Question 1

The firm's revenues and expenses over a period of time are reported on the firm's:

Accepted Answer

A) income statement or statement of financial performance. 
B) income statement or statement of financial position. 
C) balance sheet or statement of financial performance. 
D) balance sheet or statement of financial position. 
A) income statement or statement of financial performance. 
B) income statement or statement of financial position. 
C) balance sheet or statement of financial performance. 
D) balance sheet or statement of financial position.

Question 2

Use the information for the question(s)below.
In November 2017,Perrigo Co.(PRGO)had a share price of $39.20.They had 91.33 million shares outstanding,a market-to-book ratio of 3.76.In addition,PRGO had $845.01 million in outstanding debt,$163.82 million in net income,and cash of $257.09 million.
-Perrigo's return on equity (ROE)is closest to:

Accepted Answer

A) 4.6%. 
B) 9.1%. 
C) 17.2%. 
D) 27%. 
A) 4.6%. 
B) 9.1%. 
C) 17.2%. 
D) 27%.

Question 3

Accounts payable is a:

Accepted Answer

A) long-term liability. 
B) current asset. 
C) long-term asset. 
D) current liability. 
A) long-term liability. 
B) current asset. 
C) long-term asset. 
D) current liability.

Question 4

Use the table for the question(s)below.
Consider the following balance sheet:    
-If on December 31,2018 Luther has 8 million shares outstanding trading at $15 per share,then what is Luther's enterprise value?

Accepted Answer

Enterprise value = Market value of equit

Question 5

If Moon Corporation's gross margin declined,which of the following is TRUE?

Accepted Answer

A) Its cost of goods sold increased. 
B) Its cost of goods sold as a percent of sales increased. 
C) Its sales increased. 
D) Its net profit margin was unaffected by the decline. 
A) Its cost of goods sold increased. 
B) Its cost of goods sold as a percent of sales increased. 
C) Its sales increased. 
D) Its net profit margin was unaffected by the decline.

Question 6

Use the information for the question(s)below.
In November 2019,Perrigo Co.(PRGO)had a share price of $39.20.They had 91.33 million shares outstanding,a market-to-book ratio of 3.76.In addition,PRGO had $845.01 million in outstanding debt,$163.82 million in net income,and cash of $257.09 million.
-Perrigo's price-earnings ratio (P/E)is closest to:

Accepted Answer

A) 15.96. 
B) 21.85. 
C) 29.77. 
D) 35.64. 
A) 15.96. 
B) 21.85. 
C) 29.77. 
D) 35.64.

Question 7

Which of the following adjustments is NOT correct if you are trying to calculate cash flow from financing activities?

Accepted Answer

A) Add dividends paid 
B) Add any increase in long-term borrowing 
C) Add any increase in short-term borrowing 
D) Add proceeds from the sale of stock 
A) Add dividends paid 
B) Add any increase in long-term borrowing 
C) Add any increase in short-term borrowing 
D) Add proceeds from the sale of stock

Question 8

The Sarbanes-Oxley Act (SOX)was passed by Congress in 2002,in response to:

Accepted Answer

A) financial scandals,including WorldCom and Enron. 
B) financial scandals,including Bernie Madoff and AIG. 
C) financial scandals,including General Motors and Chrysler. 
D) the Troubled Asset Relief Program (TARP). 
A) financial scandals,including WorldCom and Enron. 
B) financial scandals,including Bernie Madoff and AIG. 
C) financial scandals,including General Motors and Chrysler. 
D) the Troubled Asset Relief Program (TARP).

Question 9

Wyatt Oil has a net profit margin of 4.0%,a total asset turnover of 2.2,total assets of $525 million,and a book value of equity of $220 million.Wyatt Oil's current return-on-equity (ROE)is closest to:

Accepted Answer

A) 8.8%. 
B) 9.5%. 
C) 21.0%. 
D) 22.8%. 
A) 8.8%. 
B) 9.5%. 
C) 21.0%. 
D) 22.8%.

Question 10

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 operating activities is:

Accepted Answer

A) $9.4 million. 
B) -$18.8 million. 
C) $47.2 million. 
D) $40.0 million. 
A) $9.4 million. 
B) -$18.8 million. 
C) $47.2 million. 
D) $40.0 million.

Question 11

Use the information for the question(s)below.
In November 2018,Perrigo Co.(PRGO)had a share price of $39.20.They had 91.33 million shares outstanding,a market-to-book ratio of 3.76.In addition,PRGO had $845.01 million in outstanding debt,$163.82 million in net income,and cash of $257.09 million.
-Perrigo's earnings per share (EPS)is closest to:

Accepted Answer

A) $0.19. 
B) $1.79. 
C) $2.81. 
D) $3.76. 
A) $0.19. 
B) $1.79. 
C) $2.81. 
D) $3.76.

