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F2 Advanced Financial Reporting Questions and Answers

Question 37

LM are just about to pay a dividend of 20 cents a share. Historically, dividends have grown at a rate of 5% each year.

The current share price is $3.05.

The cost of equity using the dividend valuation model is:

Options:

12.4%

11.9%

7.4%

6.9%

Question 38

Which of the following are limitations of financial statement figures for ratio analysis? Select the ALL that apply.

Options:

Only provides historic data

Only provides financial information

Limited information to identify trends over time

Provide only summarised information

Contains complicated information that needs to be summarised

Only provides forecast data

Question 39

Which of the following is NOT an example of an unconsolidated structured entity as defined in IFRS12 Disclosure of Interests in Other Entities?

Options:

A post-employment benefit plan

A securitisation vehicle

An asset-backed financing scheme

An investment fund

Question 40

Which of the following would limit the effectiveness of analysis performed on the operating profit margins of two separate entities with the same total revenue over a12 month period?

Options:

Different accounting estimates in respect of depreciation of property, plant and equipment.

Different approaches to allocating expenses to cost of sales, administration expenses and distribution costs.

Different interest rates on loan finance available to the entities.

Different pattern of monthly revenues caused by seasonality.

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F2 Advanced Financial Reporting Questions and Answers

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