Financial Management - Study Mode

[#516] An earning before interest, taxes, depreciation and amortization average multiple for publicly traded companies is classified as
Correct Answer

(A) entity multiple

Explanation

Solution: An earning before interest, taxes, depreciation and amortization average multiple for publicly traded companies is classified as entity multiple. Enterprise multiple, also known as the EV multiple, is a ratio used to determine the value of a company. The enterprise multiple looks at a firm in the way that a potential acquirer would by considering the company's debt.

[#517] The underwriter has to take up ________________.
Correct Answer

(B) the unsubscribed part of the agreed portion

Explanation

Solution: The underwriter has to take up the unsubscribed part of the agreed portion. The underwriter undertakes the guarantee for only part of the issue offered to the public and his liability is limited to the extent of unsubscribed portion of the issue underwritten by him.

[#518] Future value interest factor takes ____________.
Correct Answer

(A) Compounding rate

Explanation

Solution: Future value interest factor takes Compounding rate. Future value (FV) is the value of a current asset at a specified date in the future based on an assumed rate of growth.

[#519] Financial leverage measures ____________.
Correct Answer

(C) sensitivity of EPS with respect to % change in level of EBIT

Explanation

Solution: The Financial Leverage (FL) measures the relationship between the EBIT and the EPS and it reflects the effect of change in EBIT on the level of EPS. The FL measures the responsiveness of the EPS to a change in EBIT and is defined as the % change in EPS divided by the % change in EBIT.
Symbolically,
= Increase in EPS ¸EPS/Increase in EBIT¸EBIT

[#520] ___________ are financial assets.
Correct Answer

(D) A and C

Explanation

Solution: A financial asset is a liquid asset that gets its value from a contractual right or ownership claim. Cash, stocks, bonds, mutual funds, and bank deposits are all are examples of financial assets.