PART 1

1. Which of the following is not regarded as a sign of ineffective corporate govemance:

A. Board of Directors consult external experts instead of internal experts on the firm's affairs.
B. One-quarters of board members are independent.
C. Insiders' stock transactions are not disclosed in a timely manner.
D. Chairman of the Board and Chairman of the Audit Committee are not independent
directors.
E. The Chief Accountant and Chief Financial Officer are replaced frequently.

Question 2: Which of the following is a sign of ineffective remuneration system?

A. Executive compensation is fixed despite significant changes in firm performance.
B. Executive compensation is significantly higher than that in other firms with comparable
performance.
C. Board of directors' compensation is significantly higher than that in other firms.
D. Executive compensation is not disclosed.
E. A, B, C and D are all signs of ineffective remuneration system.

Question 3: Which of the following cases most likely represent the conflicts of interest
between the shareholders and the managers/directors?
A. In order to finance growth, managers and directors decide to increase borrowings to a
level that would significantly increase default risk.
B. Managers and directors decide to abandon product safety features to reduce costs.
C. A controlling shareholder who owns a 51% stake in the company demand the managers
and directors to buy inventory from his spouse's company at above market price.
D. Managers and directors do not invest in high-risk projects even if they have positive NPV
because they want to protect their employment status.
E. Managers and directors decide to use accounting practices that reduce the company's tax
expenses.

Question 4: Which of the following statements about corporations is least likely correct?
A. Shareholders can request return of contributed capital.
B. Must have a Board of Directors and a Board of Management.
C. Shareholders are liable only to the extent of capital contributed to the firm.
D. Income is taxed twice: once at corporate income tax when it is earned by the firm and
again at personal income tax when it is paid out to shareholders.
E. In Vietnam, when the firm pays dividend, individual shareholders is taxed at 5% dividend
tax rate and corporate shareholders are not taxed.

Question 5: Which of the following is usually assumed as the goal of corporate financial
decisions?
A. Balancing the benefits of shareholders, customers, employees and the society as a whole.
B. Maximizing shareholders' value.
C. Maximizing tax contribution to the government to support social welfare.
D. World peace and prosperity.
E. Creating value for shareholders by maximizing customer satisfaction.
Question 6: Which of the following statements about earnings smoothing is most likely
inaccurate?
A. Is intentional understatement of earnings volatility.
B. Can be achieved by conservative choices to understate earnings in periods when a
company's operations are performing well, building up reserves that allow aggressive choices
in periods when its operations are struggling.
C. Results in a more consistent and stable earnings profile.
D. Aims to make a company appear less risky to investors and creditors, potentially leading
to better financing terms and increased investor confidence.
E. A, B, C and D are all accurate.

Question 7: Which of the following statements are most likely incorrect?

A. The management can manipulate the income statement by accounting choices such as
over- or under-estimation of provisions and reserves, recording sales before they are
realizable or backdating sales invoices, and recording fictitious sales or inventory.
B. The management can manipulate the income statement by real cash flow choices such as
delaying sales or accelerating sales with promotion and credit sales, postponing or
accelerating R&D or advertising expenditures, overproduction to reduce unit fixed costs.
C. Unlike accruals, the management cannot manipulate the cash flows statement with biased
estimates, but can resort to timing of transactions such as delaying payments to suppliers or
accelerating collections from customers, classification of cash flows such as interest paid, or
structure complex transactions to masquerade their nature.
D. Investors should be cautious if the difference between accounting earnings and CFO is
wide and sustained.
E. Earnings management is always bad for shareholders.

Question 8: Which of the following statements about limited liability of firm owners is
cortect?
A. Promotes entrepreneurship and risk taking as personal assets are insulated against business
risks.
B. Ownership can be transferred or traded.
C. Allows ownership to be divided among a large number of shareholders and thus facilitates
fundraising to pursue large-scale investments.
D. Distorts financial decisions due to conflicts of interest.
E. A, B, C and D are all correct.

Question 9: Hoang Huy Investment Financial Services JSC (TCH), a real estate
manager and developer in Hai Phong, reported in the Balance Sheet on 30/09/2024
đ1016 billion in short-term advances from customers (from sale of apartments that have
not been transferred), and đ33 billion Short-term unearned revenue (from apartments
rents and management fee). Which of the following statements is most likely accurate?
A. Short-term advances from customers were recorded as a revenue for the reporting period
ending 30/9/2024.
B. Short-term unearned revenue was recorded as a revenue for the reporting period ending
30/9/2024.
C. A total of ₫1049 billion will likely be recorded as revenue in the following reporting
period, when TCH completes the transfer of apartments to customers and finishes the
provision of renting and management services.
D. The recognition of revenue as in C will likely result in higher cash flows.
E. A, B, C, and D are all accurate.