Question 12

Details of acquisitions,spin-offs,leases,taxes,and risk management activities are given:

Accepted Answer

A) in the management discussion and analysis. 
B) in the Securities and Exchange Commission's commentary. 
C) in the auditor's report. 
D) in the notes to the financial statements. 
A) in the management discussion and analysis. 
B) in the Securities and Exchange Commission's commentary. 
C) in the auditor's report. 
D) in the notes to the financial statements.

Question 13

Use the information for the question(s)below.
In November 2019,Perrigo Co.(PRGO)had a share price of $39.20.They had 91.33 million shares outstanding,a market-to-book ratio of 3.76.In addition,PRGO had $845.01 million in outstanding debt,$163.82 million in net income,and cash of $257.09 million.
-Perrigo's market debt-to-equity ratio is closest to:

Accepted Answer

A) 0.24. 
B) 0.50. 
C) 0.75. 
D) 0.89. 
A) 0.24. 
B) 0.50. 
C) 0.75. 
D) 0.89.

Question 14

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 price - earnings ratio (P/E)for the year ending December 31,2019 is closest to:

Accepted Answer

A) 7.9. 
B) 10.1. 
C) 15.4. 
D) 16.0. 
A) 7.9. 
B) 10.1. 
C) 15.4. 
D) 16.0.

Question 15

Use the following information for ECE incorporated:
 
-ECE's Return on Assets (ROA)is:

Accepted Answer

A) 5.0%. 
B) 8.5%. 
C) 7.5%. 
D) 15.0%. 
A) 5.0%. 
B) 8.5%. 
C) 7.5%. 
D) 15.0%.

Question 16

Which of the following is (are)deducted from EBIT to determine net income?

Accepted Answer

A) Earnings per share 
B) Interest expense 
C) Corporate taxes 
D) Both B and C 
A) Earnings per share 
B) Interest expense 
C) Corporate taxes 
D) Both B and C

Question 17

The third party who checks annual financial statements to ensure that they are prepared according to GAAP and verifies that the information reported is reliable is the:

Accepted Answer

A) NYSE Enforcement Board. 
B) Accounting Standards Board. 
C) Securities and Exchange Commission (SE
C) . 
D) auditor. 
A) NYSE Enforcement Board. 
B) Accounting Standards Board. 
C) Securities and Exchange Commission (SE
C) . 
D) auditor.

Question 18

Which of the following is NOT an operating expense?

Accepted Answer

A) Interest expense 
B) Depreciation and amortization 
C) Selling,general and administrative expenses 
D) Research and development 
A) Interest expense 
B) Depreciation and amortization 
C) Selling,general and administrative expenses 
D) Research and development

Question 19

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 excess cash in 2019 is $23.4.If EBIT is $41.2 million and tax rate is 21%,its Return on Invested Capital in 2019 is closest to:

Accepted Answer

A) 0.104. 
B) 0.064. 
C) 0.038. 
D) 0.083. 
A) 0.104. 
B) 0.064. 
C) 0.038. 
D) 0.083.

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 31,2009 Luther's cash flow from financing activities is:

Accepted Answer

A) $127.1 million. 
B) $123.2 million. 
C) $137.3 million. 
D) $132.6 million. 
A) $127.1 million. 
B) $123.2 million. 
C) $137.3 million. 
D) $132.6 million.

Exam 2: Introduction to Financial Statement Analysis

The firm's revenues and expenses over a period of time are reported on the firm's:

Accounts payable is a:

Use the table for the question(s)below. Consider the following balance sheet: -If on December 31,2018 Luther has 8 million shares outstanding trading at $15 per share,then what is Luther's enterprise value?

If Moon Corporation's gross margin declined,which of the following is TRUE?

Which of the following adjustments is NOT correct if you are trying to calculate cash flow from financing activities?

The Sarbanes-Oxley Act (SOX)was passed by Congress in 2002,in response to:

Wyatt Oil has a net profit margin of 4.0%,a total asset turnover of 2.2,total assets of $525 million,and a book value of equity of $220 million.Wyatt Oil's current return-on-equity (ROE)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 operating activities is:

Details of acquisitions,spin-offs,leases,taxes,and risk management activities are given:

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 price - earnings ratio (P/E)for the year ending December 31,2019 is closest to:

Use the following information for ECE incorporated: -ECE's Return on Assets (ROA)is:

Which of the following is (are)deducted from EBIT to determine net income?

The third party who checks annual financial statements to ensure that they are prepared according to GAAP and verifies that the information reported is reliable is the:

Which of the following is NOT an operating expense?

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 financing activities is:

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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