financial analysis Q$1.$ Multiple Choice Questions $(30$ Marks$/1$M Each$)$:

If there are no switching costs, then the industry has:

A$.$ High bargaining power of suppliers

B$.$ Low bargaining power of buyers

C$.$ High existing competition

D$.$ Low existing competition

The stage where you evaluate the financial health of the company from its statements is what stage of the

financial analysis?

A$.$ Prospective Analysis

B$.$ Business Analysis

C$.$ Strategy Analysis

D$.$ Ratio Analysis

Corporate strategy analysis consists of identifying?

A$.$ The economic factors which drive industry profitability.

B$.$ The optimal scope of activities of a firm

C$.$ The best competitive strategy, e$.$g$.,$ Cost Leadership or Differentiation

D$.$ The industry or the set of industry within which the firm may operates

Cost leadership strategy involves?

A$.$ Providing a product or service that is distinct in some important respect valued by the customer.

B$.$ Supplying a similar product to that of the competitors at a higher price

C$.$ Supplying a similar product to that of the competitors at a lower cost

D$.$ Supplying a product with superior quality

The firm's

determines how the firm positions itself in its environment to achieve a competitive

advantage?

A$.$ Economic environment

B$.$ Business strategy

C$.$ Porter's five forces

D$.$ Industry analysis

An industry such as legal services might have lower

because it relies heavily on relationships?

A$.$ Existing competition

B$.$ Threat of new entrants

C$.$ Bargaining power of buyers

D$.$ Bargaining power of suppliers

Which of the following is a factor to consider when analysing the bargaining power of buyers?

A$.$ Price sensitivity

B$.$ Direct bargaining power

C$.$ Concentration of competitors

D$.$ Output bargaining power The firm's vale is determined by its ability to carn a return on its capital, in excess of $...?$

A$.$ Cost of debt

B$.$ Cost of equity

C$.$ Cost of capital

D$.$ Cost of sales

Energy conservation technologies that allow customers to reduce their consumption of electricity and fossil

fuels is an example of

A$.$ Threat of new entrants

B$.$ Rivalry among existing firms

C$.$ Threat of substitute products

D$.$ Bargaining power of buyers

Regardless of the broad overview that the financial market function effieciently, the need for the financial

statement analysis can be justified by$?$

A$.$ The potentail mispricing of the indivdual secutrites by the investor

B$.$ The absnse of transaction cost

C$.$ The absence of "lemeon problem"

D$.$ Inability of the indivdual investors to undresatand the rpeorted financial numbers

Corprate managemnt can create value for the firms' investros when the return on its capital is$?$

A$.$ Higher than inflation

B$.$ Lower than the cost of debt

C$.$ Higher than the cost of capital

D$.$ Highet than the cost of sale

Assessing the degree of distortion in a firm's reported finacial sateement is part of

A$.$ Finacial analysis

B$.$ Accounting analysis

C$.$ Business stategey analysis

D$.$ Industy analysis

The process of evaluating the firm performance using ratios and cash flow analysis is$?$

A$.$ Prospective analysis

B$.$ Business strategy analysis

C$.$ Financial ratio analysis

D$.$ Operation business analysis

Industry choice, competitive positioning, and corporate strategy are strategic choices that determines...

A$.$ Firm's Profitability

B$.$ Firm's Success

C$.$ Firm's Competition

D$.$ Firm's Risk

Lemons problems arise in capital markets when?

A$.$ Managers are better informed about the value of their business ideas than investors

B$.$ Managers have an incentive to understate the value of their business ideas

C$.$ Managers and investors have conflicting interests

D$.$ A and C