Valucon Activitiesquiz PDF

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MODULE 6Methodologies on asset-based valuation are discounted cash flows or DCF analysis, comparable company analysis and economic value added. * 1 pointTrue FalseValuation should be kept confidential to allow the company to negotiate a better position for them to acquire opportunity. * 1 pointTrue ...

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MODULE 6 Methodologies on asset-based valuation are discounted cash flows or DCF analysis, comparable company analysis and economic value added. * 1 point True False Valuation should be kept confidential to allow the company to negotiate a better position for them to acquire opportunity. * 1 point True False In determining the value of equity, it is necessary to value the asset first. This method is known as asset-based valuation. * 1 point True False Green field investments are those that are already in going concern state, as most business are in the optimistic perspective that they will grow in the future. * 1 point True False The value of investment opportunities is highly dependent on the value that the asset will generate from now until the future. * 1 point True False Theoretically, in valuation since it is more on the economic benefits valuation to determine the asset value, the pertinent and anticipated outflow must be included. * 1 point True False Going concern business opportunities are those business that has a long term into infinite operational period. * 1 point True False Equity has been defined by the industry as transactions that would yield future economic benefits as a result of past transactions. *

1 point True False Discounted cash flows analysis is meticulous but more conservative method or approach that can be used to determine the asset value for it clearly demonstrate the movement of the transaction. * 1 point True False Brown field investment are those that started from scratch while green field investment are those opportunities that either partially or fully operational. * 1 point True False This represents the value of the company in perpetuity or in a going concern environment. * 1 point Salvage value. Infinity value. Perpetuity value. Terminal value. These are business opportunities which are those business that has a long-term into infinite operational period. * 1 point Going Concern Business Opportunities Stable Business Opportunities Strategic Business Opportunities Perpetual Business Opportunities These are the amounts of cash available for distribution to both debt and equity claim from the business or asset. * 1 point Investing Cash Flows. Financing Cash Flows. Operating Cash Flows. Net Cash Flows. There are two levels of net cash flows, these are: * 1 point net cash flows to the firm and net cash flows to equity. net cash flows to the firm and net cash flows to creditors. net cash flows to the creditors and net cash flows to equity. none of the above, since there are three levels of net cash flows.

This represents the amount of cash made available to the equity stockholders after deducting the net debt or the outstanding liabilities to the creditors less available cash balance of the company. * 1 point Net Cash Flows to the Firm Net Cash Flows to Creditors Net Cash Flows to Equity Operating Cash Flows These are investments which are already in the going concern state, as most business are in the optimistic perspective that they will grow in the future. * 1 point Brown Field Investment Green Field Investment Black Field Investment Blue Field Investment DCF Analysis is most applicable to use when the following are available, except * 1 point cash flow pricing multiples. new quantifiable information. reasonable appropriated cost of capital or required rate of return. validated operational and financial information. This has been defined by the industry as transactions that would yield future economic benefits as a result of past transactions. * 1 point Asset Net Assets Share of Stocks Equity This represents the cash flows which was described in the preceding paragraph. This is the amount made available to both debt and equity claims against the company. * 1 point Operating Cash Flows Net Cash Flows to the Firm Net Cash Flows to Equity Net Cash Flows to Creditors The beauty if GCBOs is that we already have a reference for their performance either on similar nature of business or from its historical performance. With this, the risk indicators can be identified easily and therefore can be quantified accordingly. The Committee of Sponsoring Organization of the Treadway Commission (COSO) suggest that risks management principles must be observed as well in doing business and determining its value. It was noted in their report that the benefits of having a sound Enterprise-wide Risk Management allows for the company as follows, except * 1 point

