How often Financial statements and ratios is asked

Where it was asked

• Oct/Nov 20144 marks
• May/Jun 20144 marks
• Oct/Nov 20136 marks

The questions

1. Oct/Nov 2014, Q441 mark · multiple choice

   This section covers Financial Management. Two discounting-factor tables are supplied for present-value and future-value calculations at 5%, 10% and 15% over periods 1 to 5 (present-value factors: year1 0.9524/0.9091/0.8696; year2 0.9070/0.8264/0.7561; year3 0.8638/0.7513/0.6575; year4 0.8227/0.6830/0.5718; year5 0.7835/0.6209/0.4972; future-value factors: year1 1.0500/1.1000/1.1500; year2 1.1025/1.2100/1.3225; year3 1.1576/1.3310/1.5209; year4 1.2155/1.4641/1.7490; year5 1.2763/1.6105/2.0114). Several questions are based on short scenarios: an extract from Case Study 10 on International Business Machines Corporation (IBM), a scenario about Sarah who owns a perfume shop, financial data for XYZ Enterprises for the year ended 2014, a scenario about Sarah's leather-shoe factory (Brinx) leasing a machine from Stretch Unlimited, and a scenario about Google. Referring to the same IBM extract, which one of the following ratio formulas would IBM have used to calculate the gross profit margin?

2. Oct/Nov 2014, Q461 mark · multiple choice

   This section covers Financial Management. Two discounting-factor tables are supplied for present-value and future-value calculations at 5%, 10% and 15% over periods 1 to 5 (present-value factors: year1 0.9524/0.9091/0.8696; year2 0.9070/0.8264/0.7561; year3 0.8638/0.7513/0.6575; year4 0.8227/0.6830/0.5718; year5 0.7835/0.6209/0.4972; future-value factors: year1 1.0500/1.1000/1.1500; year2 1.1025/1.2100/1.3225; year3 1.1576/1.3310/1.5209; year4 1.2155/1.4641/1.7490; year5 1.2763/1.6105/2.0114). Several questions are based on short scenarios: an extract from Case Study 10 on International Business Machines Corporation (IBM), a scenario about Sarah who owns a perfume shop, financial data for XYZ Enterprises for the year ended 2014, a scenario about Sarah's leather-shoe factory (Brinx) leasing a machine from Stretch Unlimited, and a scenario about Google. Consider the following four statements about financial ratios: (a) the acid test ratio should be used in combination with the current ratio; (b) the current ratio reflects the relationship between the value of current assets and the extent of current liabilities; (c) the liquidity ratio indicates the ability of the business to repay its debts from the sale of its assets upon liquidation; (d) the solvency ratio provides an indication of the ability of a business to meet its short-term obligations as they become due without curtailing or ceasing its normal activities. Which combination of these statements is correct?

3. Oct/Nov 2014, Q491 mark · multiple choice

   This section covers Financial Management. Two discounting-factor tables are supplied for present-value and future-value calculations at 5%, 10% and 15% over periods 1 to 5 (present-value factors: year1 0.9524/0.9091/0.8696; year2 0.9070/0.8264/0.7561; year3 0.8638/0.7513/0.6575; year4 0.8227/0.6830/0.5718; year5 0.7835/0.6209/0.4972; future-value factors: year1 1.0500/1.1000/1.1500; year2 1.1025/1.2100/1.3225; year3 1.1576/1.3310/1.5209; year4 1.2155/1.4641/1.7490; year5 1.2763/1.6105/2.0114). Several questions are based on short scenarios: an extract from Case Study 10 on International Business Machines Corporation (IBM), a scenario about Sarah who owns a perfume shop, financial data for XYZ Enterprises for the year ended 2014, a scenario about Sarah's leather-shoe factory (Brinx) leasing a machine from Stretch Unlimited, and a scenario about Google. Match each element in Column A with the corresponding element in Column B. Column A lists: (a) environmental factor, (b) task of financial management, (c) non-current asset, and (d) current asset. Column B lists: (i) machinery, (ii) incentive measures, (iii) debtors, and (iv) financial analysis. Select the option that correctly pairs each letter in Column A with its matching Roman numeral in Column B.

4. Oct/Nov 2014, Q541 mark · multiple choice

   This section covers Financial Management. Two discounting-factor tables are supplied for present-value and future-value calculations at 5%, 10% and 15% over periods 1 to 5 (present-value factors: year1 0.9524/0.9091/0.8696; year2 0.9070/0.8264/0.7561; year3 0.8638/0.7513/0.6575; year4 0.8227/0.6830/0.5718; year5 0.7835/0.6209/0.4972; future-value factors: year1 1.0500/1.1000/1.1500; year2 1.1025/1.2100/1.3225; year3 1.1576/1.3310/1.5209; year4 1.2155/1.4641/1.7490; year5 1.2763/1.6105/2.0114). Several questions are based on short scenarios: an extract from Case Study 10 on International Business Machines Corporation (IBM), a scenario about Sarah who owns a perfume shop, financial data for XYZ Enterprises for the year ended 2014, a scenario about Sarah's leather-shoe factory (Brinx) leasing a machine from Stretch Unlimited, and a scenario about Google. XYZ Enterprises reported the following financial data for the year ended 2014: current assets R1 300 000; current liabilities R550 000; inventory R551 000; cost of sales R3 480 000; total debt R993 000; total assets R1 797 000; owner's equity R895 000; gross profit R540 000; and sales R3 840 000. Using this data, calculate XYZ Enterprises' debt ratio, rounded up.

5. May/Jun 2014, Q451 mark · multiple choice

   This block covers the Financial Management section. Two reference tables of discounting factors are supplied for present values and future values, each listed for periods 1 to 5 at 5%, 10% and 15% interest. The present-value discounting factors are: period 1 - 0,9524 (5%), 0,9091 (10%), 0,8696 (15%); period 2 - 0,9070, 0,8264, 0,7561; period 3 - 0,8638, 0,7513, 0,6575; period 4 - 0,8227, 0,6830, 0,5718; period 5 - 0,7835, 0,6209, 0,4972. The future-value discounting factors are: period 1 - 1,0500, 1,1000, 1,1500; period 2 - 1,1025, 1,2100, 1,3225; period 3 - 1,1576, 1,3310, 1,5209; period 4 - 1,2155, 1,4641, 1,7490; period 5 - 1,2763, 1,6105, 2,0114. Candidates should use these tables where needed to answer the questions below. Read the extract from case study 10 on International Business Machines Corporation (IBM): in 1991 IBM's revenues approached $67 billion; although profits had dropped slightly from the 1984 peak of $6.5 billion, its common stock still commanded a price-earnings ratio of over 100. Four years later, in 1993, IBM was among the biggest loss-makers in corporate history, reporting a record $5.46 billion loss for the fourth quarter of 1992 (announced on 19 January 1993). Given that IBM noted revenue (income) of $67 billion in 1991, which formula would they have used to calculate this figure?