Question 1

Cash is a:

Accepted Answer

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

Question 2

Use the table for the question(s)below.
Consider the following income statement and other information:  
-If Luther's accounts receivable were $55.5 million in 2009,then calculate Luther's accounts receivable days for 2009.

Accepted Answer

Accounts r

Question 3

Luther's quick ratio for 2008 is closest to:

Accepted Answer

A) 0.77 
B) 0.87 
C) 1.15 
D) 1.30 
A) 0.77 
B) 0.87 
C) 1.15 
D) 1.30

Question 4

Use the table for the question(s)below.
Consider the following income statement and other information:  
-Luther's Operating Margin for the year ending December 31,2008 is closest to:

Accepted Answer

A) 0.5% 
B) 0.7% 
C) 5.4% 
D) 6.8% 
A) 0.5% 
B) 0.7% 
C) 5.4% 
D) 6.8%

Question 5

Perrigo's enterprise value is closest to:

Accepted Answer

A) $952.16 million 
B) $3580.14 million 
C) $4168.06 million 
D) $4425.15 million 
A) $952.16 million 
B) $3580.14 million 
C) $4168.06 million 
D) $4425.15 million

Question 6

If ECE's net profit margin is 8%,then ECE's return on equity (ROE)is:

Accepted Answer

A) 10% 
B) 12% 
C) 24% 
D) 30% 
A) 10% 
B) 12% 
C) 24% 
D) 30%

Question 7

Which of the following is (are)deducted from EBIT to determine net 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 8

Chloe Floral Company had segment earnings as follows (in thousands):
2016 2015
Greenery $140 $125
Blooms $240 $215
Pottery and Vases $180 $155
Which segment had the highest percentage growth?

Accepted Answer

A) Greenery 
B) Blooms 
C) Pottery and Vases 
D) Answer cannot be determined from information given. 
A) Greenery 
B) Blooms 
C) Pottery and Vases 
D) Answer cannot be determined from information given.

Question 9

Use the table for the question(s)below.
Consider the following income statement and other information:  
-Luther's EBITDA coverage ratio for the year ending December 31,2009 is closest to:

Accepted Answer

A) 1.64 
B) 1.78 
C) 1.98 
D) 2.19 
A) 1.64 
B) 1.78 
C) 1.98 
D) 2.19

Question 10

Which of the following is NOT an operating expense?

Accepted Answer

A) Interest expense 
B) Depreciation and amortization 
C) Selling,general and administrative expenses 
D) Research and development 
A) Interest expense 
B) Depreciation and amortization 
C) Selling,general and administrative expenses 
D) Research and development

Question 11

Use the following information for ECE incorporated:
Assets $200 million
Shareholder Equity $100 million
Sales $300 million
Net Income $15 million
Interest Expense $2 million
-If ECE's stock is currently trading at $24.00 and ECE has 25 million shares outstanding,then ECE's market-to-book ratio is closest to:

Accepted Answer

A) 0.24 
B) 4 
C) 6 
D) 30 
A) 0.24 
B) 4 
C) 6 
D) 30

Question 12

If Moon Corporation has an increase in sales,which of the following would result in no change in its EBIT margin?

Accepted Answer

A) A proportional increase in its net income 
B) A proportional decrease in its EBIT 
C) A proportional increase in its EBIT 
D) An increase in its operating expenses 
A) A proportional increase in its net income 
B) A proportional decrease in its EBIT 
C) A proportional increase in its EBIT 
D) An increase in its operating expenses

Question 13

The third party who checks annual financial statements to ensure that they are prepared according to GAAP and verifies that the information reported is reliable is the:

Accepted Answer

A) NYSE Enforcement Board. 
B) Accounting Standards Board. 
C) Securities and Exchange Commission (SE
C) . 
D) auditor. 
A) NYSE Enforcement Board. 
B) Accounting Standards Board. 
C) Securities and Exchange Commission (SE
C) . 
D) auditor.

