Question 1

The ﬁnancial statement summarizing a ﬁrm's accounting performance over a period of time is the:

Accepted Answer

A) income statement. 
B) statement of ﬁnancial position. 
C) statement of cash ﬂows. 
D) tax reconciliation statement. 
E) shareholders' equity sheet. 
A) income statement. 
B) statement of ﬁnancial position. 
C) statement of cash ﬂows. 
D) tax reconciliation statement. 
E) shareholders' equity sheet.

Question 2

Earnings per share is equal to:

Accepted Answer

A) net income divided by the total number of shares outstanding. 
B) net income divided by the par value of the ordinary equity. 
C) gross income multiplied by the par value of the ordinary equity. 
D) operating income divided by the par value of the ordinary equity. 
E) net income divided by total shareholders' equity. 
A) net income divided by the total number of shares outstanding. 
B) net income divided by the par value of the ordinary equity. 
C) gross income multiplied by the par value of the ordinary equity. 
D) operating income divided by the par value of the ordinary equity. 
E) net income divided by total shareholders' equity.

Question 3

The net change in cash ﬂow from investing activities equals:

Accepted Answer

A) the acquisition of current assets plus any interest payable and dividends paid minus the sales of current
Assets. 
B) the addition of nom-current assets minus the sales of non-current assets divided by any security
Investments. 
C) any security investments minus the sales of non-current assets divided by the acquisition of any non-current
Assets. 
D) the acquisition of non-current assets plus any security investments minus the sales of non-current assets. 
E) the acquisition of current assets plus any security investments minus the sales of current assets. 
A) the acquisition of current assets plus any interest payable and dividends paid minus the sales of current
Assets. 
B) the addition of nom-current assets minus the sales of non-current assets divided by any security
Investments. 
C) any security investments minus the sales of non-current assets divided by the acquisition of any non-current
Assets. 
D) the acquisition of non-current assets plus any security investments minus the sales of non-current assets. 
E) the acquisition of current assets plus any security investments minus the sales of current assets.

Question 4

What is the change in net working capital from 2013 to 2014?

Accepted Answer

A) -€93 
B) -€7 
C) €7 
D) €85 
E) €97 
A) -€93 
B) -€7 
C) €7 
D) €85 
E) €97

Question 5

What is the amount of the net capital spending for 2014?

Accepted Answer

A) -£290 million. 
B) £795 million. 
C) £1,080 million. 
D) £1,660 million. 
E) £2,165 million. 
A) -£290 million. 
B) £795 million. 
C) £1,080 million. 
D) £1,660 million. 
E) £2,165 million.

Question 6

At the beginning of the year, a ﬁrm has current assets of £380 and current liabilities of £210.At the end of the year, the current assets are £410 and the current liabilities are £250.What is the change in net working capital?

Accepted Answer

A) -£30 
B) -£10 
C) £0 
D) £10 
E) £30 
A) -£30 
B) -£10 
C) £0 
D) £10 
E) £30

Question 7

Which of the following are included in current liabilities? 
I.Note payable to a supplier in eighteen months.
II.Debt payable to a mortgage company in nine months.
III.Trade payables to suppliers.
IV.Loan payable to the bank in fourteen months.

Accepted Answer

A) I and III only. 
B) II and III only. 
C) III and IV only. 
D) II, III, and IV only. 
E) I, II, and III only. 
A) I and III only. 
B) II and III only. 
C) III and IV only. 
D) II, III, and IV only. 
E) I, II, and III only.

Question 8

_____ is calculated by adding back non-cash expenses to net income and adjusting for changes in current assets and liabilities.

Accepted Answer

A) Cash generated from operations 
B) Capital spending 
C) Net working capital 
D) Cash ﬂow from operating activities 
E) Cash ﬂow to creditors 
A) Cash generated from operations 
B) Capital spending 
C) Net working capital 
D) Cash ﬂow from operating activities 
E) Cash ﬂow to creditors

Question 9

Under International Accounting Standards, a ﬁrm's assets are reported at:

Accepted Answer

A) market value. 
B) liquidation value. 
C) intrinsic value. 
D) cost. 
E) None of the above. 
A) market value. 
B) liquidation value. 
C) intrinsic value. 
D) cost. 
E) None of the above.

Question 10

_____ measures the cash generated from operations not counting cash ﬂows arising from investment expenditure or ﬁnancing.

Accepted Answer

A) Operating cash ﬂow 
B) Capital spending 
C) Net working capital 
D) Cash ﬂow from creditors 
E) Cash ﬂow to shareholders 
A) Operating cash ﬂow 
B) Capital spending 
C) Net working capital 
D) Cash ﬂow from creditors 
E) Cash ﬂow to shareholders

Question 11

Peggy Grey's Cookies has at the end of the year, Sales of $140,000, Total Assets of $115,000 and Net Income of $50,000.Calculate the Total asset turnover and Capital intensity?

Accepted Answer

A) 1.2174 and 0.8214. 
B) 1.2174 and 1. 
C) 1 and 0.8214 
D) 2.8 and 0.3571. 
E) 2.3 and 0.4348. 
A) 1.2174 and 0.8214. 
B) 1.2174 and 1. 
C) 1 and 0.8214 
D) 2.8 and 0.3571. 
E) 2.3 and 0.4348.

Question 12

What is the cash ﬂow of the ﬁrm for 2014?

Accepted Answer

A) €50 
B) €247 
C) €297 
D) €447 
E) €517 
A) €50 
B) €247 
C) €297 
D) €447 
E) €517

Question 13

Which of the following are included in current assets? 
I.Equipment
II.Inventory
III.Trade payables
IV.Cash

Accepted Answer

A) II and IV only. 
B) I and III only. 
C) I, II, and IV only. 
D) III and IV only. 
E) II, III, and IV only. 
A) II and IV only. 
B) I and III only. 
C) I, II, and IV only. 
D) III and IV only. 
E) II, III, and IV only.

