Exam 2: Introduction to Financial Statement Analysis

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?

GenCorp. has a total debt of $140 million and stockholders' equity of $50 million. It also has 26 million shares outstanding, with a market price of $4.00 per share. What is GenCorp's market debt-equity ratio?

Company A has current assets of $42 billion and current liabilities of $41 billion. Company B has current assets of $2.7 billion and current liabilities of $1.8 billion. Which of the following statements is correct, based on this information?

Cash is a ________.

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 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?

The above diagram shows a balance sheet for a certain company. All quantities shown are in millions of dollars. If the company has 5 million shares outstanding, and these shares are trading at a price of $6.39 per share, what does this tell you about how investors view this firm's book value?

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

Use of Generally Accepted Accounting Principles (GAAP) and auditors have eliminated the danger of inadvertent or deliberate fraud in financial statements.

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

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

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

Accounts payable is a ________.

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.

The balance sheet shows the assets, liabilities, and stockholders' equity of a firm over a given length of time.

The above diagram shows a balance sheet for a certain company. All quantities shown are in millions of dollars. What is the company's net working capital?

What role do external auditors play in a firm's financial reporting process?

The management of public companies is not legally required to disclose any off-balance sheet transactions.

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

AOS Industries Statement of Cash Flows for 2008 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?