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Last Updated: Sep 05, 2026
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| Section | Objectives |
|---|---|
| Topic 1: Financial Statement Analysis | - Analysis techniques
|
| Topic 2: Valuation Approaches and Methods | - Income, market, and asset-based approaches
|
| Topic 3: Qualitative and Industry Analysis | - Business and economic factors
|
| Topic 4: Business Valuation Fundamentals | - Core valuation principles
|
| Topic 5: Valuation Reporting and Standards | - Reporting requirements
|
Question 1
The analyst should keep in mind that (1) if earnings are adjusted from LIFO to FIFO and
(2)
if after-tax income or
after-tax cash flow is used as the appropriate
measure of economic income, then the adjustment should be:
A. net of the income tax effect
B. Ratio of the income tax effect
C. Gross of the income tax effect
D. Cost of the income tax effect
Question 2
are defined as the sum of the market value of total liabilities divide by the aggregate liquidation value of the preferred stock.
A. Liquidation Coverage ratio
B. Capitalization ratio
C. Fixed charge coverage
D. Pretax return on total capital
Question 3
Which of the following method is used in the asset-based approach to business valuation?
A. Both A and B
B. Neither A nor B
C. The individual revaluation of all of the company's assets and liabilities
D. The collective revaluation of all of the company's assets and liabilities
Question 4
The analyst should be curious about the proprietary products and services, especially:
A. Favorable supplier contracts
B. Benefits attributable to brand name, trademarks copyrights or patents
C. The unique characteristics
that generate a comparative
advantage over their competition
D. Intangible assets
Question 5
The primary impact on the value of a sinking fund preferred stock results from the fact that redemption creates a finite stream of income to the investor plus .
A. A negative value versus a theoretically infinite stream of income available to the non- sinking fund preferred stockholder.
B. A positive value versus a theoretically finite earning available to the non-sinking fund preferred stockholder.
C. A terminal value versus a theoretically infinite stream of income available to the non- sinking fund preferred stockholder.
D. A terminal value versus a theoretically finite stream of income available to the non-sinking fund preferred stockholder.
Solutions:
| Question 1 Answer: A | Question 2 Answer: A | Question 3 Answer: A | Question 4 Answer: C | Question 5 Answer: C |
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