Question 14

A ﬁrm starts its year with a positive net working capital.During the year, the ﬁrm acquires more short-term debt than it does short-term assets.This means that:

Accepted Answer

A) the ending net working capital will be negative. 
B) both accounts receivable and inventory decreased during the year. 
C) the beginning current assets were less than the beginning current liabilities. 
D) trade payables increased and inventory decreased during the year. 
E) the ending net working capital can be positive, negative, or equal to zero. 
A) the ending net working capital will be negative. 
B) both accounts receivable and inventory decreased during the year. 
C) the beginning current assets were less than the beginning current liabilities. 
D) trade payables increased and inventory decreased during the year. 
E) the ending net working capital can be positive, negative, or equal to zero.

Question 15

Net working capital is deﬁned as:

Accepted Answer

A) total liabilities minus shareholders' equity. 
B) current liabilities minus shareholders' equity. 
C) non-current assets minus non-current liabilities. 
D) total assets minus total liabilities. 
E) current assets minus current liabilities. 
A) total liabilities minus shareholders' equity. 
B) current liabilities minus shareholders' equity. 
C) non-current assets minus non-current liabilities. 
D) total assets minus total liabilities. 
E) current assets minus current liabilities.

Question 16

What is the cash ﬂow of the ﬁrm for 2014?

Accepted Answer

A) £430 million. 
B) £485 million. 
C) £1,340 million. 
D) £2,590 million. 
E) £3,100 million. 
A) £430 million. 
B) £485 million. 
C) £1,340 million. 
D) £2,590 million. 
E) £3,100 million.

Question 17

_____ is current assets minus current liabilities.

Accepted Answer

A) Operating cash ﬂow 
B) Capital spending 
C) Net working capital 
D) Cash ﬂow from shareholders 
E) Cash ﬂow to creditors 
A) Operating cash ﬂow 
B) Capital spending 
C) Net working capital 
D) Cash ﬂow from shareholders 
E) Cash ﬂow to creditors

Question 18

When you are making a ﬁnancial decision, the most relevant tax rate is the _____ rate.

Accepted Answer

A) average 
B) non-current 
C) marginal 
D) total 
E) variable 
A) average 
B) non-current 
C) marginal 
D) total 
E) variable

Question 19

Why is interest expense excluded from the operating cash ﬂow calculation?

Accepted Answer

Operating cash ﬂow is designed to repres

Question 20

Teddy's Pillows has beginning net non-current assets of £480 and ending net non-current assets of £530.Assets valued at £300 were sold during the year.Depreciation was £40.What is the amount of capital spending?

Accepted Answer

A) £10 
B) £50 
C) £90 
D) £260 
E) £390 
A) £10 
B) £50 
C) £90 
D) £260 
E) £390

Exam 3: Financial Statement Analysis

The ﬁnancial statement summarizing a ﬁrm's accounting performance over a period of time is the:

Earnings per share is equal to:

The net change in cash ﬂow from investing activities equals:

What is the change in net working capital from 2013 to 2014?

What is the amount of the net capital spending for 2014?

At the beginning of the year, a ﬁrm has current assets of £380 and current liabilities of £210.At the end of the year, the current assets are £410 and the current liabilities are £250.What is the change in net working capital?

Which of the following are included in current liabilities? I.Note payable to a supplier in eighteen months. II.Debt payable to a mortgage company in nine months. III.Trade payables to suppliers. IV.Loan payable to the bank in fourteen months.

_____ is calculated by adding back non-cash expenses to net income and adjusting for changes in current assets and liabilities.

Under International Accounting Standards, a ﬁrm's assets are reported at:

_____ measures the cash generated from operations not counting cash ﬂows arising from investment expenditure or ﬁnancing.

Peggy Grey's Cookies has at the end of the year, Sales of $140,000, Total Assets of $115,000 and Net Income of $50,000.Calculate the Total asset turnover and Capital intensity?

What is the cash ﬂow of the ﬁrm for 2014?

Which of the following are included in current assets? I.Equipment II.Inventory III.Trade payables IV.Cash

A ﬁrm starts its year with a positive net working capital.During the year, the ﬁrm acquires more short-term debt than it does short-term assets.This means that:

Net working capital is deﬁned as:

What is the cash ﬂow of the ﬁrm for 2014?

_____ is current assets minus current liabilities.

When you are making a ﬁnancial decision, the most relevant tax rate is the _____ rate.

Why is interest expense excluded from the operating cash ﬂow calculation?

Teddy's Pillows has beginning net non-current assets of £480 and ending net non-current assets of £530.Assets valued at £300 were sold during the year.Depreciation was £40.What is the amount of capital spending?

Introduction to Corporate Finance

Corporate Governance

Discounted Cash Flow Valuation

Bond, Equity and Firm Valuation

Net Present Value and Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options and Capital Budgeting

Risk and Return: Lessons From Market History

Risk and Return: the Capital Asset Pricing Model

Factor Models and the Arbitrage Pricing Theory

Risk, Cost of Capital and Capital Budgeting

Efficient Capital Markets and Behavioural Finance

Long-Term Financing: an Introduction

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Valuation and Capital Budgeting for the Levered Firm

Dividends and Other Payouts

Equity Financing

Debt Financing

Leasing

Options and Corporate Finance

Options and Corporate Finance: Extensions and Applications

Warrants and Convertibles

Financial Risk Management With Derivatives

Short-Term Finance and Planning

Short-Term Capital Management

Mergers and Acquisitions

Financial Distress

International Corporate Finance

Filters