Question 14

Which of the following is NOT a reason why cash flow may not equal net income?

Accepted Answer

A) Amortization is added in when calculating net income. 
B) Changes in inventory will change cash flows but not income. 
C) Capital expenditures are not recorded on the income statement. 
D) Depreciation is deducted when calculating net income. 
A) Amortization is added in when calculating net income. 
B) Changes in inventory will change cash flows but not income. 
C) Capital expenditures are not recorded on the income statement. 
D) Depreciation is deducted when calculating net income.

Question 15

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

Accepted Answer

A) 127.1 
B) 123.2 
C) 137.3 
D) 132.6 
A) 127.1 
B) 123.2 
C) 137.3 
D) 132.6

Question 16

Which of the following adjustments to net income is NOT correct if you are trying to calculate cash flow from operating activities?

Accepted Answer

A) Add increases in accounts payable 
B) Add back depreciation 
C) Add increases in accounts receivable 
D) Deduct increases in inventory 
A) Add increases in accounts payable 
B) Add back depreciation 
C) Add increases in accounts receivable 
D) Deduct increases in inventory

Question 17

The firm's asset turnover measures:

Accepted Answer

A) the value of assets held per dollar of shareholder equity. 
B) the return the firm has earned on its past investments. 
C) the firm's ability to sell a product for more than the cost of producing it. 
D) how efficiently the firm is utilizing its assets to generate sales. 
A) the value of assets held per dollar of shareholder equity. 
B) the return the firm has earned on its past investments. 
C) the firm's ability to sell a product for more than the cost of producing it. 
D) how efficiently the firm is utilizing its assets to generate sales.

Question 18

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

Accepted Answer

A) 2.29 
B) 0.37 
C) 1.89 
D) 0.31 
A) 2.29 
B) 0.37 
C) 1.89 
D) 0.31

Question 19

Luther's return on equity (ROE)for the year ending December 31,2009 is closest to:

Accepted Answer

A) 2.0% 
B) 6.5% 
C) 8.4% 
D) 12.7% 
A) 2.0% 
B) 6.5% 
C) 8.4% 
D) 12.7%

Question 20

Calculate Luther's return of equity (ROE),return of assets (ROA),and price-to-earnings ratio (P/E)for the year ending December 31,2008.

Accepted Answer

ROE = NI/shareholder equity = 10.2/63.6

Exam 2: Introduction to Financial Statement Analysis

Cash is a:

Use the table for the question(s)below. Consider the following income statement and other information: -If Luther's accounts receivable were $55.5 million in 2009,then calculate Luther's accounts receivable days for 2009.

Luther's quick ratio for 2008 is closest to:

Use the table for the question(s)below. Consider the following income statement and other information: -Luther's Operating Margin for the year ending December 31,2008 is closest to:

Perrigo's enterprise value is closest to:

If ECE's net profit margin is 8%,then ECE's return on equity (ROE)is:

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

Chloe Floral Company had segment earnings as follows (in thousands): 2016 2015 Greenery $140 $125 Blooms $240 $215 Pottery and Vases $180 $155 Which segment had the highest percentage growth?

Use the table for the question(s)below. Consider the following income statement and other information: -Luther's EBITDA coverage ratio for the year ending December 31,2009 is closest to:

Which of the following is NOT an operating expense?

If Moon Corporation has an increase in sales,which of the following would result in no change in its EBIT margin?

The third party who checks annual financial statements to ensure that they are prepared according to GAAP and verifies that the information reported is reliable is the:

Which of the following is NOT a reason why cash flow may not equal net income?

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

Which of the following adjustments to net income is NOT correct if you are trying to calculate cash flow from operating activities?

The firm's asset turnover measures:

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

Luther's return on equity (ROE)for the year ending December 31,2009 is closest to:

Calculate Luther's return of equity (ROE),return of assets (ROA),and price-to-earnings ratio (P/E)for the year ending December 31,2008.

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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