Question 1

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 2

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 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

The debt-equity ratio is a common ratio used to assess a firm's ________.

Accepted Answer

A)  liquidity 
B)  return on equity 
C)  leverage 
D)  retained earnings 
A)  liquidity 
B)  return on equity 
C)  leverage 
D)  retained earnings

Question 5

Which of the following statements regarding the income statement is incorrect?

Accepted Answer

A)  The income statement shows the earnings and expenses at a given point in time. 
B)  The income statement shows the flow of earnings and expenses generated by the firm between two dates. 
C)  The last or "bottom" line of the income statement shows the firm's net income. 
D)  The first line of an income statement lists the revenues from the sales of products or services. 
A)  The income statement shows the earnings and expenses at a given point in time. 
B)  The income statement shows the flow of earnings and expenses generated by the firm between two dates. 
C)  The last or "bottom" line of the income statement shows the firm's net income. 
D)  The first line of an income statement lists the revenues from the sales of products or services.

Question 6

Use the table for the question(s) below.
Consider the following income statement and other information:
  
-Luther's Net Profit 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 7

________ is the difference between total asset value and total liability value.

Accepted Answer

A)  Market value 
B)  Residual value 
C)  Liquidity value 
D)  Liquidation value 
A)  Market value 
B)  Residual value 
C)  Liquidity value 
D)  Liquidation value

Question 8

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 9

As of January 1,2011,Canadian publicly accountable companies must follow IFRS in their financial statements. IFRS rules are expected to be adopted in the US for fiscal years beginning ________.

Accepted Answer

A)  January 1st, 2014 
B)  January 1st, 2017 
C)  January 1st, 2015 
D)  January 1st, 2016 
A)  January 1st, 2014 
B)  January 1st, 2017 
C)  January 1st, 2015 
D)  January 1st, 2016

Question 10

Creditors often compare a firm's ________ and ________ to assess whether the firm has sufficient working capital to meet its short-term needs.

Accepted Answer

A)  total assets; total liabilities 
B)  current assets; current liabilities 
C)  total assets; current liabilities 
D)  current assets; total liabilities 
A)  total assets; total liabilities 
B)  current assets; current liabilities 
C)  total assets; current liabilities 
D)  current assets; total liabilities

Question 11

Details of acquisitions,spin-offs,leases,taxes,and risk management activities are given

Accepted Answer

A)  in the management discussion and analysis. 
B)  in the Provincial Securities Commission's commentary. 
C)  in the auditor's report. 
D)  in the notes to the financial statements. 
A)  in the management discussion and analysis. 
B)  in the Provincial Securities Commission's commentary. 
C)  in the auditor's report. 
D)  in the notes to the financial statements.

Question 12

Why does a firm's net income not correspond to cash generated?

Accepted Answer

1.There are non-cash entries on the inco

Question 13

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 2006 is closest to:

Accepted Answer

A)  2.21 
B)  2.29 
C)  2.98 
D)  3.03 
A)  2.21 
B)  2.29 
C)  2.98 
D)  3.03

Question 14

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 15

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 16

Management is also required to disclose any ________,which are transactions or arrangements that can have a material impact on the firms future performance yet to do not appear on the ________.

Accepted Answer

A)  earnings per share; income statement 
B)  investment decision; statement of cash flows 
C)  financing decision; statement of cash flows 
D)  off-balance sheet transactions; balance sheet 
A)  earnings per share; income statement 
B)  investment decision; statement of cash flows 
C)  financing decision; statement of cash flows 
D)  off-balance sheet transactions; balance sheet

Question 17

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 18

DuPont Identity expresses the ROE in terms of the firm's ________.

Accepted Answer

A)  profitability, asset efficiency, and leverage 
B)  current assets, current liabilities, long-term debts 
C)  profitability, interest expense, and net income 
D)  total assets, total liabilities, and total equity 
A)  profitability, asset efficiency, and leverage 
B)  current assets, current liabilities, long-term debts 
C)  profitability, interest expense, and net income 
D)  total assets, total liabilities, and total equity

Question 19

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 20

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

Exam 2: Introduction to Financial Statement Analysis

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

Which of the following balance sheet equations is incorrect?

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

The debt-equity ratio is a common ratio used to assess a firm's ________.

Which of the following statements regarding the income statement is incorrect?

Use the table for the question(s) below. Consider the following income statement and other information: -Luther's Net Profit Margin for the year ending December 31,2005 is closest to:

________ is the difference between total asset value and total liability value.

Accounts payable is a

As of January 1,2011,Canadian publicly accountable companies must follow IFRS in their financial statements. IFRS rules are expected to be adopted in the US for fiscal years beginning ________.

Creditors often compare a firm's ________ and ________ to assess whether the firm has sufficient working capital to meet its short-term needs.

Details of acquisitions,spin-offs,leases,taxes,and risk management activities are given

Why does a firm's net income not correspond to cash generated?

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 2006 is closest to:

The change in Luther's quick ratio from 2005 to 2006 is closest to:

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

Management is also required to disclose any ________,which are transactions or arrangements that can have a material impact on the firms future performance yet to do not appear on the ________.

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

DuPont Identity expresses the ROE in terms of the firm's ________.

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

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?

The Corporation

Arbitrage and Financial Decision Making

The Time Value of Money

Interest Rates

Valuing Bonds

Valuing Stocks

Investment Decision Rules

Fundamentals of Capital Budgeting

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

Financial Options

Option Valuation

Real Options

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 Modelling: a Case Study

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 .

Creditors often compare a firm's and to assess whether the firm has sufficient working capital to meet its short-term needs.

Management is also required to disclose any ,which are transactions or arrangements that can have a material impact on the firms future performance yet to do not appear on the .

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