Exam 1: Overview of Financial Reporting, Financial Statement Analysis, and Valuation

When attempting to identify the economic characteristics of the industry in which a particular firm participates an analyst might ask which of the following questions?

The second step in financial statement analysis is to identify the company strategy.Which of the following is a question an analyst should ask when performing a strategy analysis?

What is comprehensive income?

How easily can customers switch to substitute products is a question one might ask when assessing the ___________________________________.

When assessing buyer power using Porter's five forces,which of the following is not consistent with low buyer power?

Assets that do not represent a claim to a fixed amount of cash are called ____________________ assets.

Which of the following is not a characteristic of an extraordinary item?

All of the following are principal provisions of the Sarbanes-Oxley Act of 2002 except:

Which of the following would not inhibit new entrants into a market?

Assets for a particular business might include

What is the principal activity of security analysts?

The two categories of shareholders' equity usually found on the balance sheet of a corporation are

Normally,intense rivalries have a tendency to reduce ____________________.

Which of the following is a question an analyst would ask when assessing the quality of a firm's financial statements?

Another important step in financial statement analysis is to assess the quality of a firm's ________________________________________ and if necessary adjust them for such characteristics as sustainability or comparability.

Statements that express all items in a particular financial statement as a percentage of some common base are called _________________________ statements.

On a common size basis,which of the following assets is normally largest for a electric utility?

Net income is equal to:

____________________ assets include the rights established by law or contract to the future use of property.

Comparative financial statement data for Donovan Company and Maltese Company,two competitors in the same industry,appear below.All balance sheet data are as of December 31,2012,and December 31,2011. REQUIRED: (a)Prepare a common-size 2012 income statement using the data for Donovan Company and Maltese Company in columnar form. (b)Comment on the relative profitability of the companies by computing the return on assets (Net income/(Average total assets)and the return on total equity (Net income / (Average Shareholders' Equity)ratios for both companies.