Exam 1: Overview of Financial Reporting,financial Statement Analysis,and Valuation

The third step in financial statement analysis is to assess the quality of the firm's financial statements.Which of the following is a question an analyst should ask when performing this step?

____________________ assets include the rights established by law or contract to the future use of property.

The threat of new entrants is measured by whether there are entry barriers,such as capital investment,________________________________________,patents,or regulation that inhibit new entrants.

When a firm attempting to create unique products or services for particular market niches,in order to achieve relatively high profit margins,this is best known as:

When a company sells a subsidiary or a product line on what financial statement is it reported and how is it reported?

Which of the following is not considered to be a liability?

How easily can new firms enter a market is a question one might ask when assessing _____________________________________________.

Which of the following economic characteristics is consistent with a pharmaceutical company?

Assets for a particular business might include:

The _____________________________________________ defines more clearly the explicit responsibility of managers for financial statements,the relation between the independent auditor and the firm audited and the kinds of services permitted and not permitted.

Under the ____________________ basis of accounting,a firm recognizes revenue when it performs all or a substantial portion,of the services it expects to perform and receives either cash or a receivable.

Many people view the balance sheet as being a representation of a firm's economic position.What are some issues that reduce the quality of this representation?

Comparative financial statements for Larson Company,prepared on December 31 are shown below: Required: Assume that one-third of sales are on credit and that cash dividends of $3,000 were declared and paid in 2012.Then,complete a percentage change income statement and a percentage change balance sheet for the company,using both amount and percentage changes from 2011 to 2012.

What is an industry's value chain?

Prepare an analysis of the automobile manufacturing industry using Porter's five forces framework.For each component force provide support for your conclusion.In addition,at the of your analysis provide a conclusion,along with support,of whether you expect the automobile industry to report high or low profitability in the near future.

___________________________________ financial statements are helpful in highlighting the relative magnitude of changes in financial statement data from year to year.

Many market participants argue that financial markets are efficient and that financial statement users cannot routinely analyze financial statements to find mispriced securities.This view would lead some to suggest that there is little value to financial statement analysis. Required: Provide a discussion of the role of financial statement analysis in an efficient capital market and reasons why financial statement analysis is still valuable.

Depreciation is a(n)___________________ added back to net income when preparing the operating activities section of the Statement of Cash Flows.

Current assets are defined as:

Another important step in financial statement analysis is to assess the quality of a firm's _____________________________ and if necessary adjust them for such characteristics as sustainability or comparability.