Question 1

What information do the notes to financial statements provide?

Accepted Answer

In addition to the financial statements,

Question 2

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

Accepted Answer

Operating cash flow = NI + Dep

Question 3

The debt-to-equity ratio is calculated by dividing the ________ by ________.

Accepted Answer

A)  total debt; total shareholders' equity 
B)  short-term debt; retained earnings 
C)  long-term debt; total equity 
D)  long-term debt; preferred equity 
A)  total debt; total shareholders' equity 
B)  short-term debt; retained earnings 
C)  long-term debt; total equity 
D)  long-term debt; preferred equity

Question 4

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 5

A 30 year mortgage loan is a

Accepted Answer

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

Question 6

Following the Sarbanes-Oxley Act in United States,Canadian regulators adopted similar measures that came into effect in ________.

Accepted Answer

A)  2001 
B)  2003 
C)  2005 
D)  2007 
A)  2001 
B)  2003 
C)  2005 
D)  2007

Question 7

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

Accepted Answer

The firm's statement of cash flows utili

Question 8

Use the table for the question(s) below.
Consider the following income statement and other information:
  
-Luther's return on equity (ROE)for the year ending December 31,2006 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 9

In the IFRS,in addition to the five financial statements,companies provide ________ with further details on the information provided in the statements.

Accepted Answer

A)  pro forma statements 
B)  statements of cash used and sources 
C)  extensive notes 
D)  ratio analysis 
A)  pro forma statements 
B)  statements of cash used and sources 
C)  extensive notes 
D)  ratio analysis

Question 10

The income statement lists the firm's ________.

Accepted Answer

A)  assets and equities over a period of time 
B)  assets and liabilities over a period of time 
C)  variable costs and fixed costs at the end of the fiscal year 
D)  revenues and expenses over a period of time 
A)  assets and equities over a period of time 
B)  assets and liabilities over a period of time 
C)  variable costs and fixed costs at the end of the fiscal year 
D)  revenues and expenses over a period of time

Question 11

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 using the market value of equity,the debt to equity ratio for Luther in 2006 is closest to:

Accepted Answer

A)  1.71 
B)  1.78 
C)  2.31 
D)  2.35 
A)  1.71 
B)  1.78 
C)  2.31 
D)  2.35

Question 12

As the Bernard Madoff's Ponzi Scheme makes clear,when making an investment decision,it is important not only to review the firm's ________,but also to consider ________ who prepare the statement in the first place.

Accepted Answer

A)  balance sheet; the reliability and reputation of the auditors 
B)  Financial Statements; the reliability and reputation of the government offices 
C)  Financial Statements; the reliability and reputation of the auditors 
D)  Financial Statements; the reliability and reputation of the bookkeepers 
A)  balance sheet; the reliability and reputation of the auditors 
B)  Financial Statements; the reliability and reputation of the government offices 
C)  Financial Statements; the reliability and reputation of the auditors 
D)  Financial Statements; the reliability and reputation of the bookkeepers

Question 13

Which of the following statements regarding the balance sheet is incorrect?

Accepted Answer

A)  The balance sheet provides a snapshot of the firm's financial position at a given point in time. 
B)  The balance sheet lists the firm's assets and liabilities. 
C)  The balance sheet reports stockholders' equity on the right hand side. 
D)  The balance sheet reports liabilities on the left hand side. 
A)  The balance sheet provides a snapshot of the firm's financial position at a given point in time. 
B)  The balance sheet lists the firm's assets and liabilities. 
C)  The balance sheet reports stockholders' equity on the right hand side. 
D)  The balance sheet reports liabilities on the left hand side.

Question 14

Depreciation is ________ that the firm ________.

Accepted Answer

A)  an actual cash expense; pays 
B)  not an actual cash expense; receives 
C)  not an actual cash expense; pays 
D)  an actual cash expense; receives 
A)  an actual cash expense; pays 
B)  not an actual cash expense; receives 
C)  not an actual cash expense; pays 
D)  an actual cash expense; receives

Question 15

Use the table for the question(s) below.
Consider the following balance sheet:
    
-Market-to-book-ratio is also called the ________.

Accepted Answer

A)  price-to-debt ratio 
B)  price-to-book ratio 
C)  price-to-asset ratio 
D)  price-to-equity ratio 
A)  price-to-debt ratio 
B)  price-to-book ratio 
C)  price-to-asset ratio 
D)  price-to-equity ratio

Question 16

Canadian public companies are required to file their interim financial statements and annual financial statements with which one of the following authorities?

Accepted Answer

A)  Provincial Security Commissions 
B)  Federal Security Commissions 
C)  Provincial Finance Ministry 
D)  Federal Finance Ministry 
A)  Provincial Security Commissions 
B)  Federal Security Commissions 
C)  Provincial Finance Ministry 
D)  Federal Finance Ministry

Question 17

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 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 18

Use the table for the question(s) below.
Consider the following balance sheet:
    
-If on December 31,2005 Luther has 8 million shares outstanding trading at $15 per share,then what is Luther's market-to-book ratio?

Accepted Answer

market-to-book = market value

Question 19

The P/E ratio is not useful when the firm's ________ are negative.In this case,it is common to look at the firm's ________ relative to sales.

Accepted Answer

A)  operating earnings; enterprise value 
B)  net earnings; enterprise value 
C)  operating earnings; market value 
D)  net earnings; market value 
A)  operating earnings; enterprise value 
B)  net earnings; enterprise value 
C)  operating earnings; market value 
D)  net earnings; market value

Question 20

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

Accepted Answer

Key points:
1.To ensure that the annual

Exam 2: Introduction to Financial Statement Analysis

What information do the notes to financial statements provide?

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

The debt-to-equity ratio is calculated by dividing the ________ by ________.

If Luther's accounts receivable were $55.5 million in 2006,then calculate Luther's accounts receivable days for 2006.

A 30 year mortgage loan is a

Following the Sarbanes-Oxley Act in United States,Canadian regulators adopted similar measures that came into effect in ________.

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 return on equity (ROE)for the year ending December 31,2006 is closest to:

In the IFRS,in addition to the five financial statements,companies provide ________ with further details on the information provided in the statements.

The income statement lists the firm's ________.

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 using the market value of equity,the debt to equity ratio for Luther in 2006 is closest to:

As the Bernard Madoff's Ponzi Scheme makes clear,when making an investment decision,it is important not only to review the firm's ________,but also to consider ________ who prepare the statement in the first place.

Which of the following statements regarding the balance sheet is incorrect?

Depreciation is ________ that the firm ________.

Use the table for the question(s) below. Consider the following balance sheet: -Market-to-book-ratio is also called the ________.

Canadian public companies are required to file their interim financial statements and annual financial statements with which one of the following authorities?

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 Luther's market-to-book ratio would be closest to:

Use the table for the question(s) below. Consider the following balance sheet: -If on December 31,2005 Luther has 8 million shares outstanding trading at $15 per share,then what is Luther's market-to-book ratio?

The P/E ratio is not useful when the firm's ________ are negative.In this case,it is common to look at the firm's ________ relative to sales.

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

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 debt-to-equity ratio is calculated by dividing the by .

As the Bernard Madoff's Ponzi Scheme makes clear,when making an investment decision,it is important not only to review the firm's ,but also to consider who prepare the statement in the first place.

Depreciation is that the firm .

The P/E ratio is not useful when the firm's are negative.In this case,it is common to look at the firm's relative to sales.