decrease the opportunities with risk being managed well. improve management and distribution of resources across the enterprise. facilitates the management and identification of the risk factors that affect the business. make the business more resilient to abrupt changes. Malaysia Inc. purchased a capital expenditure amounting to PHP 1,500 and reported revenue of PHP 125,000 and operating expenses is PHP 50,000. The company incurred PHP 500 for interest. If the depreciation is PHP 5,000, how much is the net cash flows? * 2 points PHP 75,000 PHP 52,150 PHP 56,150 PHP 57,650 Uranus Co. Ltd reported net income of PHP 2,750 while 8 years ago, net income was PHP 2,000 only. How much is the compounded annualized growth rate? * 2 points 4.65% 5.25% 5.65% 4.56% Green Tea Corp. reported the following information: Revenue - PHP 32,500; Operating Expenses - PHP 16,250. Included in the operating expense are salaries and wages of PHP 1,450, depreciation of PHP 500, and rentals of PHP 275. The interest expense incurred is PHP 200. How much is the EBITDA for the period? * 2 points PHP 14,025 PHP 16,750 PHP 16,550 PHP 16,250 The management accountant of Yza Belle Inc., has calculated their book value per share at PHP 6.25. If Yza Belle's shares will be sold using the average book to market ratio for the industry similar to the company of 0.68, the price per share would be at least * 2 points PHP 9.90 PHP 10.00 PHP 4.25 PHP 6.25 Leone Inc., a listed corporation, reported on its Statement of Financial Position total assets of PHP 85 Million. The company maintain its debt ratio of 70% and have outstanding capital stocks of PHP 1 Million. Given their performance and financial stability, their stocks were traded at PHP 30 per share. Based on the foregoing, the book to market ratio of Leone Inc., is * 2 points 0.85

0.90 0.95 1.00 Cornerstone Inc., reported revenue for the period amounting to PHP 75,200 and EBITDA Margin of 60%. How much is the operating expenses excluding depreciation? * 2 points PHP 0 PHP 45,120 PHP 30,080 PHP 75,200 Pluto Corp., a listed company, sells its share in the stock market at PHP 13.50 per share with EPS of PHP 2.50. Based on the foregoing, how much is the P/E Ratio? * 2 points 2.50 3.50 5.00 5.40 If Jupiter Inc.'s market value per share is PHP 275 Million, and the EPS it generated is PHP 12.50, what is the P/E Ratio? * 2 points PHP 12.50 PHP 20.00 PHP 27.50 PHP 32.80 275M / 12.50 = PHP22.00 Singapore Ltd., has reported PHP 125,000 revenue where their EBITDA Margin is 45%. If the taxes are 30% of the EBITDA and the capital expenditure was purchased at PHP 1,500, how much is the Net Cash Flows? * 2 points PHP 46,625 PHP 37,875 PHP 39,375 PHP 56,250 Sunflower Inc., provided the following information: EPS is PHP 25 while P/E Multiple is 2.0. How much is market value per share? * 2 points PHP 48.00 PHP 55.00 PHP 50.75 PHP 50.00

MODULE 7 (MANAGEMENT ACCOUNTANTS) Civil engineers are good candidate for financial modeler role given their ability to understand operational models and design long-term financial strategies. * 1 point True False Historical information may be generated from, but not limited to the following: audited financial statements, corporate disclosures, contracts, and peer information. * 1 point True False Financial Modelling is a sophisticated and confidential activity in a company or for an analyst. * 1 point True False Most of the companies hire financial modelers to assist the in determining the value of GCBOs or any opportunities. * 1 point True False Historical information must be made available before the financial model is to be constructed. * 1 point True False Financial Models are mathematical models designed to aid in coming up with a recommended decision and at the same time can be used to validate the assumptions made. * 1 point True False Information can also be considered as competitive advantage of a company or a person. * 1 point True False Value of the asset is an important representation f the value of the firm. * 1 point True False

Financial modelers normally are economists, financial managers, and accountants. * 1 point True False Valuation is a sensitive and meticulous task for every analyst and investors. * 1 point True False Peer information and other public information are also essential inputs to the financial model. * 1 point True False Peer information provides more context and even supports the risk identified or will be assumed in the valuation process. * 1 point True False Statement of Cash Flows illustrate how the company historically financing its operations and investments. * 1 point True False Statement of Changes in Stockholder's Equity provides the information on how much is the claim and dividend background of the company. * 1 point True False Contracts are formal agreements between parties. In valuing the GCBOs, it is important for the modeler to also know the existing contracts and the covenants. * 1 point True False The components of the audited financial statements enable the analyst or the financial modeler to assess the future of the company based on its past performance. * 1 point True False

