Question 1

Which of the following is an example of an intangible asset?

Accepted Answer

A) Brand names and trademarks 
B) Patents 
C) Customer relationships 
D) All of the above are intangible assets. 
A) Brand names and trademarks 
B) Patents 
C) Customer relationships 
D) All of the above are intangible assets.

Question 2

Gross profit is calculated as:

Accepted Answer

A) Total sales - cost of sales - selling,general and administrative expenses - depreciation and amortization. 
B) Total sales - cost of sales - selling,general and administrative expenses. 
C) Total sales - cost of sales. 
D) None of the above 
A) Total sales - cost of sales - selling,general and administrative expenses - depreciation and amortization. 
B) Total sales - cost of sales - selling,general and administrative expenses. 
C) Total sales - cost of sales. 
D) None of the above

Question 3

Use the following information for ECE incorporated:
 
-If ECE's stock is currently trading at $24.00 and ECE has 25 million shares outstanding,then ECE's market-to-book ratio is closest to:

Accepted Answer

A) 0.24. 
B) 4. 
C) 6. 
D) 30. 
A) 0.24. 
B) 4. 
C) 6. 
D) 30.

Question 4

Zoe Dental Implements has gross property,plant and equipment totaling $1.4 million,depreciation expense this year of $200,000,and accumulated depreciation last year of $550,000.What is Zoe's net property,plant and equipment?

Accepted Answer

A) $1.4 million 
B) $1.2 million 
C) $550,000 
D) $650,000 
A) $1.4 million 
B) $1.2 million 
C) $550,000 
D) $650,000

Question 5

Use the table for the question(s)below.
Consider the following balance sheet:    
-Luther Corporation's stock price is $39 per share and the company has 20 million shares outstanding.Its book value Debt -Equity Ratio for 2019 is closest to:

Accepted Answer

A) 2.29. 
B) 0.31. 
C) 1.89. 
D) 0.37. 
A) 2.29. 
B) 0.31. 
C) 1.89. 
D) 0.37.

Question 6

Use the table for the question(s)below.
Consider the following balance sheet:    
-When using the book value of equity,the debt to equity ratio for Luther in 2019 is closest to:

Accepted Answer

A) 0.43. 
B) 2.29. 
C) 2.98. 
D) 3.57. 
A) 0.43. 
B) 2.29. 
C) 2.98. 
D) 3.57.

Question 7

The Sarbanes-Oxley Act (SOX)stiffened penalties for providing false information by:

Accepted Answer

A) requiring the CEO and CFO to return bonuses or profits from the sale of stock that are later shown to be due to misstated financial reports. 
B) imposing large compliance costs on small companies. 
C) requiring auditing firms to have long-standing relationships with their clients and receive lucrative auditing and consulting fees from them. 
D) putting strict limits on the amount of non-audit fees (consulting or otherwise)that an accounting firm can earn from a firm that it audits. 
A) requiring the CEO and CFO to return bonuses or profits from the sale of stock that are later shown to be due to misstated financial reports. 
B) imposing large compliance costs on small companies. 
C) requiring auditing firms to have long-standing relationships with their clients and receive lucrative auditing and consulting fees from them. 
D) putting strict limits on the amount of non-audit fees (consulting or otherwise)that an accounting firm can earn from a firm that it audits.

Question 8

Which of the following statements regarding net income transferred to retained earnings is correct?

Accepted Answer

A) Net income = net income transferred to retained earnings - dividends 
B) Net income transferred to retained earnings = net income + dividends 
C) Net income = net income transferred to retained earnings + dividends 
D) Net income transferred to retained earnings - net income = dividends 
A) Net income = net income transferred to retained earnings - dividends 
B) Net income transferred to retained earnings = net income + dividends 
C) Net income = net income transferred to retained earnings + dividends 
D) Net income transferred to retained earnings - net income = dividends

Question 9

Use the following information for ECE incorporated:
 
-If ECE reported $15 million in net income,then ECE's Return on Equity (ROE)is:

Accepted Answer

A) 5.0%. 
B) 7.5%. 
C) 10.0%. 
D) 15.0%. 
A) 5.0%. 
B) 7.5%. 
C) 10.0%. 
D) 15.0%.

