Exam 2: Introduction to Financial Statement Analysis

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?

The major components of stockholders' equity are ________.

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

Luther Corporation Consolidated Balance Sheet December 31, 2006 and 2005 (in $ millions) Refer to the balance sheet above. When using the book value of equity, the debt-equity ratio for Luther in 2006 is closest to ________.

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

What role does Generally Accepted Accounting Principles (GAAP) play in the accounting process?

Luther Corporation Consolidated Income Statement Year ended December 31 (in $millions) Refer to the income statement above. Assuming that Luther has no convertible bonds outstanding, then for the year ending December 31, 2006 Luther's diluted earnings per share are closest to ________.

Use the table for the question(s) below. -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?

Luther Corporation Consolidated Income Statement Year ended December 31 (in $millions) Refer to the income statement above. Luther's return on equity (ROE) for the year ending December 31, 2005 is closest to ________.

A small company has current assets of $112,000 and current liabilities of $117,000. Which of the following statements about that company is most likely to be true?

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

A company that produces drugs is preparing a balance sheet. Which of the following would be most likely to be considered a long-term asset on this balance sheet?

Stockholders' equity is the difference between a firm's assets and liabilities, as shown on the balance sheet.

Gross profit is calculated as ________.

The notes to the financial statements would LEAST likely be used for which of the following purposes?

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

Luther Corporation Consolidated Income Statement Year ended December 31 (in $millions) Refer to the income statement above. Luther's operating margin for the year ending December 31, 2005 is closest to ________.

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?

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

Financial statements are optional accounting reports issued periodically by a firm which present information on the past performance of the firm, a summary of the firm's assets and the financing of those assets, and a prediction of the firm's future performance.