Exam 2: Introduction to Financial Statement Analysis

The firm's statement of cash flows uses the balance sheet and the income statement to determine the amount of cash a firm has generated and how it has used that cash during a given period.

What role do external auditors play in the firm's financial reporting process?

Which type of transactions must be disclosed in the management discussion and analysis?

A firm has ROE of 15% and a net profit margin of 4.5%.If the firm has 6.5 dollars in assets per dollar of equity,what is the firm's asset turnover ratio?

How can we cross check the statement of cash flows?

A firm has total sales of $53 million.It has gross profit of $12 million,operating income of $8.5 million,and net income of $4 million.What is the firm's net profit margin?

Financial statements are accounting reports issued periodically by a firm that present information on the past performance of the firm,a summary of the firm's assets and the financing of those assets,and a prediction of the firm's future performance.

A firm has EBIT of $29 million,interest expense of $4.5 million,and pays taxes of $8 million.If the firm has 15 million shares outstanding,what is the firm's EPS?

Price-earnings ratios tend to be high for fast-growing firms.

Use the table for the question(s) below. -Refer to the statement of financial position above.The change in Luther's quick ratio from 2014 to 2015 is closest to:

MTS has 83 million shares outstanding with a current share price of $19.25.The firm has a market-to-book ratio of 4.17 and a book debt-equity ratio of 1.59.If MTS currently has $24 million in cash,what is its enterprise value?

Which of the following is one of the ways that the Sarbanes-Oxley Act sought to improve the accuracy of information given to both boards and shareholders?

A manufacturer of plastic bottles for the medical trade purchases a new compression blow moulder for its bottle production plant.How will the cost to the company of this piece of equipment be recorded?

The management of public companies are not legally required to disclose any off balance sheet transactions.

A firm has ROE of 5.5% and an asset turnover ratio of 1.2.If the firm has 10 dollars in assets per dollar of equity,what is the firm's net profit margin?

Which of the following is the main lesson that analysts and investors should take from the case of Enron?

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

Use the table for the question(s) below. -Refer to the income statement above.Luther's operating margin for the year ending December 31,2014 is closest to:

What will be the effect on the statement of cash flows if a firm buys a new processing plant through a new loan?

Use the table for the question(s) below. -Refer to the income statement above.Assuming that Luther has no convertible bonds outstanding,then for the year ending December 31,2015 Luther's diluted earnings per share are closest to: