Exam 2: Introduction to Financial Statement Analysis

The third party who checks annual financial statements to ensure that they are prepared according to Generally Accepted Accounting Principles (GAAP) and verifies that the information reported is reliable is the ________.

A company has a share price of $22.15 and 118 million shares outstanding. Its market-to-book ratio is 4.2, its book debt-equity ratio is 3.2, and it has cash of $800 million. How much would it cost to take over this business assuming you pay its enterprise value?

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

The exchanges in which of the following countries or regions do NOT accept the International Financial Reporting Standards set out by the International Accounting Standards Board?

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. Which of the following is true of AOS Industries' operating cash flows?

What are the requirements of section 404 of SOX?

State the names of some of the firms discussed in the chapter that had inaccurate reporting in their financial statements.

AOS Industries Statement of Cash Flows for 2008 Investment activities Financing activities Consider the above statement of cash flows. If all amounts shown above are in millions of dollars, what were AOS Industries' retained earnings for 2008?

Gross profit is calculated as ________.

What is the main problem in using a balance sheet to provide an accurate assessment of the value of a company's equity?

International Financial Reporting Standards are taking root throughout the world. However, it is unlikely that the U.S. will report according to IFRS before the second half of the twenty-first century.

What is the need for the notes to the financial statements when a firm's operations are already documented in the financial statements?

Which of the following balance sheet equations is INCORRECT?

Use the table for the question(s) below. -Refer to the balance sheet above. If on December 31, 2005 Luther has 8 million shares outstanding trading at $15 per share, then what is Luther's enterprise value?

What will be the effect on the income statement if a firm buys a new processing plant through a new loan?

Manufacturer A has a profit margin of 2.2%, an asset turnover of 1.7 and an equity multiplier of 5.0. Manufacturer B has a profit margin of 2.5%, an asset turnover of 1.2 and an equity multiplier of 4.7. How much asset turnover should manufacturer B have to match manufacturer A's ROE?

Which of the following is a way that the operating activity section of the statement of cash flows adjusts Net Income from the balance sheet?

Balance Sheet Net property, plant, The above diagram shows a balance sheet for a certain company. If the company buys new property, plant and equipment today using its entire cash balance, what will its net working capital be?

Which of the following is the LEAST likely explanation for a firm's high ROE?

Use the table for the question(s) below. Income Statement for Xenon Manufacturing: Selling, general, Earnings before interest -Consider the above Income Statement for Xenon Manufacturing. All values are in millions of dollars. Calculate the gross margin for 2008 and 2009. What does the change in the gross margin between these two years imply about the company?