Question 1

The statement of financial performance is also known as the:

Accepted Answer

A) balance sheet. 
B) income statement. 
C) statement of cash flows. 
D) statement of stockholder's equity. 
A) balance sheet. 
B) income statement. 
C) statement of cash flows. 
D) statement of stockholder's equity.

Question 2

Which of the following includes other sources of income or expenses that arise from activities that are not a central part of a company's business?

Accepted Answer

A) Earnings Before Interest and Taxes (EBIT) 
B) Gross Profit 
C) Operating Income 
D) Operating Expenses 
A) Earnings Before Interest and Taxes (EBIT) 
B) Gross Profit 
C) Operating Income 
D) Operating Expenses

Question 3

Which of the following balance sheet equations is INCORRECT?

Accepted Answer

A) Assets - Liabilities = Shareholders' Equity 
B) Assets = Liabilities + Shareholders' Equity 
C) Assets - Current Liabilities = Long Term Liabilities 
D) Assets - Current Liabilities = Long Term Liabilities + Shareholders' Equity 
A) Assets - Liabilities = Shareholders' Equity 
B) Assets = Liabilities + Shareholders' Equity 
C) Assets - Current Liabilities = Long Term Liabilities 
D) Assets - Current Liabilities = Long Term Liabilities + Shareholders' Equity

Question 4

Use the information for the question(s)below.
In November 2009,Perrigo Co.(PRGO)had a share price of $39.20.They had 91.33 million shares outstanding,a market-to-book ratio of 3.76.In addition,PRGO had $845.01 million in outstanding debt,$163.82 million in net income,and cash of $257.09 million.
-Perrigo's earnings per share (EPS)is closest to:

Accepted Answer

A) $0.19 
B) $1.79 
C) $2.81 
D) $3.76 
A) $0.19 
B) $1.79 
C) $2.81 
D) $3.76

Question 5

What are the four financial statements that all public companies must produce?

Accepted Answer

1.Balance Sheet
2.In

Question 6

Wyatt Oil has a net profit margin of 4.0%,a total asset turnover of 2.2,total assets of $525 million,and a book value of equity of $220 million.Wyatt Oil's current return-on-equity (ROE)is closest to:

Accepted Answer

A) 8.8% 
B) 9.5% 
C) 21.0% 
D) 22.8% 
A) 8.8% 
B) 9.5% 
C) 21.0% 
D) 22.8%

Question 7

Suppose Novak Company experienced a reduction in its ROE over the last year.This fall could be attributed to:

Accepted Answer

A) an increase in net profit margin. 
B) a decrease in asset turnover. 
C) an increase in leverage. 
D) a decrease in Equity. 
A) an increase in net profit margin. 
B) a decrease in asset turnover. 
C) an increase in leverage. 
D) a decrease in Equity.

Question 8

The Sarbanes-Oxley Act (SOX)forced companies to validate their internal financial control processes by:

Accepted Answer

A) putting strict limits on the amount of non-audit fees (consulting or otherwise)that an accounting firm can earn from a firm that it audits. 
B) requiring the CEO and CFO to return bonuses or profits from the sale of stock that are later shown to be due to misstated financial reports. 
C) requiring auditing firms to have long-standing relationships with their clients and receive lucrative auditing and consulting fees from them. 
D) requiring senior management and the boards of public companies to validate and certify the process through which funds are allocated and controlled. 
A) putting strict limits on the amount of non-audit fees (consulting or otherwise)that an accounting firm can earn from a firm that it audits. 
B) requiring the CEO and CFO to return bonuses or profits from the sale of stock that are later shown to be due to misstated financial reports. 
C) requiring auditing firms to have long-standing relationships with their clients and receive lucrative auditing and consulting fees from them. 
D) requiring senior management and the boards of public companies to validate and certify the process through which funds are allocated and controlled.

Question 9

Which of the following is (are)deducted from EBIT to determine pretax income?

Accepted Answer

A) Earnings per share 
B) Interest expense 
C) Corporate taxes 
D) Both B and C 
A) Earnings per share 
B) Interest expense 
C) Corporate taxes 
D) Both B and C

Question 10

Dustin's Donuts experienced a decrease in the value of the trademark of a company it acquired two years ago.This reduction in value results in:

Accepted Answer

A) an impairment charge. 
B) depreciation expense. 
C) an operating expense. 
D) goodwill. 
A) an impairment charge. 
B) depreciation expense. 
C) an operating expense. 
D) goodwill.

Question 11

If ECE's return on assets (ROA)is 12%,then ECE's return on equity (ROE)is:

Accepted Answer

A) 10% 
B) 12% 
C) 18% 
D) 22% 
A) 10% 
B) 12% 
C) 18% 
D) 22%

Question 12

Perrigo's debt to equity ratio is closest to:

Accepted Answer

A) 0.24 
B) 0.50 
C) 0.75 
D) 0.89 
A) 0.24 
B) 0.50 
C) 0.75 
D) 0.89

Question 13

Use the information for the question(s)below.
In November 2009,Perrigo Co.(PRGO)had a share price of $39.20.They had 91.33 million shares outstanding,a market-to-book ratio of 3.76.In addition,PRGO had $845.01 million in outstanding debt,$163.82 million in net income,and cash of $257.09 million.
-Perrigo's price-earnings ratio (P/E)is closest to:

Accepted Answer

A) 15.96 
B) 21.85 
C) 29.77 
D) 35.64 
A) 15.96 
B) 21.85 
C) 29.77 
D) 35.64

Question 14

The Dodd-Frank Wall Street Reform and Consumer Protection Act does the following:

Accepted Answer

A) Exempts firms with less than $75 million in publicly traded shares from some provisions of SOX. 
B) Requires the SEC to study ways to reduce the cost of SOX for firms with less than $250 million in publicly traded shares. 
C) Strengthens whistle-blower provisions of SOX. 
D) All of the above. 
A) Exempts firms with less than $75 million in publicly traded shares from some provisions of SOX. 
B) Requires the SEC to study ways to reduce the cost of SOX for firms with less than $250 million in publicly traded shares. 
C) Strengthens whistle-blower provisions of SOX. 
D) All of the above.

