EXAM
Exam Solution
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FMVA (CFI) 2026 A+ GRADE ASSURED COMPLETE SOLU
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TIONS AND VERIFIED ANSWERS (C4311) ga ga ga ga
QUESTION 1 ga
Net profit margin
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ANSWER
shows how much is earned for every dollar of sales revenue. Net profit margin = Net income / Sales
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QUESTION 2 ga
Tax ratio
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ANSWER
shows how well management manages tax. (Efficiency ratio) Tax ratio = Tax expense / Pre-tax income
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QUESTION 3 ga
Interest Coverage Ratio ga ga
ANSWER
shows how much income is available to service debt costs. (Leverage ratio) Interest coverage ratio = E
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BIT(DA) / Interest expenses
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QUESTION 4 ga
Current Ratio ga
ANSWER
measures the ability of a company to cover its obligations in the short term. (Liquidity ratio) Current ra
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tio = Current assets / Current liabilities
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, QUESTION 5 ga
Quick ratio / acid test ratio
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ANSWER
provides a more prudent measure of short-
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term liquidity recognizing that the inventory cannot always be readily converted into cash. (Liquidity ra
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tio) Quick ratio = (Current assets - Inventory) / Current liabilities
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QUESTION 6 ga
Asset turnover ratio
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ANSWER
hows how effective the company is in generating sales from its assets. (Efficiency ratio) Asset turnover
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ratio = Sales / Total (or net) assets
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QUESTION 7 ga
Inventory turnover ratio ga ga
ANSWER
shows how quickly a company sells its inventory. (Efficiency ratio) Inventory turnover ratio = Cost of s
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ales / Inventory
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QUESTION 8 ga
Inventory days ratio ga ga
ANSWER
ndicates the average number of days goods remain in inventory before being sold. (Efficiency ratio) Inv
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entory days ratio = (Inventory x 365) / Cost of sales
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QUESTION 9 ga
Accounts receivable turnover ratio ga ga ga
ANSWER
measures how effective the company's credit policies are. (Efficiency ratio) Accounts receivable turnove
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r ratio = Sales / Accounts receivable
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QUESTION 10 ga
Accounts receivable days ratio ga ga ga
Exam Solution
ga
FMVA (CFI) 2026 A+ GRADE ASSURED COMPLETE SOLU
ga ga ga ga ga ga ga
TIONS AND VERIFIED ANSWERS (C4311) ga ga ga ga
QUESTION 1 ga
Net profit margin
ga ga
ANSWER
shows how much is earned for every dollar of sales revenue. Net profit margin = Net income / Sales
ga ga ga ga ga ga ga ga ga ga ga ga ga ga ga ga ga ga
QUESTION 2 ga
Tax ratio
ga
ANSWER
shows how well management manages tax. (Efficiency ratio) Tax ratio = Tax expense / Pre-tax income
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QUESTION 3 ga
Interest Coverage Ratio ga ga
ANSWER
shows how much income is available to service debt costs. (Leverage ratio) Interest coverage ratio = E
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BIT(DA) / Interest expenses
ga ga ga
QUESTION 4 ga
Current Ratio ga
ANSWER
measures the ability of a company to cover its obligations in the short term. (Liquidity ratio) Current ra
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tio = Current assets / Current liabilities
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, QUESTION 5 ga
Quick ratio / acid test ratio
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ANSWER
provides a more prudent measure of short-
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term liquidity recognizing that the inventory cannot always be readily converted into cash. (Liquidity ra
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tio) Quick ratio = (Current assets - Inventory) / Current liabilities
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QUESTION 6 ga
Asset turnover ratio
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ANSWER
hows how effective the company is in generating sales from its assets. (Efficiency ratio) Asset turnover
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ratio = Sales / Total (or net) assets
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QUESTION 7 ga
Inventory turnover ratio ga ga
ANSWER
shows how quickly a company sells its inventory. (Efficiency ratio) Inventory turnover ratio = Cost of s
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ales / Inventory
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QUESTION 8 ga
Inventory days ratio ga ga
ANSWER
ndicates the average number of days goods remain in inventory before being sold. (Efficiency ratio) Inv
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entory days ratio = (Inventory x 365) / Cost of sales
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QUESTION 9 ga
Accounts receivable turnover ratio ga ga ga
ANSWER
measures how effective the company's credit policies are. (Efficiency ratio) Accounts receivable turnove
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r ratio = Sales / Accounts receivable
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QUESTION 10 ga
Accounts receivable days ratio ga ga ga
