for cash. On December 1, the company reacquired 960 Treasury shares. Basic Earnings Per Share, rounded to the nearest cent, were a) $3.20 b) $3.45 c) $3.26 d) $2.90 Question 2: Which of the following ratios should be used in evaluating the effectiveness with which the company uses its assets? Receivables Turnover Dividend Payout Ratio a) No No b) Yes Yes c) Yes No d) No Yes Question 3: Are the following ratios useful in assessing the liquidity position of a company? Current Return on Ratio Shareholders' Equity a) No Yes b) No No c) Yes No d) Yes Yes Question 4: In a comparison of 20X9 with 20X8, Neir Co.'s inventory turnover ratio increased substantially, although sales and inventory amounts were essentially unchanged. Which of the following statements explains the increased inventory turnover ratio? a) Accounts receivable turnover increased. b) Gross profit percentage decreased. c) Total asset turnover increased. d) Cost of goods sold decreased. Note: Present Value tables are provided on the final pages of this exam. Mock Exam #1 – CMA Part 2 Question 5: A useful tool in financial statement analysis is the common-size financial statement. What does this tool enable the financial analyst to do? a) Determine which companies in the same industry are at approximately the same stage of development. b) Evaluate financial statements of companies within a given industry of approximately the same value. c) Ascertain the relative potential of companies of similar size in different industries. d) Compare the mix of assets, liabilities, capital, revenue, and expenses within a company over time or between companies within a given industry without respect to relative size.