Exam 1: Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Basic EPS is calculated as net income minus _____________________________________________ divided by the weighted average number of shares outstanding.

The second step in financial statement analysis is to identify the company strategy. Which of the following is a question an analyst should ask when performing a strategy analysis?

The _____________________________________________ defines more clearly the explicit responsibility of managers for financial statements, the relation between the independent auditor and the firm audited and the kinds of services permitted and not permitted.

Many people view the balance sheet as being a representation of a firm's economic position. What are some issues that reduce the quality of this representation?

The two categories of shareholders' equity usually found on the balance sheet of a corporation are

The threat of new entrants is measured by whether there are entry barriers, such as capital investment, ________________________________________, patents, or regulation that inhibit new entrants.

Normally, intense rivalries have a tendency to reduce ____________________.

Which of the following is not a characteristic of an extraordinary item?

Many market participants argue that financial markets are efficient and that financial statement users cannot routinely analyze financial statements to find mispriced securities. This view would lead some to suggest that there is little value to financial statement analysis. Required: Provide a discussion of the role of financial statement analysis in an efficient capital market and reasons why financial statement analysis is still valuable.

The accrual basis of accounting recognizes

Prepare an analysis of the grocery industry using Porter's Five Forces framework. For each component force provide support for your conclusion. In addition, at the completion of your analysis provide a conclusion, along with support, of whether you expect the grocery industry to report high or low profitability in the near future.

All of the following are principal provisions of the Sarbanes-Oxley Act of 2002 except:

The fourth step in financial statement analysis is using the financial statements to analyze the current ____________________ and ____________________ of the firm.

What is the principal activity of security analysts?

What is an industry's value chain?

Which SEC form may be the best place to start learning about the economics of an industry and the particular strategy a firm has selected for competing in the industry?

Which financial statement would you look at to determine whether a company will be able to pay for the goods when payment is due in 30 days?

Under the Sarbanes-Oxley Act ____________________ assumes responsibility for establishing and maintaining adequate internal control structure and procedures.

Resources that have the potential for providing a firm with future economic benefits are called ____________________.

Which of the following economic characteristics is consistent with a commercial bank?