【正确答案】 B

【答案解析】The total asset turnover ratio = sales/assets. In 2002, the ratio was (10,424/5,012) = 2.08. In 2004, the ratio was (11,606/7,636) = 1.52. From 2002 to 2004 the ratio declined by (2.08 – 1.52) = 0.56.

【正确答案】 C

【答案解析】The cash conversion cycle = (average receivables collection period) + (average inventory processing period) – (payables payment period). 　　For 2003: Receivables turnover = (sales/average receivables) = 11,718/((625+798)/2) = 11,718/712 = 16.46 Average receivables collection period = (365/receivables turnover) = 365/16.46 = 22.17 days Inventory turnover = (COGS/average inventory) = 7183/((1342+937)/2) = 7183/1140 = 6.3 Average inventory processing period = (365/inventory turnover) = 365/6.3 = 57.94 days. Payables turnover = (COGS/average payables) = 7183/((620 + 544)/2) = 7183/582 = 12.34 Payables payment period = (365/12.34) = 29.58 days 2003 cash conversion cycle = 22.17 + 57.94 – 29.58 = 50.53 days. For 2004: Receivables turnover = (sales/average receivables) = 11,606/((1294+798)/2) = 11,606/1046 = 11.10 Average receivables collection period = (365/receivables turnover) = 365/11.10 = 32.88 days Inventory turnover = (COGS/average inventory) = 7150/((1342+1552)/2) = 7150/1447 = 4.94 Average inventory processing period = (365/inventory turnover) = 365/4.94 = 73.89 days. Payables turnover = (COGS/average payables) = 7150/((620 + 597)/2) = 7150/609 = 11.74 Payables payment period = (365/11.74) = 31.09 days 2004 cash conversion cycle = 32.88 + 73.89 – 31.09 = 75.68 days. From 2003 to 2004, the cash conversion cycle increased by (75.68-50.53) = 25.15 days. 　

【正确答案】 D

【答案解析】From 2002 to 2004, ROE declined from (328/1575) = 20.8% to (304/2292) = 13.3%. 　　The extended DuPont formula states that ROE = [(operating profit margin)(total asset turnover) – (interest expense rate)](financial leverage multiplier)(tax retention rate) 　　For 2002: 　　Operating profit margin = (EBIT/sales) = (513 + 147)/10,424 = 0.0633 = 6.33%. 　　Total Asset Turnover = (sales/assets) = 10424/5012 = 2.08x 　　Interest Expense rate = (interest expense/assets) = 147/5012 = 2.93% 　　Financial leverage multiplier = (assets/equity) = 5012/1575 = 3.18 　　Tax retention rate = (1-tax rate) = 1 – (185/513) = 1 – 0.36 = 64%. 　　For 2004: 　　Operating profit margin = (EBIT/sales) = (516 + 340)/11,606 = 0.0738 = 7.38%. 　　Total Asset Turnover = (sales/assets) = 11,606/7,636 = 1.52x 　　Interest Expense rate = (interest expense/assets) = 340/7,636 = 4.45% 　　Financial leverage multiplier = (assets/equity) = 7,636/2,292 = 3.33 　　Tax retention rate = (1-tax rate) = 1 – (212/516) = 1 – 0.41 = 59%. 　　Since the operating profit margin and the financial leverage multiplier both increased, these did not have an adverse impact on the ROE. The interest coverage ratio is not part of the DuPont formula. The only viable answer is the tax retention rate, which, in fact did decline significantly. 　

【正确答案】 B

【答案解析】Although return on assets is one of the ratios that bond agencies rely on heavily for deriving their debt ratings, it is not one of the ratios that is deemed most useful for stock valuation, therefore Karazim’s statement is incorrect. Return on equity, (not ROA), is a ratio that is deemed to be very effective for both stock valuation and determining credit ratings. 　　Cannon’s statement is correct – the current ratio is considered to be one of the most effective ratios for both determining systematic risk (beta) based on accounting variables and for forecasting bankruptcy. 　

【正确答案】 D

【答案解析】Common size statements normalize balance sheet items by expressing each item as a percentage of total assets, and normalize income statements by expressing each item as a percentage of sales. Using common size statements allows the analyst to make easier comparisons of different sized firms. 　　Explanations of terms：(10 points) 　　1. Legal tender：The status of legal tender simply means that coins and paper currency cannot lawfully be refused in payment for goods and services and in discharge of debts. 　　2. Double-entry bookkeeping：Bookkeeper debits the transaction to one account and credits it to another bill of exchange: A non-interest-bearing written order used primarily in international trade that binds one party to pay a fixed sum of money to another party at a predetermined future date. 　　3. Arbitrage pricing theory：An equilibrium model of asset pricing that states that the expected return on a security is a linear function of the security’s sensitivity to various common factors. 　　4. Soft law：Quasi-legal instruments which do not have any legally binding force, or whose binding force is somewhat "weaker" than the binding force of traditional law, often contrasted to soft law by being referred to as "hard law". 　　5. Gold markets：According to its nature and the influence on the entire world gold transaction, gold market may be divided into leading market and regional market. According to the difference of transaction type and the transaction way, gold market may be divided into spot transaction and future transaction. 　　Following international experiences, gold market participants include; gold enterprises, banks, hedge funds, organizations and personal investors, broker companies and the exchanges. 　　Factors that Affect Gold Market are the quantity change of structure of supply and demand, economic factors and political situation and unexpected significant events. 　　There are many different ways to invest in gold, such as gold futures, gold exploration companies, blue-chip gold mining stocks, gold mutual funds, gold bars, gold bullion and gold coins.