Question 1

Why is the firm's statement of cash flows very important?

Accepted Answer

The firm's statement of cash flows utili

Question 2

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 31,2005 is closest to:

Accepted Answer

A)  1.8% 
B)  2.7% 
C)  5.4% 
D)  16.7% 
A)  1.8% 
B)  2.7% 
C)  5.4% 
D)  16.7%

Question 3

According to the IFRS,in addition to the balance sheet,income statement,and the statement of cash flows,a firm's complete financial statements will include all of the following EXCEPT:

Accepted Answer

A)  Management discussion and analysis 
B)  Notes to the financial statements 
C)  Securities Commission's commentary 
D)  A statement of shareholders' equity 
A)  Management discussion and analysis 
B)  Notes to the financial statements 
C)  Securities Commission's commentary 
D)  A statement of shareholders' equity

Question 4

Use the table for the question(s) below.
Consider the following balance sheet:    
-What is Luther's net working capital in 2005?

Accepted Answer

A)  $12 million 
B)  $27 million 
C)  $39 million 
D)  $63.6 million 
A)  $12 million 
B)  $27 million 
C)  $39 million 
D)  $63.6 million

Question 5

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 Provincial Securities 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 Provincial Securities Commission's commentary. 
D)  in the statement of stockholders' equity.

Question 6

Which of the following is NOT a financial statement that every public company is required by IFRS to produce?

Accepted Answer

A)  Income Statement 
B)  Statement of Sources and Uses of Cash 
C)  Balance Sheet 
D)  Statement of Shareholders' Equity 
A)  Income Statement 
B)  Statement of Sources and Uses of Cash 
C)  Balance Sheet 
D)  Statement of Shareholders' Equity

Question 7

The balance sheet shows the ________ of a firm ________.The income statement shows the flow of ________ generated by them ________.

Accepted Answer

A)  assets and liabilities, between two dates, revenues and expenses, at a given point in time 
B)  revenues and expenses, between two dates, assets and liabilities, at a given point in time 
C)  assets and liabilities, at a given point in time, revenues and expenses, between two dates 
D)  revenues and expenses, at a given point in time, assets and liabilities, between two dates 
A)  assets and liabilities, between two dates, revenues and expenses, at a given point in time 
B)  revenues and expenses, between two dates, assets and liabilities, at a given point in time 
C)  assets and liabilities, at a given point in time, revenues and expenses, between two dates 
D)  revenues and expenses, at a given point in time, assets and liabilities, between two dates

Question 8

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 2006,then calculate Luther's accounts receivable days for 2006.

Accepted Answer

Accounts r

Question 9

The statement of cash flows is divided into three sections: ________.

Accepted Answer

A)  operating leverage, investment leverage, and financing leverage 
B)  cash inflows, cash outflows, and cash flow cycle 
C)  cash-in-use, cash-in-resource, and cash conversion cycle 
D)  operating activity, investment activity, and financing activity 
A)  operating leverage, investment leverage, and financing leverage 
B)  cash inflows, cash outflows, and cash flow cycle 
C)  cash-in-use, cash-in-resource, and cash conversion cycle 
D)  operating activity, investment activity, and financing activity

Question 10

P/B ratio is ________.

Accepted Answer

A)  price-to-book ratio 
B)  profit-to-book ratio 
C)  property-to-book ratio 
D)  price-to-benefit ratio 
A)  price-to-book ratio 
B)  profit-to-book ratio 
C)  property-to-book ratio 
D)  price-to-benefit ratio

Question 11

Shareholders' equity,the difference between the firm's ________,is an accounting measure of the firm's ________.

Accepted Answer

A)  assets and liabilities, net value 
B)  assets and liabilities, book value 
C)  short-term liabilities and long-term liabilities, net value 
D)  short-term liabilities and long-term liabilities, book value 
A)  assets and liabilities, net value 
B)  assets and liabilities, book value 
C)  short-term liabilities and long-term liabilities, net value 
D)  short-term liabilities and long-term liabilities, book value

Question 12

A higher ________ implies less risk of the firm experiencing a cash shortfall in the near future.

Accepted Answer

A)  return on asset ratio 
B)  market-to-book ratio 
C)  current ratio 
D)  return on equity ratio 
A)  return on asset ratio 
B)  market-to-book ratio 
C)  current ratio 
D)  return on equity ratio

Question 13

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 14

Use the tables for the question(s) below.
Consider the following financial information:      
-Calculate Luther's cash flow from financing activities for the year ending December 31,2006.

