Question 1

Suppose Novak Company experienced a reduction in its ROE over the last year. This fall could be attributed to:

Accepted Answer

A)  an increase in net profit margin. 
B)  a decrease in asset turnover. 
C)  an increase in leverage. 
D)  a decrease in Equity. 
A)  an increase in net profit margin. 
B)  a decrease in asset turnover. 
C)  an increase in leverage. 
D)  a decrease in Equity.

Question 2

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 3

Use the tables for the question(s) below.
Consider the following financial information:
      
-For the year ending December 31, 2009 Luther's cash flow from financing activities is:

Accepted Answer

Cash flow from financing:
- dividends pa

Question 4

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 5

On the balance sheet, short-term 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 6

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.
-The statement of financial performance is also known as the:

Accepted Answer

A)  balance sheet. 
B)  income statement. 
C)  statement of cash flows. 
D)  statement of stockholder's equity. 
A)  balance sheet. 
B)  income statement. 
C)  statement of cash flows. 
D)  statement of stockholder's equity.

Question 7

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 8

If Moon Corporation has depreciation or amortization expense, which of the following is TRUE?

Accepted Answer

A)  Its EBITDA /Interest Coverage ratio will be greater than its EBIT/Interest Coverage ratio. 
B)  Its EBITDA /Interest Coverage ratio will be less than its EBIT/Interest Coverage ratio. 
C)  Its EBITDA /Interest Coverage ratio will be equal to its EBIT/Interest Coverage ratio. 
D)  Not enough information to answer the question. 
A)  Its EBITDA /Interest Coverage ratio will be greater than its EBIT/Interest Coverage ratio. 
B)  Its EBITDA /Interest Coverage ratio will be less than its EBIT/Interest Coverage ratio. 
C)  Its EBITDA /Interest Coverage ratio will be equal to its EBIT/Interest Coverage ratio. 
D)  Not enough information to answer the question.

Question 9

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 2009, then calculate Luther's accounts receivable days for 2009.

Accepted Answer

Accounts receivable

Question 10

Use the following information for ECE incorporated:
Assets $200 million
Shareholder Equity $100 million
Sales $300 million
Net Income $15 million
Interest Expense $2 million
-IECE's Return on Assets (ROA) is:

Accepted Answer

A)  5.0% 
B)  8.5% 
C)  7.5% 
D)  15.0% 
A)  5.0% 
B)  8.5% 
C)  7.5% 
D)  15.0%

Question 11

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

Accepted Answer

A)  0.77 
B)  0.87 
C)  1.15 
D)  1.30 
A)  0.77 
B)  0.87 
C)  1.15 
D)  1.30

Question 12

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 price-earnings ratio (P/E) is closest to:

Accepted Answer

A)  15.96 
B)  21.85 
C)  29.77 
D)  35.64 
A)  15.96 
B)  21.85 
C)  29.77 
D)  35.64

Question 13

Use the table for the question(s) below.
Consider the following income statement and other information:
  
-Luther's EBIT coverage ratio for the year ending December 31, 2008 is closest to:

Accepted Answer

A)  1.64 
B)  1.78 
C)  1.98 
D)  2.19 
A)  1.64 
B)  1.78 
C)  1.98 
D)  2.19

Question 14

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 15

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 2009 is closest to:

Accepted Answer

A)  0.43 
B)  2.29 
C)  2.98 
D)  3.57 
A)  0.43 
B)  2.29 
C)  2.98 
D)  3.57

Question 16

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 and Exchange Commission's (SE
C)  commentary 
D)  Statement of stockholders' equity 
A)  Management discussion and analysis 
B)  Notes to the financial statements 
C)  Securities and Exchange Commission's (SE
C)  commentary 
D)  Statement of stockholders' equity

Question 17

U.S. public companies are required to file their annual financial statements with the U.S. Securities and Exchange Commission on which form?

Accepted Answer

A)  10-A 
B)  10-K 
C)  10-Q 
D)  10-SEC 
A)  10-A 
B)  10-K 
C)  10-Q 
D)  10-SEC

Question 18

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 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 following information for ECE incorporated:
Assets $200 million
Shareholder Equity $100 million
Sales $300 million
Net Income $15 million
Interest Expense $2 million
-If ECE's stock is currently trading at $24.00 and ECE has 25 million shares outstanding, then ECE's market-to-book ratio is closest to:

Accepted Answer

A)  0.24 
B)  4 
C)  6 
D)  30 
A)  0.24 
B)  4 
C)  6 
D)  30

Question 20

Which of the following is an example of an intangible asset?

Accepted Answer

A)  Brand names and trademarks 
B)  Patents 
C)  Customer relationships 
D)  All of the above are intangible assets. 
A)  Brand names and trademarks 
B)  Patents 
C)  Customer relationships 
D)  All of the above are intangible assets.

Exam 2: Introduction to Financial Statement Analysis

Suppose Novak Company experienced a reduction in its ROE over the last year. This fall could be attributed to:

Use the tables for the question(s) below. Consider the following financial information: -For the year ending December 31, 2009 Luther's cash flow from financing activities is:

Cash is a:

On the balance sheet, short-term debt appears:

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

If Moon Corporation has depreciation or amortization expense, which of the following is TRUE?

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 2009, then calculate Luther's accounts receivable days for 2009.

Use the following information for ECE incorporated: Assets $200 million Shareholder Equity $100 million Sales $300 million Net Income $15 million Interest Expense $2 million -IECE's Return on Assets (ROA) is:

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

Use the table for the question(s) below. Consider the following income statement and other information: -Luther's EBIT coverage ratio for the year ending December 31, 2008 is closest to:

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 2009 is closest to:

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:

U.S. public companies are required to file their annual financial statements with the U.S. Securities and Exchange Commission on which form?

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 what is Luther's Enterprise Value?

Which of the following is an example of an intangible asset?

The Corporation

Financial Decision Making and the Law of One Price

The Time Value of Money

Interest Rates

Valuing Bonds

Investment Decision Rules

Fundamentals of Capital Budgeting

Valuing Stocks

Capital Markets and the Pricing of Risk

Optimal Portfolio Choice and the Capital Asset Pricing Model

Estimating the Cost of Capital

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

Raising Equity Capital

Debt Financing

Leasing

Working Capital Management

Short-Term Financial Planning

Mergers and Acquisitions

Corporate Governance

Risk Management

International Corporate Finance

Filters