Question 10

On the balance sheet,current maturities of long-term debt appear:

Accepted Answer

A) in the Stockholders' Equity section. 
B) in the Operating Expenses section. 
C) in the Current Assets section. 
D) in the Current Liabilities section. 
A) in the Stockholders' Equity section. 
B) in the Operating Expenses section. 
C) in the Current Assets section. 
D) in the Current Liabilities section.

Question 11

Use the table for the question(s)below.
Consider the following income statement and other information:
Luther Corporation
Consolidated Income Statement
Year ended December 31 (in $ millions)  
-Luther's EBITDA coverage ratio for the year ending December 31,2019 is closest to:

Accepted Answer

A) 1.64. 
B) 1.78. 
C) 1.98. 
D) 2.19. 
A) 1.64. 
B) 1.78. 
C) 1.98. 
D) 2.19.

Question 12

Use the table for the question(s)below.
Consider the following income statement and other information:
Luther Corporation
Consolidated Income Statement
Year ended December 31 (in $ millions)  
-Luther's EBIT coverage ratio for the year ending December 31,2018 is closest to:

Accepted Answer

A) 1.64. 
B) 1.78. 
C) 1.98. 
D) 2.19. 
A) 1.64. 
B) 1.78. 
C) 1.98. 
D) 2.19.

Question 13

The firm's asset turnover measures:

Accepted Answer

A) the value of assets held per dollar of shareholder equity. 
B) the return the firm has earned on its past investments. 
C) the firm's ability to sell a product for more than the cost of producing it. 
D) how efficiently the firm is utilizing its assets to generate sales. 
A) the value of assets held per dollar of shareholder equity. 
B) the return the firm has earned on its past investments. 
C) the firm's ability to sell a product for more than the cost of producing it. 
D) how efficiently the firm is utilizing its assets to generate sales.

Question 14

Use the tables for the question(s)below.Consider the following financial information:
Luther Corporation
Consolidated Balance Sheet
December 31,2019 and 2018 (in $ millions)    
-For the year ending December 31,2009 Luther's cash flow from investing activities is:

Accepted Answer

A) $122.49 million. 
B) $358.2 million. 
C) $66.39 million. 
D) $295.71 million. 
A) $122.49 million. 
B) $358.2 million. 
C) $66.39 million. 
D) $295.71 million.

Question 15

Use the following information for ECE incorporated:
 
-If ECE's net profit margin is 8%,then ECE's return on equity (ROE)is:

Accepted Answer

A) 10%. 
B) 12%. 
C) 24%. 
D) 30%. 
A) 10%. 
B) 12%. 
C) 24%. 
D) 30%.

Question 16

Use the following information for ECE incorporated:
 
-If ECE's return on assets (ROA)is 12%,then ECE's return on equity (ROE)is:

Accepted Answer

A) 10%. 
B) 12%. 
C) 18%. 
D) 22%. 
A) 10%. 
B) 12%. 
C) 18%. 
D) 22%.

Question 17

Chloe Floral Company had segment earnings as follows (in thousands): 
 
Which segment had the highest percentage growth?

Accepted Answer

A) Greenery 
B) Blooms 
C) Pottery and Vases 
D) Answer cannot be determined from information given. 
A) Greenery 
B) Blooms 
C) Pottery and Vases 
D) Answer cannot be determined from information given.

Question 18

Use the table for the question(s)below.
Consider the following balance sheet:    
-The change in Luther's quick ratio from 2018 to 2019 is closest to:

Accepted Answer

A) a decrease of .10. 
B) an increase of .10. 
C) a decrease of .15. 
D) an increase of .15. 
A) a decrease of .10. 
B) an increase of .10. 
C) a decrease of .15. 
D) an increase of .15.

Question 19

Use the table for the question(s)below.
Consider the following balance sheet:    
-Luther's quick ratio for 2018 is closest to:

Accepted Answer

A) 0.77. 
B) 0.87. 
C) 1.15. 
D) 1.30. 
A) 0.77. 
B) 0.87. 
C) 1.15. 
D) 1.30.

