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F2 – Advanced Financial Reporting

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Showing 7–9 of 15 questions

Question 7

The yield to maturity of a redeemable bond is calculated as the internal rate of return of the relevant cash flows associated with the bond.

Which TWO of the following are considered relevant cash flows in this calculation?

Select all that apply, then click Submit answer.

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    The annual interest payments net of tax relief.
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    The redemption value of the bond at the date of redemption.
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    The market value of the bond now.
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    The nominal value of the bond now.
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    The value of the conversion premium on conversion to equity shares.
Question 8

Which THREE of the following actions should improve the cash position of an entity?

Select all that apply, then click Submit answer.

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    Substituting a bonus issue for the final dividend.
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    Selling non current assets and leasing them back under operating leases.
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    Implementing an efficient inventory ordering system.
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    Revaluing all non-current assets.
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    Revising the depreciation policy of non-current assets.
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    Offering extended credit terms to existing customers.
Question 9

MNO has calculated its return on capital employed ratio for 20X4 and 20X5 as 41% and 56% respectively.

Taking each statement in isolation, which would explain the movement in the ratio between the 2 years?

Select an option, then click Submit answer.

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    In 20X5 the average interest rate on borrowing decreased compared to 20X4.
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    In 20X4 an onerous contract was provided for and this provision did not change in 20X5.
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    In 20X5 the increase in value of MNO's head office was reflected in the financial statements.
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    In 20X4 an unused building was sold at a price in excess of its carrying value.