Question 1

A univariate model to predict financial failure uses a single variable in a prediction model.

Accepted Answer

A) True 
 B)False  True

Question 2

The authors (Tom Copeland,Tim Keller,and Jack Morrin)maintain that the correct way to value dot.coms is by using the classic discounted-cash-flow (DCF)approach to valuating,reinforcing the continued importance of basic economics and finance.

Accepted Answer

A) True 
 B)False  True

Question 3

The financial literature and valuation books strongly support the use of multiperiod discounted valuation model either in terms of earnings or cash flow.

Accepted Answer

A) True 
 B)False  True

Question 4

Which of the following ratios is given the highest significance rating by Certified Public Accountants?

Accepted Answer

A) Quick Ratio 
B) Debt/Equity 
C) Net Profit Margin 
D) Current Ratio 
E) Times Interest Earned 
A) Quick Ratio 
B) Debt/Equity 
C) Net Profit Margin 
D) Current Ratio 
E) Times Interest Earned

Question 5

It is likely that particular attention should be paid to cash,accounts receivable,and inventory when forecasting financial failure.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following ratios is given the highest significance rating by commercial loan officers?

Accepted Answer

A) Inventory Turnover In Days 
B) Degree of Financial Leverage 
C) Times Interest Earned 
D) Fixed Charge Coverage 
E) Debt/Equity 
A) Inventory Turnover In Days 
B) Degree of Financial Leverage 
C) Times Interest Earned 
D) Fixed Charge Coverage 
E) Debt/Equity

Question 7

The interest rate that is assumed to be earned on pension funds can have a material influence on the pension expense and the pension liability.The higher the rate of interest assumed to be earned on pension funds,the higher the pension expense and the higher the pension liability.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not a discounted cash flow model for valuation?

Accepted Answer

A) Free cash flow 
B) Dividend discount model 
C) Discounted cash flow 
D) Discounted abnormal earnings 
E) All of the answers are discounted cash flow models. 
A) Free cash flow 
B) Dividend discount model 
C) Discounted cash flow 
D) Discounted abnormal earnings 
E) All of the answers are discounted cash flow models.

Question 9

Usually,a company must make estimates in the preparation of financial statements as of a given date.

Accepted Answer

A) True 
 B)False

Question 10

In financial accounting,which of the following assets is not considered to be an intangible asset?

Accepted Answer

A) Goodwill 
B) Patents 
C) Copyrights 
D) Trademarks 
E) Accounts receivable 
A) Goodwill 
B) Patents 
C) Copyrights 
D) Trademarks 
E) Accounts receivable

Question 11

The following data are presented for Hillsdale Company. $\begin{array}{llcc}
2012&  \text {Net income as reported   } & \$60,000 \
2012& \text { Inventory reserve  } &\$30,000\
 2011&\text {Inventory reserve   } &\$20,000\
2012& \text {Income taxes  } &\$20,000\
2012& \text {  Income hefnre incomp taxes} &\$80,000\
 \text {  } &\
\end{array}$
  
Required:
Compute the approximate income for 2012 if inventory had been valued at approximate current cost.

Accepted Answer

The answer of The following data are presented for Hillsdale...

Question 12

The straight-line depreciation method is a conservative depreciation method.

Accepted Answer

A) True 
 B)False

Question 13

A review of the computational methodology used to compute the ratios for annual reports indicated that there were wide differences of opinion on how many of the ratios should have been computed.

Accepted Answer

A) True 
 B)False

Question 14

The Beaver Study indicated the following ratio (ratios)to be the best for forecasting financial failure:

Accepted Answer

A) cash flow/total debt. 
B) net income/total assets. 
C) total debt/total assets. 
D) cash flow/total debt and net income/total assets. 
E) all of the answers are correct. 
A) cash flow/total debt. 
B) net income/total assets. 
C) total debt/total assets. 
D) cash flow/total debt and net income/total assets. 
E) all of the answers are correct.

Question 15

Under inflationary conditions,the least conservative inventory method is lifo.

Accepted Answer

A) True 
 B)False

Question 16

Profitability ratios are the most likely ratios to be selected for corporate objectives.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following ratios is given the highest significance rating by controllers?

Accepted Answer

A) Current Ratio 
B) Earning Per Share 
C) Return on Equity - After Tax 
D) Return on Assets - After Tax 
E) Price/Earnings Ratio 
A) Current Ratio 
B) Earning Per Share 
C) Return on Equity - After Tax 
D) Return on Assets - After Tax 
E) Price/Earnings Ratio

Question 18

Which of the following statements is not true?

Accepted Answer

A) The depreciation method and the period of time selected to depreciate an asset can have a significant influence on income. 
B) There are many depreciation methods. 
C) The depreciation methods that recognize a large amount of depreciation in the later years of an asset's life are conservative. 
D) The straight-line depreciation method recognizes depreciation in equal amounts over each year of the life of the asset. 
E) There is sometimes a material difference in the lives used for depreciation between firms. 
A) The depreciation method and the period of time selected to depreciate an asset can have a significant influence on income. 
B) There are many depreciation methods. 
C) The depreciation methods that recognize a large amount of depreciation in the later years of an asset's life are conservative. 
D) The straight-line depreciation method recognizes depreciation in equal amounts over each year of the life of the asset. 
E) There is sometimes a material difference in the lives used for depreciation between firms.