Statement of income are used to determine the historical financial performance. * 1 point True False Statement of Financial Position is used to determine the (BOOK VALUE) market value of the assets and the disclosed stakes of the debt and equity financiers. * 1 point True False Audited financial statements are the most ideal reference for the (HISTORICAL) future performance of the company. * 1 point True False One of the most important components of the financial statements are the (NOTES) Cover Pages to the Financial Statements. It provides the summary of important disclosures that should be considered in the valuation. * 1 point True False In order to develop financial models, the following steps are needed to be observed. Which one is incorrect? * 1 point Step 4: Make Scenarios and Sensitivity Analysis Based on the Results Step 1: Gather Historical Information and References Step 2: Establish Drivers for Growth and Assumptions Step 3: Determine the Reasonable Cost of Capital Which of the following is a correct related to financial modelling? * 1 point Most of the companies hire financial modelers to assist them in determining the value of GCBOs or any opportunities. Operations managers are good candidates for this role given their ability to understand operational models and design long-term financial strategies.

Financial modelling is a sophisticated and non-confidential activity in a company or for an analyst. Most financial modelers do not have extensive financial acumen and vast knowledge and experience. These is the most ideal reference for the historical performance of the company. * 1 point Notes to Financial Statements Statement of Income Audited Financial Statements Statement of Financial Position This component of audited financial statements is used to determine the historical financial performance. * 1 point Notes to the Financial Statements Statement of Financial Position Statement of Changes in Stockholders' Equity Statement of Comprehensive Income In gathering historical information and references, which statement is not correct? * 1 point Statement of income are used to determine the historical financial performance. Audited financial statements are the most ideal reference for the historical performance of the company. Historical information may be generated from, but not limited to the following: audited financial statements, corporate disclosures, contracts, industry and market prospects and peer information. Historical must be made available before the financial model is to be constructed. This component of audited financial statements is used to illustrate the company historically financing its operations and investments. * 1 point Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Stockholders' Equity Statement of Cash Flows ___________________ provide more context for the future plans and strategies of the company. This will enable the analysts or the financial modelers to identify the risk about the GCBO and quantify them accordingly. * 1 point Corporate disclosures. Peer information. Notes to the financial statements. Market prospects. This component of audited financial statements is used to determine the book value of the assets and the disclosed stakes of debt and equity financiers. *

1 point Statement of Comprehensive Income Notes to the Financial Statements Statement of Changes in Stockholders' Equity Statement of Financial Position This component of audited financial statements provides the information on how much claim an dividend background of the company. * 1 point Statement of Changes in Stockholders' Equity Statement of Comprehensive Income Statement of Cash Flows Statement of Financial Position One of the most important components of the financial statements is the ___________________. It provides summary of important disclosure that should be considered in the valuation. * 1 point Statement of Changes in Stockholders' Equity Statement of Comprehensive Income Statement of Financial Position Notes to the Financial Statements Drivers for growth used in financial modelling are suggested to be those validated and is represented by authorities like government experts. Which government agency is not a source of these information? * 1 point Philippine Statistics Authority Bureau of Internal Revenue Bangko Sentral ng Pilipinas National Economic and Development Authority ___________________ provides more context and even supports the risks identified or will be assumed in the valuation process. This may be the other analysts, industry experts and other consultants. * 1 point Corporate disclosures. Notes to the financial statements. Peer information. Market prospects.