Question 10: A company cannot shorten its cash conversion cycle by:
A. Reducing days of inventory on hand by discontinuing products or products lines with low
or niche demand
B. Reducing days of inventory by negotiating with suppliers to do more frequent deliveries.
C. Using data analytics to improve customer demand forecasts and to rationalize stocking
levels.
D. Reducing days sales outstanding by offering prompt-payment discounts to customers,
imposing late fees, tightening credit standards, imposing upfront deposits or accelerating
instalment payments, and working with third party collection agencies.
E. Reducing days payable outstanding by negotiating supplier contracts for longer terms.

Question 11: Which of the following statements is incorrect?

A. Cash dividend and share repurchase both result in the same amount of decrease in the
firm's equity value and cash balance.
B. Cash dividend is paid to every shareholder according to the number of shares they own.
C. Share repurchase pays the group of shareholders who want to sell their ownership in the
firm.
D. Share repurchase results in a lower number of share outstanding.
E. Stock dividend increases the firm's equity value and cash balance.

Question 12: Watch producer Tuba Inc. has recently decided to implement product
differentiation strategy and invest in luxury, automatic smartwatches with superior
qualities and novel functions. Which of the following will most likely happen due to the
implementation of this new strategy?
A. R&D expenses will decrease.
B. Inventory will increase.
C. Advertising expenses will decrease.
D. Gross profit margin will increase.
E. Return on equity will increase.
 PART 2:
PX Sporty is a manufacturer and distributor of sportswear and sports equipment in Southern
Vietnam. PX's management is considering a new division in Binh Phuoc Province to
manufacture camping and hiking products to be sold in the same retail outlets as PX's
existing products. Mai Linh, CFO, is exploring the feasibility of the new division. Mai Linh
begins by developing future financial projections for the division. The division will be
established as a subsidiary company, 100% owned by PX. A ₫80 billion investment in new
equipment is to be completed at the end of 2025. The new equipment will be installed in a
plant owned by PX and currently on lease. The lease will be terminated and therefore an
annual fee of d5 billion will be lost. These fixed assets will be fully depreciated in five years
using double-declining balance method.
After five years, PX can continue to use the fixed assets forever at a maintenance cost of d5
billion per year. Increases in working capital will be ₫4 billion at the end of 2025 to prepare
for production, and 10% of the increase in sales in the following years, to be invested at the
beginning of each year. Estimated revenue from sales in 2026 (the project's first year) is đ30
billion, and increases by 10% each year after. Production costs (excluding depreciation
expenses) are 40% of sales. Selling and administrative costs are 10% of sales. Income tax rate
is 20%. From 2031, sales will remain stable at the same level as in 2030. The cost of capital
components are estimated as in Exhibit 1.

Exhibit 1: WACC Components

Risk-free rate 5%
Market return 15%
Equity beta 1
Pre-tax cost of debt 10%
Debt-to-Equity ratio 1:2
 PART 3:
Dam Ca Mau (DCM) is a fertilizer producer in the South of Vietnam. Vietnam Oil and Gas
Group, which owns 75.6% of DCM shares, is DCM's main supplier of input chemicals for
fertilizer production. Use the information in the supplementary document DCM
Consolidated Financial Statements 2023) to answer questions from 14 to 17.
Question 14: Dam Phu My (DPM) is a competitor of DCM. In 2023, DPM's net profit
margin, assets turnover, and financial leverage are respectively 3.9%, 0.88, and 1.21.
Compared to DCM's, DPM's return on equity is low or high and why? Explain your
answer using Dupont analysis, with detailed calculations.

Question 15: Calculate DCM's inventory turnover, receivables turnover, payables

turnover, and cash conversion cycle in 2023. (0.8 points)
Question 16: During the 2024 annual shareholders meeting, a shareholder is concerned
that Equity and Earnings are both lower this year than last. Is the concern justified?
How did DCM cope with the sharp decrease in operating cash flows? Explain your
answer in detail

Question 17: As of December 31, 2023, DPM has 391.33 million shares outstanding at a
market price of ₫34000. DPM also reports a book equity (excluding non-controlling
interest) of đ11370 billion on December 31, 2023, and an EPS of đ1030 for 2023. As of
December 31, 2023, DCM share price is ₫33000. Calculate DCM's and DPM's trailing
P/E and P/B. Which company is cheaper?