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

On the statement of cash flows,depreciation would be classified as?

The following selected financial data pertain to four companies: a hotel,a travel agency,a meat packing company and a pharmaceutical company. Required: Match each with the financial information and explain why you made your choice as you did. Balance Sheet Data (component percentages) Company 1 Company 2 Company 3 Company Cash 7.2 22.0 6.0 11.2 Accounts Receivable 28.0 40.0 3.4 23.0 Inventory 21.4 0.5 0.9 27.4 Property, Plant \& Equipment 32.0 19.0 75.1 25.0 Income Statement Data (component percentages) Gross Profit 15.2 Not Applicable Not Applicable 44.0 Profit before Taxes 1.8 3.3 2.5 7.0 Ratios Current ratio (over the last five years) 1.6 1.3 0.5 1.8 Inventory turnover ratio 27.8 Not Applicable Npplicable 3.4 Debt-to-equity ratio 1.8 2.3 5.8 1.4

Most financial statement analysis aims to assess a firm's ____________________ and ____________________.

Which of the following is not one of Porter's five forces?

When identifying the strategies that a particular firm pursues to gain a competitive advantage it is important to determine if its products are designed to meet the needs of a specific market segment or are they intended for a(n)_____________________________________________.

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. Donovan Company Maltese Company Net sales \ 1,549,035 \ 339,038 Cost of goods sold 1,080,490 241,000 Operating expenses 302,275 79,000 Interest expense 8,980 2,252 Income tax expense 54,500 6,650 Current Assets 325,975 312,410 83,336 79,467 Common Stock, \ 10 par 500,000 500,000 120,000 120,000 Retained earnings 173,460 146,595 38,096 28,998 Non-current liabilities 108,500 90,000 29,620 25,000 Current liabilities 65,325 75,815 35,348 30,281 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.

Which of the following assets would appear on the balance sheet at an amount greatly below its fair market value?

The tools of effective financial statement analysis are useful for assessing whether to extend ____________________ to a firm,either for a short-term or for a long-term.

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

Nickel Industries reported the following amounts on its balance sheet on December 31,2014: Cash \ 180,000 Nates payable 100,000 Inventary 325,000 Cantributed Capital 750,000 Net Praperty, Plant a Equipment 600,000 Accaunts Receivable 30,000 Accuunts Payable 75,000 Retained Earrings ? Required: 1.What is the amount of Nickel's total assets at the end of 2011? 2.Identify the items listed above that are liabilities. 3.What is the amount of Nickel's retained earnings at the end of 2011? 4.Prepare a balance sheet for Nickel Industries using U.S.GAAP as of December 31,2011. 5.Nickel Industries wishes to purchase merchandise from your company on account.The amount of the purchases would probably be about $11,000 per month,and the terms would require Nickel to make payment in full within 30 days.Would you recommend that your company grant credit to Nickel under these terms? Explain the reasoning for your response.

Which of these would be considered Property,Plant,and Equipment?

A value chain for an industry sets forth:

Which financial statement would you look at to determine whether a company will be able to pay for the goods when payment is due in 30 days? 

The accrual basis of accounting recognizes:

Which of the following would not appear as a liability on the balance sheet?

What are the six interconnected activities related to financial statement analysis?

All of the following are the building blocks for financial statement analysis except:

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

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 higher the value added from any activity,the higher should be the ____________________ from engaging in that activity.