Exam 2: Introduction to Financial Statement Analysis

Income Statement for CharmCorp: Selling, general, Earnings before interest Consider the above Income Statement for CharmCorp. All values are in millions of dollars. If CharmCorp. has 4 million shares outstanding, and its managers and employees have stock options for 2 million shares, what is its diluted EPS in 2008?

Why must care be taken when comparing a firm's share price to its operating income?

Allen Company bought a new copy machine to be depreciated straight line for three years for use by sales personnel. Where would this purchase be reflected on the Statement of Cash Flows?

Which of the following is the main lesson that analysts and investors should take from the cases of Enron and WorldCom?

Use the table for the question(s) below. Balance Sheet Net property, plant, -If the above balance sheet is for a retail company, what indications about this company would best be drawn from the changes in quick ratio between 2007 and 2008?

Use the table for the question(s) below. Balance Sheet Net property, plant, -If the above balance sheet is for a retail company, what indications about this company would best be drawn from the changes in the balance sheet between 2007 and 2008?

In 2009, an agricultural company introduced a new cropping process which reduced the cost of growing some of its crops. If sales in 2008 and 2009 were steady at $30 million, but the gross margin increased from 2.8% to 3.9% between those years, by what amount was the cost of sales reduced?

A printing company prints a brochure for a client and then bills them for this service. At the time the printing company's financial disclosure statements are prepared, the client has not yet paid the bill for this service. How will this transaction be recorded?

Use the table for the question(s) below. AOS Industries Statement of Cash Flows for 2008 Investment activities Financing activities -Consider the above statement of cash flows. What were AOS Industries' major means of raising money in 2008?

Accounts payable is a ________.

Which of the following is NOT one of the financial statements that must be produced by a public company?

Which ratio would you use to measure the financial health of a firm by assessing that firm's leverage?

A firm's statement of cash flows uses the balance sheet and the income statement to determine the amount of cash a firm has generated and how it has used that cash during a given period.

Balance Sheet Net property, plant, The above diagram shows a balance sheet for a certain company. All quantities shown are in millions of dollars. How would the balance sheet change if the company's long-term assets were judged to depreciate at an extra $5 million per year?

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

What is a firm's net income?

Which of the following is NOT an operating expense?

AOS Industries Statement of Cash Flows for 2008 Investment activities Financing activities Consider the above statement of cash flows. In 2008, AOS Industries had contemplated buying a new warehouse for $3 million, the cost of which would be depreciated over 10 years. If AOS Industries has a tax rate of 25%, what would be the impact for the amount of cash held by AOS at the end of the 2008?

How does a firm select the dates for preparation of its income statement?

A delivery company is creating a balance sheet. Which of the following would most likely be considered a short-term liability on this balance sheet?