Question 1

The firm's equity multiplier measures:

Accepted Answer

A) the value of assets held per dollar of shareholder equity. 
B) the return the firm has earned on its past investments. 
C) the firm's ability to sell a product for more than the cost of producing it. 
D) how efficiently the firm is utilizing its assets to generate sales. 
A) the value of assets held per dollar of shareholder equity. 
B) the return the firm has earned on its past investments. 
C) the firm's ability to sell a product for more than the cost of producing it. 
D) how efficiently the firm is utilizing its assets to generate sales.

Question 2

Use the table for the question(s)below.
Consider the following income statement and other information:
  
-Luther's price - earnings ratio (P/E)for the year ending December 31,2009 is closest to:

Accepted Answer

A) 7.9 
B) 10.1 
C) 15.4 
D) 16.0 
A) 7.9 
B) 10.1 
C) 15.4 
D) 16.0

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 operating activities is:

Accepted Answer

Operating cash flow = NI + Dep

Question 4

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

Accepted Answer

Key points: 1.To ensure that the annual

Question 5

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

Accepted Answer

A) The balance sheet provides a snapshots 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 snapshots 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 6

Perrigo's earnings per share (EPS)is closest to:

Accepted Answer

A) $0.19 
B) $1.79 
C) $2.81 
D) $3.76 
A) $0.19 
B) $1.79 
C) $2.81 
D) $3.76

Question 7

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 31,2008 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 8

Dustin's Donuts experienced a decrease in the value of the trademark of a company it acquired two years ago.This reduction in value results in:

Accepted Answer

A) an impairment charge. 
B) depreciation expense. 
C) an operating expense. 
D) goodwill. 
A) an impairment charge. 
B) depreciation expense. 
C) an operating expense. 
D) goodwill.

Question 9

Which of the following includes other sources of income or expenses that arise from activities that are not a central part of a company's business?

Accepted Answer

A) Earnings Before Interest and Taxes (EBIT) 
B) Gross Profit 
C) Operating Income 
D) Operating Expenses 
A) Earnings Before Interest and Taxes (EBIT) 
B) Gross Profit 
C) Operating Income 
D) Operating Expenses

Question 10

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 investing activities is:

Accepted Answer

A) 122.49 
B) 358.2 
C) 66.39 
D) 295.71 
A) 122.49 
B) 358.2 
C) 66.39 
D) 295.71

Question 11

If Firm A and Firm B are in the same industry and use the same production method,and Firm A's asset turnover is higher than that of Firm B,then all else equal we can conclude:

Accepted Answer

A) Firm A is more efficient than Firm B. 
B) Firm A has a lower dollar amount of assets than Firm B. 
C) Firm A has higher sales than Firm B. 
D) Firm A has a lower ROE than Firm B. 
A) Firm A is more efficient than Firm B. 
B) Firm A has a lower dollar amount of assets than Firm B. 
C) Firm A has higher sales than Firm B. 
D) Firm A has a lower ROE than Firm B.

Question 12

Use the table for the question(s)below.
Consider the following income statement and other information:
  
-Assuming that Luther has no convertible bonds outstanding,then for the year ending December 31,2009 Luther's diluted earnings per share are closest to:

Accepted Answer

A) $1.01 
B) $1.04 
C) $1.28 
D) $1.33 
A) $1.01 
B) $1.04 
C) $1.28 
D) $1.33

Question 13

Which of the following is NOT a section on the cash flow statement?

Accepted Answer

A) Income generating activities 
B) Investing activities 
C) Operating activities 
D) Financing activities 
A) Income generating activities 
B) Investing activities 
C) Operating activities 
D) Financing activities

Question 14

The statement of financial position 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 15

The firm's asset turnover measures:

Accepted Answer

A) the value of assets held per dollar of shareholder equity. 
B) the return the firm has earned on its past investments. 
C) the firm's ability to sell a product for more than the cost of producing it. 
D) how efficiently the firm is utilizing its assets to generate sales. 
A) the value of assets held per dollar of shareholder equity. 
B) the return the firm has earned on its past investments. 
C) the firm's ability to sell a product for more than the cost of producing it. 
D) how efficiently the firm is utilizing its assets to generate sales.

