MBA403 ASSESSMENT 1 PRACTICE QUESTIONS

Amplia Therapeutics

The following financial statements for Amplia Therapeutics include:

 The balance sheet (consolidated statement of financial position) as at 31 March 2022
 The income statement (consolidated statement of profit or loss and other
comprehensive income) for the year ended 31 March 2022
MULTIPLE CHOICE QUESTIONS
 Choose the best answer out of the four options given.
 Solutions are provided at the end of the document

Question 1
What is the Debt Ratio for the most recent reporting period?
A) 2.2%
B) 10.8%
C) 8.6%
D) 12.1%
Answer: B

Question 2
What is the Debt to Equity Ratio for the most recent reporting period?
A) 12.1%
B) 9.6%
C) 2.4%
D) 10.8%
Answer: A

Question 3
What is the Current Ratio for the most recent reporting period?
A) 31.2%
B) 31.2
C) 2.1
D) 2.1%
Answer: BD
Question 4
What is the Asset Turnover Ratio for the most recent reporting period?
A) 9.3
B) 125%
C) 12.3
D) 0.08
Answer: D

Question 5
What is the Return on Sales for the most recent reporting period?
A) 1.0
B) -1.8%
C) -184%
D) 65%
Answer: C

Question 6
What is the Return on Equity for the most recent reporting period?
A) -14.9%
B) -35.2%
C) -22.6%
D) -16.7%
Answer: D

Question 7
What is the Return on Investment for the most recent reporting period?
A) -14.9%
B) -16.7%
C) -22.6%
D) -$3.6m
Answer: A
Question 8
If Amplia Therapeutics’ share price decreased from $14.30 on 31 December 2019 to $5.46
on 31 December 2021. This indicates a compound annual rate of return of?
A) 38.2%
B) Cannot calculate due to negative numbers
C) -61.8%
D) -38.2%
Answer: D

Question 9
Therapeutics is currently conducting clinical trials on a cancer medication with the code
AMP945. Consider the following (fictional) cash flows for this project:
Time zero: -$2.8m
Yr 1: $0m
Yr 2: $0.8m
Yr 3: $1.0m
Yr 4: $1.2m
Yr 5: $1.1m
What is the NPV of the project, assuming a required rate of return of 7%?
A) $414,808
B) $400,000
C) $3,200,000
D) $3,214,808
Answer: A

Question 10
Referring to the AMP945 cash flow projections in the previous question, what is the IRR of
the investment (to 1 decimal place)?
A) 11.0%
B) 11.1%
C) 11.3%
D) 11.5%
Answer: C
SHORT ANSWER QUESTIONS
 Solutions are not provided – these are for self study and practice
Question 11
Amplia Therapeutics’ FY22 Cash Flow Statement shows Operating cash flows of -$4.4m,
Investing cash flows of nil and Financing cash flows of +$17.2m.
Referring also to the FY22 balance sheet and income statement, what does this tell you
about the business?
(0.5 mark per insight up to a maximum 4 insights / 2 marks) 

Question 12
Using your calculations and the Amplia Therapeutics financial information provided,
comment on the company’s leverage and financial stability.
(0.5 mark per insight up to a maximum 4 insights / 2 marks) 

Question 13
Returning to the earlier information provided about Therapeutics AMP945 cancer
treatment, what is the expected Payback Period? (1 mark)
Management recently changed their Payback Period threshold to 3 years. Would the project
have satisfied this new threshold? (1 mark)

Question 14
An investment has a positive Net Present Value of $1,300,000 when discounted at the
WACC. It also has a positive Internal Rate of Return of 7%.
Describe what WACC represents? (1 mark)
What do we know about the numerical value of WACC in this instance? (1 mark)

MCQ SOLUTIONS
1. B
2. A
3. B
4. D
5. C
6. D
7. A
8. D
9. A
10. C