F2 Analysis of financial perfromance and position

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1
Explain the creditor hierarchy
he creditor hierarchy is the order in which different groups of creditors (people or institutions owed money by a company) are paid if the company goes bankrupt or liquidates its assets. Typically, the order is:

Secured creditors: These have loans backed by company assets (like banks with a mortgage on property). They get paid first from the proceeds of those assets.
Unsecured creditors: These do not have specific assets as collateral. Examples include suppliers, contractors, or bondholders.
Subordinated creditors: These agree to be paid after other unsecured creditors; they take on more risk.
Shareholders/owners: They are last in line and only get paid if anything is left after all creditors are paid.
2
What are money market instruments?
Short-term financial instruments used for borrowing and lending, typically for durations of a year or less.
3
Name three examples of money market instruments
Certificates of deposit, commercial papers, and Treasury bills.
4
What distinguishes money market instruments from bonds?
Money market instruments are short-term, while bonds are long-term financial instruments.
5
Who typically issues certificates of deposit?
Private sector banks
6
What is a Treasury bill?
A short-term loan instrument issued by the government.
7
Over what period are bonds usually repaid?
Bonds are generally repaid over a longer period, such as three to five years.
8
What do investors receive when they hold bonds?
Interest payments during the holding period, with the principal repaid at maturity.
9
What is dividend cover?
Dividend cover indicates how many times a company’s earnings can cover its current level of dividend payments.
10
How is dividend cover calculated?
Divide Earnings Per Share (EPS) by dividends per share.
11
Why is dividend cover important for ordinary shareholders?
It shows how secure dividend payments are, as ordinary shareholders are not guaranteed dividends.
12
What does dividend yield represent?
The percentage return an investor can expect from a share, based on its market price and dividend
13
Which type of investor cares most about dividend yield?
Investors seeking short-term returns are more interested in high dividend yields.
14
What factor might make an investor focus less on dividend yield and more on another metric?
Interest in long-term growth may lead investors to focus on the P (Price/Earnings) ratio instead.
15
What does the P ratio (Price/Earnings ratio) tell you?
It provides insights into a company’s market confidence and outlook, not specifically its dividend policy.
16
What is the Gartner data analytics maturity model
17
What are descriptive analytics?
18
What are diagnostic analytics
19
What are Predictive analytics
20
What are prescriptive analytics
21
How does the quality of data limit the usefulness of comparing financial data
22
How does creative accounting limit the usefulness of comparing financial statements
23
What are the limitations of ratio analysis
24
What are the limitations of inter-segment comparisons
25
What are the limitations of international comparisons
26
What is the objective of financial reporting
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