NACVA Exam Practice Test Instant Access - No Installation Required

Question 1

To get an explanation or interpretation of something on the financial statements, or to consult working papers for details that augment the financial statements, it may be necessary to interview the company's outside independent accountant. This is most often the case when:

AThe financial statements are not audited

BNot completely footnoted

CContain some kind of unqualified opinion by the independent accountant

DContain some kind of unqualified opinion by the attorney and banker

Answer : A, B

Question 2

Which one of the following is NOT always clearly defined? Therefore, if the term is used, it should be supplemented by a definition of exactly what it means in the given valuation context.

AEnterprise value

BPartial interest

CInvested capital

DSecurities

Answer : C

Question 3

When there is a choice among accounting practices, private companies tend towards a more conservative selection in order to minimize taxes, while public companies may account more aggressively in order to report:

AMore benefits

BMore income so as to please shareholders

CAsset values

DTreatment of intangible assets

Answer : B

Question 4

Due to these complexities, for practical purposes it is acceptable to use the ratio as we defined it. However, the analyst is well advised to research:

Athe subject companies' use of short-term debt

Bthe guideline companies' use of short-term

CBoth the subject and guideline companies' use of short-term debt to determine whether to adjust this ratio to include all interest-bearing debt

DWhether to adjust this ratio to include all interest-bearing debt

Answer : C

Question 5

In comparing companies with very different accounting practices, one way for an analyst to adjust for intangible items on the financial statements is to eliminate:

AAll intangible assets from the balance sheets

BAll amortization expense from the income statements

CIdentifying the true economic value

DBoth A and B

Answer : D

Question 6

The analyst should be curious about the proprietary products and services, especially:

ABenefits attributable to brand name, trademarks copyrights or patents

BFavorable supplier contracts

CThe unique characteristics that generate a comparative advantage over their competition

DIntangible assets

Answer : C

Question 7

If a $1000 per share value of convertible bond is issued for $1000, and is convertible into 20 shares of issuer's common stock that pays no dividend, there will be no economic benefit in converting the debt to stock as long as the common stock is selling for :

ALess than $50 per share

B$50 per share

C$more than $50 per share

DLess than $25 per share

Answer : A

NACVA Certified Valuation Analysts CVA Exam Practice Test