Multiple choice Ratio analysis

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Quick exercises – Ratio Analysis & Accounting Based Indicators 1 ACCOUNTING, FINANCE AND CONTROL 2018-2019 QUICK EXERCISES – RATIO ANALYSIS & ACCOUNTING BASED INDICATORS For each question, select the correct answer (only 1 answer is correct) 1. Accounting-based indicators:  Are always in the form of ratio indicators;  Can be indicators about time, quality or productivity;  Are based on financial statements;  None of the above. 2. Accounting-based indicators:  Trace specific responsibilities well at all levels in the organizations (even for operational units);  Have a good measurability and long-term orientation;  Tend to favour short-term oriented actions if compared to Enterprise Value;  None of the above. 3. The Residual Income (RI) compared to ROI:  Is affected by the so-called “Denominator Management” issue;  Is calculated taking explicitly into account the cost of capital;  Is less aligned with Enterprise Value and can lead to maximizing cash;  Is less aligned with Enterprise Value thus leading to fewer profits. 4. According to the Financial Leverage formula:  To increase ROE, a company should always try to increase D/E;  If ROI - r < 0 and D increases, ROE increases;  The capital structure of the company has an amplifying effect;  None of the above. Quick exercises – Ratio Analysis & Accounting Based Indicators 2 5. Which of the following sentences on Reclassification is TRUE?  Balance Sheet Reclassification has the goal of highlighting, among the others, the “Value Added”;  Income Statement Reclassification has the purpose of highlighting, among the others, the Net Working Capital;  Balance Sheet Reclassification has the purpose of highlighting, among the others, the Net Working Capital (Operating Working Capital);  None of the above. 6. If…