CFA Corporate Exam 2022 questions and answers

1. The most likely costs included in both the cost of inventory and property, plant, and equipment are: A. selling costs. B. storage costs. C. delivery costs. C. delivery costs. 1. 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. 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. 00:43 01:31 1. The three factor DuPont Analysis is comprised of a. Current Ratio, profit margin, debt ratio b. Receivable turnover, gross profit margin, debt-equity ratio c. Asset turnover, profit margin, financial leverage d. Fixed asset turnover, profit margin , financial leverage c. Asset turnover, profit margin, financial leverage 1. A company increasing its credit terms for customers from 1/10, net 30 to 1/10, net 60 will most likely experience: A. an increase in cash on hand. B. a higher level of uncollectible accounts. C. an increase in the average collection period. C. an increase in the average collection period. 2. Within the Dupont Analysis a. An increase in financial leverage is met with a decrease in the use of debt. b. An increase in financial leverage is met with an increase in the use of debt. c. An increase in financial leverage is met with a decrease in the ROE. d. An increase in financial leverage is met with an increase in the use of equity. b. An increase in financial leverage is met with an increase in the use of debt. 1. Suppose a company uses trade credit with the terms of 2/10, net 50. If the company pays its account on the 50th day, the effective borrowing cost of skipping the discount on day 10 is closest to: A. 14.9%. B. 15.0%. C. 20.2%. C. 20.2%. 3. In DuPont Analysis where the financial leverage has consistently increased over the past several years a. The ROE will be less than the ROA. b. The ROE will be equal to the ROA. c. Financial Leverage does not impact the ROE. d. The ROE will be higher than the ROA. d. The ROE will be higher than the ROA. 1. Which of the companies had the highest number of days of receivables for the year 20X1? A. Company A. B. Company B. C. Company C. B. Company B. 4. The current ROA of a firm is 13% and it has an Equity Multiplier of 3.0. The resulting ROE will be approximately a. 13% b. 39% c. 4.3% d. 25% b. 39% 1. Which of the companies has the lowest accounts receivable turnover in the year 20X2? A. Company A. B. Company B. C. Company D. B. Company B. 5. The ACME Company has current sales of $2,340,000 and Total Assets of $990,000. It also has earnings of $250,000, and Total Equity of $750,000. The current inventory is $124,000 and accounts payable is $98,000. a. The asset turnover and profit margin are 2.36 and 10.68% b. The ROE is 29.90% c. The asset turnover and profit margin are 2.10 and 10.68% d. The ROE is 35% a. The asset turnover and profit margin are 2.36 and 10.68% 1. The industry average receivables collection period: A. increased from 20X1 to 20X2. B. decreased from 20X1 to 20X2. C. did not change from 20X1 to 20X2. B. decreased from 20X1 to 20X2.