Collectively, the financial model must be able to filter the information that would be necessary for the valuation. What are the two characteristics of information that are considered very important in financial modelling? * 1 point

Timeliness and Availability. Timeliness and Reliability Reliability and Relevance Availability and Relevance ___________________ growth rate is factored in to serve as a growth driver for the demand of the product, particularly for the merchandising or manufacturing business. * 1 point Consumer Prince Index Population Gross National Product Inflation The usual growth indicators used in financial modelling are as follows, except * 1 point Population Inflation Consumer Price Index Gross National Product MODULE 8: ACTIVITY Liquidation value should not be used to value profitable or growing companies as this approach does not consider growth prospects of the business. * 1 point True False Liquidation value should be used for dying or losing companies where liquidation is imminent to check whether profits can still be realized upon sale of the assets owned. * 1 point True False According to the CFA Institute, liquidation value refers to the value of a company if it were dissolved and its assets are sold individually. * 1 point True False Liquidation value is the base price or the floor price for any firm valuation exercise. * 1 point True False

Liquidation value represents the net amount that can be gathered if the business is shut down and its assets are sold piecemeal. * 1 point True False Business failure is the most common reason why businesses close or liquidate. Early symptoms of business failure are low or negative returns. * 1 point True False (BUSINESS FAILURE) Divestment can be driven by different internal factors such as mismanagement, poor financial evaluation and decisions, failure to execute strategic plans, inadequate cash flow planning or failure to manage working capital. * 1 point True False A unique callout for liquidation value is if the firm is operating under a proprietorship or a partnership model. * 1 point True False Insolvency happens when a company cannot pay liabilities as they come due. * 1 point True False Bankruptcy is the most serious type of business failure as this happens when liabilities become greater than asset balance. * 1 point True False Once the contract with the government expires or scarce resource become fully depleted and no new site is prepared to support operation, this might signal potential liquidation and valuation should be based on liquidation value. * 1 point True False

External factors such as severe economic downturn, occurrence of natural calamities and pandemic, changing consumer preferences and adverse governmental regulations may also contribute to business failure. * 1 point True False Liquidation value is the most (CONSERVATIVE) appropriate valuation approach among all as it considers the realizable value of the asset if it is sold now based on current conditions. * 1 point True False Most corporations only have finite number of years to operate as stated in their Articles of Incorporation. This is also similar in the case of projects like joint ventures with finite life. * 1 point True False If corporate end of life is already certain, it is more appropriate to compute terminal value using (LIQUIDATION VALUE) going concern value. * 1 point True False These are situations when a company will most like consider liquidation value, except * 1 point Corporate End of Life Divestment Depletion of Scarce Resources Business Failures This represents the net amount that can be gathered if the business is shut down and its assets are sold piecemeal. * 1 point Bankruptcy value Going concern value Closing value Liquidation value Which statement is not correct about liquidation value? * 1 point In some texts, liquidation value is known as business closing value. Liquidation value may continue to erode based on the time frame available for liquidating assets.

Liquidation value refers to the value of a company if it were dissolved and its assets are sold individually. If liquidation value becomes higher compared against going concern value, this may signal Which of the following is not correct in relation to liquidation value? * 1 point Liquidation value must be used if the business continuity is dependent on current management that will not stay. If the nature of the business implies limited lifetime, the terminal value must be based on liquidation. All costs necessary to close the operations should also be factored in and deducted to arrive at the liquidation value. Non-operating assets should be valued by liquidation method as the market value reduced by costs of sale and taxes. Since they are not part of the firm's operating activities, it might be inappropriate to use the same going concern value technique used for business operations. If such result is higher than net present value of cash flows from operating the asset, the liquidation value should be used. If the liquidation value is below income approach valuation (based on going concern principle) and liquidation comes into consideration, liquidation value should be used.

Which of the following is incorrect statement related to the use of Liquidation Value in Investment Analysis? * 1 point If the company can be readily liquidated any time, market price per share should never be below book value per share if all reported assets in the balance sheet is accurate. When liquidation value is lower than market price of share, these corporate investors buy the shares at prevailing market price and sell the company at the higher liquidation value. Liquidation value method can also be used as benchmark in making investment decisions. For firms that experiencing decline or industry is consistently declining, prevailing share prices might be lower than liquidation value. Liquidation is done immediately especially if...