Institute of Chartered Financial Analysts of India (ICFAI) University 2006 Certification Finance Security Analysis-I - Question Paper

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10.
The cash earning per share for Anandam Ceramics Ltd. is 12. The net sales and the depreciation are Rs.1000 crores and Rs.20 crores respectively. The net profit margin for the company is 10%. The earning per share for the company is

(a) Rs.6.00 (b) Rs.7.50 (c) Rs.10.00 (d) Rs.12.50 (e) Rs.15.00.
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11.
If the net income is understated by Rs.22,000, Purchases are overstated by Rs. 8,000 and the closing inventory is understated by Rs. 12,000, the beginning inventory will

(a) Be understated by Rs.2,000 (b) Be overstated by Rs.18,000

(c) Be understated by Rs.26,000 (d) Be overstated by Rs.2,000

(e) Be overstated by Rs.4,000.
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12.
Which of the subsequent statements is/are actual with respect to Lease Accounting?

I. The generally accepted accounting principles related to lease accounting require the lessee acquiring the use of a financial lease to capitalize the asset and create a corresponding liability equal to the fair value of the leased property or the current value of the minimum lease payments.

II. The rentals paid by the lessee must be apportioned ranging from the finance charge and the reduction of the outstanding liability and the annual finance charges must be debited to the revenue account over the leased period.

III. In an operating lease, the annual rentals must be charged off as operating expenses to the revenue account.

(a) Only (II) above (b) Only (III) above

(c) Both (I) and (III) above (d) Both (II) and (III) above

(e) All (I), (II) and (III) above.
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13.
Which of the subsequent statements is false with respect to the two-stage dividend discount model?

(a) It is difficult to specify the supernormal growth period with precision

(b) The model suffers with the limitation of the change of high supernormal growth to a lower stable growth rate at the end of the supernormal growth period

Earning:   Approval pending.