Exam 2: Introduction to Financial Statement Analysis

Use the table for the question(s) below. Statement of Financial Position -The above diagram shows a statement of financial position for a certain company.All quantities shown are in millions of dollars.How would the balance sheet change if the company's long-term assets were judged to depreciate at an extra $5 million per year?

A delivery company is creating a statement of financial position.Which of the following would most likely be considered a short-term liability on this statement of financial position?

Why must care be taken when comparing a firm's share price to its operating income?

Manufacturer A has a profit margin of 2.0%,an asset turnover of 1.7,and an equity multiplier of 4.9. Manufacturer B has a profit margin of 2.3%,an asset turnover of 1.1,and an equity multiplier of 4.7. How much asset turnover should manufacturer B have to match manufacturer A's ROE?

A printing company prints a brochure for a client,and then bills them for this service.At the time the printing company's financial disclosure statements are prepared,the client has not yet paid the bill for this service.How will this transaction be recorded?

Which of the following best describes why the left and right sides of a statement of financial position are equal?

Use the table for the question(s) below. Statement of Financial Position -The above diagram shows a statement of financial position for a certain company.All quantities shown are in millions of dollars.If the company has 4 million shares outstanding,and these shares are trading at a price of $8.24 per share,what does this tell you about how investors view this firm's book value?

What role does Generally Accepted Accounting Principles (GAAP)play in the accounting process?

A firm has EBIT of $4.5 million,interest expense of $400,000,and pays taxes of $1.2 million.If the firm has 2 million shares outstanding,what is the firm's EPS?

The major components of shareholders' equity are

What is the need for the notes to the financial statements when the firm's operations are already documented in the financial statements?

A software company acquires a smaller company in order to acquire the patents that it holds.Where will the cost of this acquisition be recorded on the statement of cash flows?

What is the main problem in using a statement of financial position to provide an accurate assessment of the value of a company's equity?

Use the table for the question(s) below. -Refer to the statement of financial position above.Luther's current ratio for 2015 is closest to:

Use the table for the question(s) below. -Refer to the income statement above.Luther has convertible bonds outstanding that would allow bondholders to convert their bonds into 700,000 shares of Luther stock.For the year ending December 31,2015 Luther's diluted earnings per share are closest to:

The above data is for five regional trucking firms.Based on price-earnings ratios,which firm's stock is the best value?

Which of the following best describes why firms produce financial statements?

Use the table for the question(s) below. Income Statement for Xenon Manufacturing: -Consider the above Income Statement for Xenon Manufacturing.All values are in millions of dollars.If Xenon Manufacturing has 25 million shares outstanding,what is its EPS in 2015?

Use the table for the question(s) below. Income Statement for Xenon Manufacturing: -Consider the above Income Statement for Xenon Manufacturing.All values are in millions of dollars.Calculate the gross margin for 2014 and 2015.What does the change in the gross margin between these two years imply about the company?

Allen Company bought a new copy machine to be depreciated straight line for three years for use by sales personnel.Where would this purchase be reflected on the Statement of Cash Flows?