Accepted Answer

Cash flow from financing:
- dividends pa

Question 15

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 16

Under IFRS,every public company is required to produce ________ financial statements.

Accepted Answer

A)  four 
B)  five 
C)  six 
D)  seven 
A)  four 
B)  five 
C)  six 
D)  seven

Question 17

Which of the following is NOT a section on the cash flow statement?

Accepted Answer

A)  Income generating activities 
B)  Investing activities 
C)  Operating activities 
D)  Financing activities 
A)  Income generating activities 
B)  Investing activities 
C)  Operating activities 
D)  Financing activities

Question 18

Use the table for the question(s) below.
Consider the following balance sheet:    
-If in 2006 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share,then what is Luther's Enterprise Value?

Accepted Answer

A)  -$63.3 million 
B)  $353.1 million 
C)  $389.7 million 
D)  $516.9 million 
A)  -$63.3 million 
B)  $353.1 million 
C)  $389.7 million 
D)  $516.9 million

Question 19

Use the table for the question(s) below.
Consider the following balance sheet:    
-The change in Luther's quick ratio from 2005 to 2006 is closest to:

Accepted Answer

A)  a decrease of .10 
B)  an increase of .10 
C)  a decrease of .15 
D)  an increase of .15 
A)  a decrease of .10 
B)  an increase of .10 
C)  a decrease of .15 
D)  an increase of .15

Question 20

Gross profit is calculated as:

Accepted Answer

A)  total sales - cost of sales - selling, general and administrative expenses - depreciation and amortization 
B)  total sales - cost of sales - selling, general and administrative expenses 
C)  total sales - cost of sales 
D)  none of the above 
A)  total sales - cost of sales - selling, general and administrative expenses - depreciation and amortization 
B)  total sales - cost of sales - selling, general and administrative expenses 
C)  total sales - cost of sales 
D)  none of the above

Exam 2: Introduction to Financial Statement Analysis

Why is the firm's statement of cash flows very important?

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 31,2005 is closest to:

According to the IFRS,in addition to the balance sheet,income statement,and the statement of cash flows,a firm's complete financial statements will include all of the following EXCEPT:

Use the table for the question(s) below. Consider the following balance sheet: -What is Luther's net working capital in 2005?

Off-balance sheet transactions are required to be disclosed

Which of the following is NOT a financial statement that every public company is required by IFRS to produce?

The balance sheet shows the ________ of a firm ________.The income statement shows the flow of ________ generated by them ________.

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 2006,then calculate Luther's accounts receivable days for 2006.

The statement of cash flows is divided into three sections: ________.

P/B ratio is ________.

Shareholders' equity,the difference between the firm's ________,is an accounting measure of the firm's ________.

A higher ________ implies less risk of the firm experiencing a cash shortfall in the near future.

Which of the following balance sheet equations is incorrect?

Use the tables for the question(s) below. Consider the following financial information: -Calculate Luther's cash flow from financing activities for the year ending December 31,2006.

Which of the following is NOT an operating expense?

Under IFRS,every public company is required to produce ________ financial statements.

Which of the following is NOT a section on the cash flow statement?

Use the table for the question(s) below. Consider the following balance sheet: -If in 2006 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share,then what is Luther's Enterprise Value?

Use the table for the question(s) below. Consider the following balance sheet: -The change in Luther's quick ratio from 2005 to 2006 is closest to:

Gross profit is calculated as:

The Corporation

Arbitrage and Financial Decision Making

The Time Value of Money

Interest Rates

Investment Decision Rules

Fundamentals of Capital Budgeting

Valuing Bonds

Valuing Stocks

Capital Markets and the Pricing of Risk

Optimal Portfolio Choice and the Capital Asset Pricing Model

Estimating the Cost of Capital

Investor Behaviour 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

The Mechanics of Raising Equity Capital

Debt Financing

Leasing

Working Capital Management

Short-Term Financial Planning

Mergers and Acquisitions

Corporate Governance

Risk Management

International Corporate Finance

Filters

The balance sheet shows the of a firm .The income statement shows the flow of generated by them .

Shareholders' equity,the difference between the firm's ,is an accounting measure of the firm's .