A.M.Y.

Company is preparing its common-size financial statements and revealed the

                                                             (in thousands of pesos)

Accounts receivable                                 20,000

Inventory                                                  40,000

Total current assets                                  70,000

Total assets                                             168,000  

Bonds payable                                          42,000

Retained earnings                                     14,000

Sales revenue                                          150,000

Cost of goods sold                                  124,000

Income tax expense                                  22,000

 How’s would A.M.Y’s retained earnings appear on a common-size balance sheet?

Select one:
a.
20.0%
b.
8.3%
c.
9.4%
d.
33.3%
 First statement: Investment banks do not take deposits.

Second statement: In CAMEL rating system, banks that are given scores greater than
three are considered to be high-quality institutions.

Select one:
a.
Both statements are false
b.
Only second statement is true
c.
Both statements are true
d.
Only first statement is true
 Insurance companies are financial institutions that

Select one:
a.
help individuals transfer risk of loss

b.
 extend loans for investment with the aim of earning profit.
c.
 perform the functions of accepting deposits from the general public
d.
assist individuals and institutions in buying and selling securities among available
investors.
Investment banks do not take deposits.

Select one:
True
False
 Examiners assess institutions' capital adequacy through

Select one:
a.
 looking at interest rate risk sensitivity, availability of assets that can easily be
converted to cash, dependence on short-term volatile financial resources and ALM
technical competence.
Answer: A

b.
assessing the company's growth, stability, valuation allowances, net interest margin,
net worth level and the quality of the company's existing assets.
c.
observing how lending to specific industries affects an institution.
d.
checking if institutions comply with regulations pertaining to risk-based net worth
requirement.

Index numbers would probably be most interested in which ratio?

Select one:
a.
Ratio analysis
b.
Vertical analysis
c.
Common-size statements
d.
Trend analysis
First statement: Assessing asset quality involves rating investment risk factors that
the company may face and comparing them with the company's capital earnings.

Second statement:  Asset quality covers an institutional loan's quality, which reflects

Select one:
a.
Only first statement is true
b.
Both statements are false
c.
Both statements are true
d.
Only second statement is true
 Examiners should determine earnings by

Select one:
a.
observing how lending to specific industries affects an institution.
b.
assessing the company's growth, stability, valuation allowances, net interest margin,
net worth level and the quality of the company's existing assets.
c.
checking if institutions comply with regulations pertaining to risk-based net worth
requirement.
d.
looking at interest rate risk sensitivity, availability of assets that can easily be
converted to cash, dependence on short-term volatile financial resources.
To assess a company's liquidity, the examiners should
 

Select one:
a.
 assess the company's growth, stability, valuation allowances, net interest margin, net
worth level and the quality of the company's existing assets.
b.
 observe how lending to specific industries affects an institution.
c.
check if institutions comply with regulations pertaining to risk-based net worth
requirement.
d.
 look at interest rate risk sensitivity, availability of assets that can easily be converted
to cash, dependence on short-term volatile financial resources.
 The main reasons to use common-size analysis are enumerated below, except

     I.    to evaluate information from one period to the next within a company

     II.   to evaluate a company relative to its competitors.

     III.  to evaluate the trend situation 

Select one:
a.
I & III
b.
II
c.
I
d.
III
This is a company engaged in the business of dealing with financial and monetary
transactions such as deposits, loans, investments, and currency exchange.

Select one:
a.
Stock market
b.
Financial market
c.
Financial institution
d.
Capital market
An income statement showing only  component percentages is known as

Select one:
a.
 Condensed income statement
b.
Common pesos statement
c.
Common-size income statement
d.
Comparative income statement
 A financial statement analysis technique that shows changes in the amounts of
corresponding financial statement items over a period of time.

Select one:
a.
Vertical analysis
b.
Common-size statements
c.
Trend analysis
d.
Ratio Analysis
A.M.Y. Company is preparing its common-size financial statements and revealed the
following:

                                                        (in thousands of pesos)

Accounts receivable                               20,000

Inventory                                                40,000

Total current assets                                70,000

Total assets                                           168,000  

Bonds payable                                        42,000

Retained earnings                                  14,000

Sales revenue                                        150,000

Cost of goods sold                                124,000

Income tax expense                                22,000

 How would A.M.Y.’s  inventory appear on a common-size balance sheet?

Select one:
a.
65.3%
b.
57.15%

c.
11.9%
d.
 23.8%
In CAMEL rating system, banks that are given scores greater than three are
considered to be high-quality institutions.

Select one:
True
False
The financial institution that is responsible for the oversight and management of all
other banks is

Select one:
a.
Investment bank
b.
Commercial bank
c.
Credit union
d.
Central bank

 They are the users of funds

I. Lenders

II. Borrowers
III. Savers

IV. Investors

V. Intermediary

Select one:
a.
III & IV
b.
I & II
c.
II & IV
d.
III, IV & V

They are the suppliers of funds

I.  Lenders

II. Borrowers

III. Savers

IV. Investors

V. Intermediary

Select one:
a.
I & II
b.
1 & III
c.
I, II, & V
d.
I, II, III, & IV