Question 1

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

Accepted Answer

1.Balance Sheet
2.Income Statement
3.Statement of Cash Flows
4.Statement of Stockholder's Equity

Question 2

Use the table for the question(s) below.
Consider the following income statement and other information:
  
-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% C

Question 3

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. A

Question 4

What is the role of an auditor in financial statement analysis?

Accepted Answer

Key points:
1.To ensure that the annual

Question 5

Use the table for the question(s) below.
Consider the following income statement and other information:
  
-For the year ending December 31,2009 Luther's earnings per share are closest to:

Accepted Answer

A)  $0.96 
B)  $1.04 
C)  $1.28 
D)  $1.33 
A)  $0.96 
B)  $1.04 
C)  $1.28 
D)  $1.33

Question 6

Use the following information for ECE incorporated:
Assets $200 million
Shareholder Equity $100 million
Sales $300 million
-If ECE's return on assets (ROA)is 12% ,then ECE's net income is:

Accepted Answer

A)  $6 million 
B)  $12 million 
C)  $24 million 
D)  $36 million 
A)  $6 million 
B)  $12 million 
C)  $24 million 
D)  $36 million

Question 7

Use the table for the question(s) below.
Consider the following income statement and other information:
  
-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-assets (ROA)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 8

If Firm A and Firm B are in the same industry and use the same production method,and Firm A's asset turnover is higher than that of Firm B,then all else equal we can conclude

Accepted Answer

A)  Firm A is more efficient than Firm B. 
B)  Firm A has a lower dollar amount of assets than Firm B. 
C)  Firm A has higher sales than Firm B. 
D)  Firm A has a lower ROE than Firm B. 
A)  Firm A is more efficient than Firm B. 
B)  Firm A has a lower dollar amount of assets than Firm B. 
C)  Firm A has higher sales than Firm B. 
D)  Firm A has a lower ROE than Firm B.

Question 9

Use the table for the question(s) below.
Consider the following balance sheet:
    
-The change in Luther's quick ratio from 2008 to 2009 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 10

Use the table for the question(s) below.
Consider the following balance sheet:
    
-If in 2009 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share,then Luther's Market-to-book ratio would be closest to:

Accepted Answer

A)  0.39 
B)  0.76 
C)  1.29 
D)  2.57 
A)  0.39 
B)  0.76 
C)  1.29 
D)  2.57

Question 11

The firm's revenues and expenses over a period of time are reported on the firm's

Accepted Answer

A)  income statement or statement of financial performance. 
B)  income statement or statement of financial position. 
C)  balance sheet or statement of financial performance. 
D)  balance sheet or statement of financial position. 
A)  income statement or statement of financial performance. 
B)  income statement or statement of financial position. 
C)  balance sheet or statement of financial performance. 
D)  balance sheet or statement of financial position.

Question 12

Use the table for the question(s) below.
Consider the following income statement and other information:
  
-Luther's price - earnings ration (P/E)for the year ending December 31,2009 is closest to:

Accepted Answer

A)  7.9 
B)  10.1 
C)  15.4 
D)  16.0 
A)  7.9 
B)  10.1 
C)  15.4 
D)  16.0

Question 13

The firm's equity multiplier 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 14

The DuPont Identity expresses the firm's ROE in terms of

Accepted Answer

A)  profitability, asset efficiency, and leverage. 
B)  valuation, leverage, and interest coverage. 
C)  profitability, margins, and valuation. 
D)  equity, assets, and liabilities. 
A)  profitability, asset efficiency, and leverage. 
B)  valuation, leverage, and interest coverage. 
C)  profitability, margins, and valuation. 
D)  equity, assets, and liabilities.

Question 15

On the balance sheet,current maturities of long-term debt debt appears

Accepted Answer

A)  in the Stockholders' Equity section. 
B)  in the Operating Expenses section. 
C)  in the Current Assets section. 
D)  in the Current Liabilities section. 
A)  in the Stockholders' Equity section. 
B)  in the Operating Expenses section. 
C)  in the Current Assets section. 
D)  in the Current Liabilities section.

Question 16

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 enterprise value is closest to:

Accepted Answer

A)  $952.16 million 
B)  $3,580.14 million 
C)  $4,168.06 million 
D)  $4,425.15 million 
A)  $952.16 million 
B)  $3,580.14 million 
C)  $4,168.06 million 
D)  $4,425.15 million

Question 17

Use the table for the question(s) below.
Consider the following balance sheet:
    
-What is Luther's net working capital in 2008?

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 18

If Alex Corporation takes out a bank loan to purchase a machine used in production and everything else stays the same,its equity multiplier will ________,and its ROE will ________.

Accepted Answer

A)  increase; increase 
B)  decrease; decrease 
C)  increase; decrease 
D)  decrease; increase 
A)  increase; increase 
B)  decrease; decrease 
C)  increase; decrease 
D)  decrease; increase

Question 19

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 20

If Moon Corporation's gross margin declined,which of the following is true?

Accepted Answer

A)  Its cost of goods sold increased. 
B)  Its cost of goods sold as a percent of sales increased. 
C)  Its sales increased. 
D)  Its net profit margin was unaffected by the decline. 
A)  Its cost of goods sold increased. 
B)  Its cost of goods sold as a percent of sales increased. 
C)  Its sales increased. 
D)  Its net profit margin was unaffected by the decline.

Exam 2: Introduction to Financial Statement Analysis

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

Off-balance sheet transactions are required to be disclosed

What is the role of an auditor in financial statement analysis?

Use the table for the question(s) below. Consider the following income statement and other information: -For the year ending December 31,2009 Luther's earnings per share are closest to:

Use the following information for ECE incorporated: Assets $200 million Shareholder Equity $100 million Sales $300 million -If ECE's return on assets (ROA)is 12% ,then ECE's net income is:

If Firm A and Firm B are in the same industry and use the same production method,and Firm A's asset turnover is higher than that of Firm B,then all else equal we can conclude

Use the table for the question(s) below. Consider the following balance sheet: -The change in Luther's quick ratio from 2008 to 2009 is closest to:

Use the table for the question(s) below. Consider the following balance sheet: -If in 2009 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share,then Luther's Market-to-book ratio would be closest to:

The firm's revenues and expenses over a period of time are reported on the firm's

Use the table for the question(s) below. Consider the following income statement and other information: -Luther's price - earnings ration (P/E)for the year ending December 31,2009 is closest to:

The firm's equity multiplier measures

The DuPont Identity expresses the firm's ROE in terms of

On the balance sheet,current maturities of long-term debt debt appears

Use the table for the question(s) below. Consider the following balance sheet: -What is Luther's net working capital in 2008?

If Alex Corporation takes out a bank loan to purchase a machine used in production and everything else stays the same,its equity multiplier will ________,and its ROE will ________.

Cash is a

If Moon Corporation's gross margin declined,which of the following is true?

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

The Capital Asset Pricing Model

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

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

If Alex Corporation takes out a bank loan to purchase a machine used in production and everything else stays the same,its equity multiplier will ,and its ROE will .