Question 20

Use the tables for the question(s)below.Consider the following financial information:
Luther Corporation
Consolidated Balance Sheet
December 31,2019 and 2018 (in $ millions)    
-For the year ending December 31,2019 Luther's cash flow from financing activities is (in $ millions):

Accepted Answer

Cash flow from financing (in $ millions)

Exam 2: Introduction to Financial Statement Analysis

Which of the following is an example of an intangible asset?

Gross profit is calculated as:

Use the following information for ECE incorporated: -If ECE's stock is currently trading at $24.00 and ECE has 25 million shares outstanding,then ECE's market-to-book ratio is closest to:

Zoe Dental Implements has gross property,plant and equipment totaling $1.4 million,depreciation expense this year of $200,000,and accumulated depreciation last year of $550,000.What is Zoe's net property,plant and equipment?

Use the table for the question(s)below. Consider the following balance sheet: -Luther Corporation's stock price is $39 per share and the company has 20 million shares outstanding.Its book value Debt -Equity Ratio for 2019 is closest to:

Use the table for the question(s)below. Consider the following balance sheet: -When using the book value of equity,the debt to equity ratio for Luther in 2019 is closest to:

The Sarbanes-Oxley Act (SOX)stiffened penalties for providing false information by:

Which of the following statements regarding net income transferred to retained earnings is correct?

Use the following information for ECE incorporated: -If ECE reported $15 million in net income,then ECE's Return on Equity (ROE)is:

On the balance sheet,current maturities of long-term debt appear:

Use the table for the question(s)below. Consider the following income statement and other information: Luther Corporation Consolidated Income Statement Year ended December 31 (in $ millions) -Luther's EBITDA coverage ratio for the year ending December 31,2019 is closest to:

Use the table for the question(s)below. Consider the following income statement and other information: Luther Corporation Consolidated Income Statement Year ended December 31 (in $ millions) -Luther's EBIT coverage ratio for the year ending December 31,2018 is closest to:

The firm's asset turnover measures:

Use the tables for the question(s)below.Consider the following financial information: Luther Corporation Consolidated Balance Sheet December 31,2019 and 2018 (in $ millions) -For the year ending December 31,2009 Luther's cash flow from investing activities is:

Use the following information for ECE incorporated: -If ECE's net profit margin is 8%,then ECE's return on equity (ROE)is:

Use the following information for ECE incorporated: -If ECE's return on assets (ROA)is 12%,then ECE's return on equity (ROE)is:

Chloe Floral Company had segment earnings as follows (in thousands): Which segment had the highest percentage growth?

Use the table for the question(s)below. Consider the following balance sheet: -The change in Luther's quick ratio from 2018 to 2019 is closest to:

Use the table for the question(s)below. Consider the following balance sheet: -Luther's quick ratio for 2018 is closest to:

Use the tables for the question(s)below.Consider the following financial information: Luther Corporation Consolidated Balance Sheet December 31,2019 and 2018 (in $ millions) -For the year ending December 31,2019 Luther's cash flow from financing activities is (in $ millions):

The Corporation

Financial Decision Making and the Law of One Price

The Time Value of Money

Interest Rates

Valuing Bonds

Investment Decision Rules

Fundamentals of Capital Budgeting

Valuing Stocks

Capital Markets and the Pricing of Risk

Optimal Portfolio Choice and the Capital Asset Pricing Model

Estimating the Cost of Capital

Investor Behavior and Capital Market Efficiency

Capital Structure in a Perfect Market

Debt and Taxes

Financial Distress,managerial Incentives,and Information

Payout Policy

Capital Budgeting and Valuation With Leverage

Valuation and Financial Modeling: a Case Study

Financial Options

Option Valuation

Real Options

Raising Equity Capital

Debt Financing

Leasing

Working Capital Management

Short-Term Financial Planning

Mergers and Acquisitions

Corporate Governance

Risk Management

International Corporate Finance

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