Exam 2: Introduction to Financial Statement Analysis

What is the main reason that it is necessary for public companies to follow the rules and format set out in the Generally Accepted Accounting Principles (GAAP)when creating financial statements?

Which of the following is a way that the Operating Activity section of the statement of cash flows adjusts Net Income from the balance sheet?

A firm has 12 million shares outstanding with a current share price of $8.50.The firm has a market-to-book ratio of 3.55 and a book debt-equity ratio of 0.8.If the firm currently has $4 million in cash,what is its enterprise value?

Use the table for the question(s) below. -Refer to the statement of financial position above.If in 2015 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share,then Luther's market-to-book ratio would be closest to:

One way Enron manipulated its financial statements was to sell assets at inflated prices to other firms,while giving a promise to buy back those assets at a later date.The incoming cash was recorded as revenue,but the promise to buy back the assets was not disclosed.Which of the following is one of the ways that such a transaction is deceptive?

Secure Energy Services has 20 million shares outstanding,with a current share price of $12.15 per share.If the firm's market-to-book ratio is 4.5,what is the firm's book value of equity?

Use the table for the question(s) below. -Refer to the statement of financial position above.If on December 31,2014 Luther has 8 million shares outstanding trading at $15 per share,then what is Luther's enterprise value?

Use the table for the question(s) below. Statement of Financial Position -If the above statement of financial position is for a retail company,how has the company's leverage changed between 2014 and 2015?

In general,a successful firm will have a market-to-book ratio that is substantially greater than 1.

A firm's net profit margin increased from 3.2% to 3.8% from 2014 to 2015.If total sales increased from $312 million in 2014 to $345 million in 2015,what was the increase in net income?

Use the table for the question(s) below. -Refer to the statement of financial position above.What is Luther's net working capital in 2014?

What is a firm's gross profit?

Use the table for the question(s) below. -Refer to the statement of financial position above.If in 2015 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share,then using the market value of equity,the debt-equity ratio for Luther in 2015 is closest to:

The balance sheet and income statement of a particular firm are shown above.What does the accounts receivable days ratio tell you about this company?

A firm has an asset turnover ratio of 1.6 and a net profit margin of 1.3%.If the firm has 5 dollars in assets per dollar of equity,what is the firm's ROE?

Use the table for the question(s) below. -Refer to the statement of financial position above.Luther's quick ratio for 2014 is closest to:

Use the table for the question(s) below. -Refer to the statement of financial position above.If in 2015 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share,then Luther's stock would be considered to be

Use of Generally Accepted Accounting Principles (GAAP)and auditors have eliminated the danger of inadvertent or deliberate fraud in financial statements.

Use the table for the question(s) below. Statement of Financial Position -If the above statement of financial position is for a retail company,what indications about this company would best be drawn from the changes in shareholders' equity between 2014 and 2015?

Which of the following describes why Canada's regulation changes following the Enron scandal were less strict than those in the United States?