Question 19

Tom Copeland,Tim Keller,and Jack Morrin,on their book Valuation,Measuring and Managing the Value of Companies,observed that acquirers paid too much for companies because of all but one of the following reasons:

Accepted Answer

A) market potential greater than estimated. 
B) overoptimistic appraisal of market potential. 
C) overestimation of synergies. 
D) poor due diligence. 
E) overbidding. 
A) market potential greater than estimated. 
B) overoptimistic appraisal of market potential. 
C) overestimation of synergies. 
D) poor due diligence. 
E) overbidding.

Question 20

Most of the ratios given a high significance rating by chartered financial analysts have a primary measure of profitability.

Accepted Answer

A) True 
 B)False

A univariate model to predict financial failure uses a single variable in a prediction model.

The authors (Tom Copeland,Tim Keller,and Jack Morrin)maintain that the correct way to value dot.coms is by using the classic discounted-cash-flow (DCF)approach to valuating,reinforcing the continued importance of basic economics and finance.

The financial literature and valuation books strongly support the use of multiperiod discounted valuation model either in terms of earnings or cash flow.

Which of the following ratios is given the highest significance rating by Certified Public Accountants?

It is likely that particular attention should be paid to cash,accounts receivable,and inventory when forecasting financial failure.

Which of the following ratios is given the highest significance rating by commercial loan officers?

The interest rate that is assumed to be earned on pension funds can have a material influence on the pension expense and the pension liability.The higher the rate of interest assumed to be earned on pension funds,the higher the pension expense and the higher the pension liability.

Which of the following is not a discounted cash flow model for valuation?

Usually,a company must make estimates in the preparation of financial statements as of a given date.

In financial accounting,which of the following assets is not considered to be an intangible asset?

The straight-line depreciation method is a conservative depreciation method.

A review of the computational methodology used to compute the ratios for annual reports indicated that there were wide differences of opinion on how many of the ratios should have been computed.

The Beaver Study indicated the following ratio (ratios)to be the best for forecasting financial failure:

Under inflationary conditions,the least conservative inventory method is lifo.

Profitability ratios are the most likely ratios to be selected for corporate objectives.

Which of the following ratios is given the highest significance rating by controllers?

Which of the following statements is not true?

Tom Copeland,Tim Keller,and Jack Morrin,on their book Valuation,Measuring and Managing the Value of Companies,observed that acquirers paid too much for companies because of all but one of the following reasons:

Most of the ratios given a high significance rating by chartered financial analysts have a primary measure of profitability.

Introduction to Financial Reporting

Introduction to Financial Statements and Other Financial Reporting Topics

Balance Sheet

Income Statement

Basics of Analysis

Liquidity of Short-Term Assets;related Debt-Paying Ability

Long-Term Debt-Paying Ability

Profitability

For the Investor

Statement of Cash Flows

Special Industries: Banks, utilities, oil and Gas, transportation, insurance, real Estate Companies

Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations

Filters

Exam 11: Expanded Analysis

A univariate model to predict financial failure uses a single variable in a prediction model.

The authors (Tom Copeland,Tim Keller,and Jack Morrin)maintain that the correct way to value dot.coms is by using the classic discounted-cash-flow (DCF)approach to valuating,reinforcing the continued importance of basic economics and finance.

The financial literature and valuation books strongly support the use of multiperiod discounted valuation model either in terms of earnings or cash flow.

Which of the following ratios is given the highest significance rating by Certified Public Accountants?

It is likely that particular attention should be paid to cash,accounts receivable,and inventory when forecasting financial failure.

Which of the following ratios is given the highest significance rating by commercial loan officers?

The interest rate that is assumed to be earned on pension funds can have a material influence on the pension expense and the pension liability.The higher the rate of interest assumed to be earned on pension funds,the higher the pension expense and the higher the pension liability.

Which of the following is not a discounted cash flow model for valuation?

Usually,a company must make estimates in the preparation of financial statements as of a given date.

In financial accounting,which of the following assets is not considered to be an intangible asset?

The straight-line depreciation method is a conservative depreciation method.

A review of the computational methodology used to compute the ratios for annual reports indicated that there were wide differences of opinion on how many of the ratios should have been computed.

The Beaver Study indicated the following ratio (ratios)to be the best for forecasting financial failure:

Under inflationary conditions,the least conservative inventory method is lifo.

Profitability ratios are the most likely ratios to be selected for corporate objectives.

Which of the following ratios is given the highest significance rating by controllers?

Which of the following statements is not true?

Tom Copeland,Tim Keller,and Jack Morrin,on their book Valuation,Measuring and Managing the Value of Companies,observed that acquirers paid too much for companies because of all but one of the following reasons:

Most of the ratios given a high significance rating by chartered financial analysts have a primary measure of profitability.

Introduction to Financial Reporting

Introduction to Financial Statements and Other Financial Reporting Topics

Balance Sheet

Income Statement

Basics of Analysis

Liquidity of Short-Term Assets;related Debt-Paying Ability

Long-Term Debt-Paying Ability

Profitability

For the Investor

Statement of Cash Flows

Special Industries: Banks, utilities, oil and Gas, transportation, insurance, real Estate Companies

Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations

Filters