GOODLUCK

For Everyone’s Attention:

• Under no Circumstances should a student be asking questions to

other students
• Try to answer the questions faithfully
• Understand that this is a test of knowledge of what you have gained so
far.
• Raise any questions to me.
• Escalate corrections immediately so we can resolve it.
• Copying will automatically be marked as failure in this exam
• Please observe silence while taking the examination
• And lastly, trust yourselves of what you have worked so far. May God
bless you all!

1. There people tend to look for companies with good growth prospects
that have poor management.
a. Fundamental Analysts
b. Activist Investors
c. Chartists
d. Information Traders

2. Separating a segment or component business and transforming it into a

separate legal entity whose ownership will be transferred to
shareholders
a. Acquisitions
b. Spin-off
c. Mergers
d. Divestiture

3. Usually has two parties; the buying firm and the selling firm. The buying
firm needs to determine the fair value of the target company prior to
offering a bid price. On the other hand, the selling firm should have a
sense of its firm value as well as to gauge reasonableness of bid
offers.
a. Spin-off
b. Divestiture
c. Merger
d. Acquisition

4. General term which describes the transaction of two companies

combined to form a wholly new entity.
a. Divestiture
b. Acquisitions
c. Mergers
d. Spin-off
5. Generally, the valuation process considers theses steps, except:
a. Understanding the business
b. Forecasting Financial performance
c. Preparing valuation model based on forecast
d. None of the above

6. These are situation most likely consider liquidation value, except

_______.
a. Business Failures
b. Divestment
c. Corporate end of life
d. Depletion of scarce resources

7. A firm’s common stock currently sells for 75 per share. The firm has
total assets of 1,000,000 and total liabilities, including preferred
stock, of 350,000. If the firm has 10,000 shares of common stock
outstanding, how much is the liquidation value per share is this
approximate book value?
a. 100
b. 75
c. 65
d. 35

8. This is the amount that is added to the value of the firm in order to gain
control of it.
a. Equity accretion
b. Earnings premium
c. Equity control premium
d. Additional paid in capital

9. The key factor that is used to discount the net cashflows in the future
is
a. Cost of equity
b. Cost of earnings
c. Cost of debt
d. Cost of capital

10. Represents the net amount that can be gathered if the business is
shutdown and its assets are sold piecemeal.
a. Going concern value
b. Liquidation value
c. Bankruptcy Value
d. Closing value
 11. Collectively, the financial model must be able to filter the
information that would be necessary for the valuation. What re the
two characteristics of information that are considered to be very
important in financial modelling?
a. Timeliness and reliability
b. Timeliness and availability
c. Reliability and relevance
d. Availability and relevance
12. The component of audited financial statements used to determine
the historical financial performance.
a. Balance sheet
b. Statement of comprehensive income
c. Notes to FS
d. Statement of changes in Shareholder’s equity

13. The most ideal reference for the historical performance of the
company
a. Audited financial statements
b. Notes to FS
c. Statement of income
d. Statement of financial position

14. This component of audited financial statements is used to

illustrate the company historically financing its operation and
investments.
a. Statement of financial position
b. Statement of changes in stockholder’s equity
c. Statement of cash flows
d. Statement of comprehensive Income
15. It provides important disclosure that should be considered in the
valuation
a. Statement of changes in stockholders’ equity
b. Statement of financial position
c. Statement of comprehensive income
d. Notes to financial Statement

(5 points each)
On January 1, 2022, Arjeune decided to open up his first business which is
selling hotdogs to different cities. His company operation during the first
year was a success which was able to earn him around 125,000 in net sales,
during that year his EBITDA Margin was at 45% while taxes paid by his company
is around 30%. He also incurred around 1,500 for capital expenditure during
the year. By December 31, 2022, he reported the following accounts to his
financial statements: Accounts Payable 10,000; Accounts Receivable
35,000; Accrued Liabilities 500; Cash 25,000; Intangible Assets 35,000;
Inventory 26,000; Long-term investments 75,000; Long-term Liabilities
62,500; Marketable Securities 23,000; Notes payable (short term) 12,500;
Property Plant & equipment 352,500; Prepaid Expense 1,500.
After a year, he created another business which is selling burgers which
earned a net sales of 32,500; Operating Expenses 16,250 (including salaries
& wages of 1,450; Deprecation of 500 & rentals of 275). The interest
incurred from the loans from creating the branch is 200. The balance sheet
of his burger business is as follows: Cash 35,000; Trade receivable 80,000;
Equipment 125,000; Intangible assets 50,000; Accounts payable 20,000;
Short term notes payable 200,000; Retained Earnings 15,000. More
information has showed that Kimberly is impressed by the technology used by
Arjeune’s burger company, she is negotiating to buy the business as a whole.
As the inventor of the said technology, you know that there are no other
similar techs comparable to yours and you estimate that the cost of
reproducing said intangible asset would be 120% of its net asset cost.
Arjeune was confident about the business and decides not to sell it to Kim,
during 2025, the burger company suddenly crashed down. Due to financial
difficulty, Arjeune decided to liquidate the company. As of Dec. 31, 2025, the
liquidation value of the company is 4,000,000. It is also estimated that
400,000 will be left from all assets after satisfying claims from third party
creditors. The details about the claims were Unsecured bonds 2,000,000;
Mortgage bonds 1,600,000; Preference share 400,000, Ordinary Share
1,000,000. He decided to sell as well his first business in order to retire for
good which Kimberly purchased for 1 billion pesos. After the sale of his two
business, he officially retired as business man as started to create a new life
in which he became an action star and the host of eat showtime. He also got
married 2 years later and moved to Japan to live a quiet and successful life.

16. How much is the net cashflows for Dec. 31, 2022?
a. 56,250
b. 37,875
c. 46,625
d. 39,375

17. What is the current asset for Dec. 31, 2022?

A. 110,500
B. 85,500
C. 87,500
D. 109,000

18. What is the non-current asset for Dec. 31, 2022?

A. 427,500
B. 387,500
C. 462,500
D. 485,500

19. What is the total current liabilities for Dec. 31, 2022?
A. 12,500
B. 13,000
C. 22,500
D. 23,000

20. What is the total non-current liabilities for Dec. 31, 2023
A. 62,500
B. 85,500
C. 63,000
D. 86,000

21. What is the book value of Arjeune Corp. as of Dec. 31, 2023?
A. 487,500
B. 510,500
C. 377,000
D. None of the Above.

22. What is the EBITDA of the Burger company for 2024?

A. 16,550
B. 16,750
C. 16,250
D. 14,025

23. What is the book value of the burger company for 2024
A. 215,000
B. 235,000
C. 255,000
D. None of the above

24. What is the reproduction cost of intangible asset for burger company in
2024?
A. 50,000
B. 60,000
C. 41,667
D. None of the above

25. What is the Reproduction value of burger company in 2024

A. 225,000
B. 235,000
C. 215,000
D. None of the above

26. What is the reproduction value per share in 2024

A. 1.13
B. 1.175
C. 1.075
D. None of the above

27. How much will the ordinary shareholders received from the liquidation.
A. 400,000
B. 1,000,000
C. 0
D. None of the above.

28. Tell me a joke (10 points)

Bonus: Find the two word message hidden in this exam to earn additional 5
points.