Question 16

Use the table for the question(s)below.
Consider the following balance sheet:
    
-Luther Corporation's stock price is $39 per share and the company has 20 million shares outstanding.Its excess cash in 2009 is $23.4.If EBIT is 41.2 and tax rate is 35%,its Return on Invested Capital in 2009 is closest to:

Accepted Answer

A) 0.104 
B) 0.064 
C) 0.038 
D) 0.068 
A) 0.104 
B) 0.064 
C) 0.038 
D) 0.068

Question 17

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 18

If Alex Corporation takes out a bank loan to purchase a machine used in production and everything else stays the same,its equity multiplier will ________,and its ROE will ________.

Accepted Answer

A) increase; increase 
B) decrease; decrease 
C) increase; decrease 
D) decrease; increase 
A) increase; increase 
B) decrease; decrease 
C) increase; decrease 
D) decrease; increase

Question 19

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

A) 127.1 
B) 123.2 
C) 137.3 
D) 132.6 
A) 127.1 
B) 123.2 
C) 137.3 
D) 132.6

Question 20

The Sarbanes-Oxley Act (SOX)was passed by Congress in 2002,in response to:

Accepted Answer

A) financial scandals,including WorldCom and Enron. 
B) financial scandals,including Bernie Madoff and AIG. 
C) financial scandals,including General Motors and Chrysler. 
D) the Troubled Asset Relief Program (TARP). 
A) financial scandals,including WorldCom and Enron. 
B) financial scandals,including Bernie Madoff and AIG. 
C) financial scandals,including General Motors and Chrysler. 
D) the Troubled Asset Relief Program (TARP).

The firm's equity multiplier measures:

Use the table for the question(s)below. Consider the following income statement and other information: -Luther's price - earnings ratio (P/E)for the year ending December 31,2009 is closest 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 operating activities is:

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

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

Perrigo's earnings per share (EPS)is closest to:

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 31,2008 is closest to:

Dustin's Donuts experienced a decrease in the value of the trademark of a company it acquired two years ago.This reduction in value results in:

Which of the following includes other sources of income or expenses that arise from activities that are not a central part of a company's business?

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 investing activities is:

If Firm A and Firm B are in the same industry and use the same production method,and Firm A's asset turnover is higher than that of Firm B,then all else equal we can conclude:

Use the table for the question(s)below. Consider the following income statement and other information: -Assuming that Luther has no convertible bonds outstanding,then for the year ending December 31,2009 Luther's diluted earnings per share are closest to:

Which of the following is NOT a section on the cash flow statement?

The statement of financial position is also known as the:

The firm's asset turnover measures:

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

If Alex Corporation takes out a bank loan to purchase a machine used in production and everything else stays the same,its equity multiplier will ,and its ROE will .

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:

The Sarbanes-Oxley Act (SOX)was passed by Congress in 2002,in response to:

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

Filters

Exam 2: Introduction to Financial Statement Analysis

The firm's equity multiplier measures:

Use the table for the question(s)below. Consider the following income statement and other information: -Luther's price - earnings ratio (P/E)for the year ending December 31,2009 is closest 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 operating activities is:

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

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

Perrigo's earnings per share (EPS)is closest to:

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 31,2008 is closest to:

Dustin's Donuts experienced a decrease in the value of the trademark of a company it acquired two years ago.This reduction in value results in:

Which of the following includes other sources of income or expenses that arise from activities that are not a central part of a company's business?

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 investing activities is:

If Firm A and Firm B are in the same industry and use the same production method,and Firm A's asset turnover is higher than that of Firm B,then all else equal we can conclude:

Use the table for the question(s)below. Consider the following income statement and other information: -Assuming that Luther has no convertible bonds outstanding,then for the year ending December 31,2009 Luther's diluted earnings per share are closest to:

Which of the following is NOT a section on the cash flow statement?

The statement of financial position is also known as the:

The firm's asset turnover measures:

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

If Alex Corporation takes out a bank loan to purchase a machine used in production and everything else stays the same,its equity multiplier will ________,and its ROE will ________.

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:

The Sarbanes-Oxley Act (SOX)was passed by Congress in 2002,in response to:

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

Filters

If Alex Corporation takes out a bank loan to purchase a machine used in production and everything else stays the same,its equity multiplier will ,and its ROE will .