Question 15

Use the table for the question(s)below.
Consider the following balance sheet:    
-When using the book value of equity,the debt to equity ratio for Luther in 2009 is closest to:

Accepted Answer

A) 0.43 
B) 2.29 
C) 2.98 
D) 3.57 
A) 0.43 
B) 2.29 
C) 2.98 
D) 3.57

Question 16

For the year ending December 31,2009 Luther's cash flow from investing activities is:

Accepted Answer

A) 122.49 
B) 358.2 
C) 66.39 
D) 295.71 
A) 122.49 
B) 358.2 
C) 66.39 
D) 295.71

Question 17

Zoe Dental Implements has gross property,plant and equipment totaling $1.4 million,depreciation expense this year of $200,000,and accumulated depreciation last year of $550,000.What is Zoe's net property,plant and equipment?

Accepted Answer

A) $1.4 million 
B) $1.2 million 
C) $550,000 
D) $650,000 
A) $1.4 million 
B) $1.2 million 
C) $550,000 
D) $650,000

Question 18

Luther Corporation's stock price is $39 per share and the company has 20 million shares outstanding.Its Debt -Capital Ratio for 2009 is closest to:

Accepted Answer

A) 0.696 
B) 0.37 
C) 1.89 
D) 0.654 
A) 0.696 
B) 0.37 
C) 1.89 
D) 0.654

Question 19

Accounts payable is a:

Accepted Answer

A) long-term liability. 
B) current asset. 
C) long-term asset. 
D) current liability. 
A) long-term liability. 
B) current asset. 
C) long-term asset. 
D) current liability.

Question 20

Off-balance sheet transactions are required to be disclosed:

Accepted Answer

A) in the management discussion and analysis. 
B) in the auditor's report. 
C) in the Securities and Exchange Commission's commentary. 
D) in the statement of stockholders' equity. 
A) in the management discussion and analysis. 
B) in the auditor's report. 
C) in the Securities and Exchange Commission's commentary. 
D) in the statement of stockholders' equity.

Exam 2: Introduction to Financial Statement Analysis

The statement of financial performance is also known as the:

Which of the following includes other sources of income or expenses that arise from activities that are not a central part of a company's business?

Which of the following balance sheet equations is INCORRECT?

What are the four financial statements that all public companies must produce?

Wyatt Oil has a net profit margin of 4.0%,a total asset turnover of 2.2,total assets of $525 million,and a book value of equity of $220 million.Wyatt Oil's current return-on-equity (ROE)is closest to:

Suppose Novak Company experienced a reduction in its ROE over the last year.This fall could be attributed to:

The Sarbanes-Oxley Act (SOX)forced companies to validate their internal financial control processes by:

Which of the following is (are)deducted from EBIT to determine pretax income?

Dustin's Donuts experienced a decrease in the value of the trademark of a company it acquired two years ago.This reduction in value results in:

If ECE's return on assets (ROA)is 12%,then ECE's return on equity (ROE)is:

Perrigo's debt to equity ratio is closest to:

The Dodd-Frank Wall Street Reform and Consumer Protection Act does the following:

Use the table for the question(s)below. Consider the following balance sheet: -When using the book value of equity,the debt to equity ratio for Luther in 2009 is closest to:

For the year ending December 31,2009 Luther's cash flow from investing activities is:

Zoe Dental Implements has gross property,plant and equipment totaling $1.4 million,depreciation expense this year of $200,000,and accumulated depreciation last year of $550,000.What is Zoe's net property,plant and equipment?

Luther Corporation's stock price is $39 per share and the company has 20 million shares outstanding.Its Debt -Capital Ratio for 2009 is closest to:

Accounts payable is a:

Off-balance sheet transactions are required to be disclosed:

The Corporation

Financial Decision Making and the Law of One Price

The Time Value of Money

Interest Rates

Valuing Bonds

Investment Decision Rules

Fundamentals of Capital Budgeting

Valuing Stocks

Capital Markets and the Pricing of Risk

Optimal Portfolio Choice and the Capital Asset Pricing Model

Estimating the Cost of Capital

Investor Behavior and Capital Market Efficiency

Capital Structure in a Perfect Market

Debt and Taxes

Financial Distress,managerial Incentives,and Information

Payout Policy

Capital Budgeting and Valuation With Leverage

Valuation and Financial Modeling: a Case Study

Financial Options

Option Valuation

Real Options

Raising Equity Capital

Debt Financing

Leasing

Working Capital Management

Short-Term Financial Planning

Mergers and Acquisitions

Corporate Governance

Risk Management

International Corporate Finance

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