Question 1

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 Market value Debt-Equity Ratio for 2009 is closest to:

Accepted Answer

A) 2.29. 
B) 0.37. 
C) 1.89. 
D) 0.31.

Question 2

If Moon Corporation has an increase in sales,which of the following would result in no change in its EBIT margin?

Accepted Answer

A) A proportional increase in its net income 
B) A proportional decrease in its EBIT 
C) A proportional increase in its EBIT 
D) An increase in its operating expenses

Question 3

Use the table for the question(s)below.
Consider the following balance sheet:  
-If in 2019 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share,then Luther's market-to-book ratio would be closest to:

Accepted Answer

A) 0.39. 
B) 0.76. 
C) 1.29. 
D) 2.57.

Question 4

Zoe Dental Implements has gross property,plant and equipment totaling $1.4 million,depreciation expense this year of $200,000,and accumulated depreciation of $750,000.What is the book value of Zoe's property,plant and equipment?

Accepted Answer

A) $1.4 million 
B) $1.2 million 
C) $550,000 
D) $650,000

Question 5

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

Accepted Answer

The answer of What is the role of an auditor...

Question 6

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

Question 7

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

Accepted Answer

A) The balance sheet provides a snapshot 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 8

Use the following information for ECE incorporated:

-If ECE's return on assets (ROA)is 12%,then ECE's net income is:

Accepted Answer

A) $6 million. 
B) $12 million. 
C) $22 million. 
D) $36 million.

Question 9

The Dodd-Frank Wall Street Reform and Consumer Protection Act does the following:

Accepted Answer

A) Exempts firms with less than $75 million in publicly traded shares from some provisions of SOX. 
B) Requires the SEC to study ways to reduce the cost of SOX for firms with less than $250 million in publicly traded shares. 
C) Strengthens whistle-blower provisions of SOX. 
D) All of the above

Question 10

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.

Question 11

Suppose Novak Company experienced a reduction in its ROE over the last year.This decrease could be attributed to:

Accepted Answer

A) an increase in net profit margin. 
B) a decrease in asset turnover. 
C) an increase in leverage. 
D) a decrease in Equity.

Question 12

Use the information for the question(s)below.
In November 2019,Perrigo Co.(PRGO)had a share price of $39.20.They had 91.33 million shares outstanding,a market-to-book ratio of 3.76.In addition,PRGO had $845.01 million in outstanding debt,$163.82 million in net income,and cash of $257.09 million.
-Perrigo's debt to equity ratio is closest to:

Accepted Answer

A) 0.24. 
B) 0.50. 
C) 0.75. 
D) 0.89.

Question 13

Use the table for the question(s)below.
Consider the following balance sheet:  
-If in 2019 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share,then using the market value of equity,the debt to equity ratio for Luther in 2009 is closest to:

Accepted Answer

A) 1.47. 
B) 1.78. 
C) 2.31. 
D) 4.07.

Question 14

Use the table for the question(s)below.
Consider the following income statement and other information:
Luther Corporation
Consolidated Income Statement
Year ended December 31 (in $ millions) 
-Luther's Net Profit Margin for the year ending December 31,2018 is closest to:

Accepted Answer

A) 1.8%. 
B) 2.7%. 
C) 5.4%. 
D) 16.7%.

Question 15

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.

Question 16

Which of the following statements regarding the income statement is INCORRECT?

Accepted Answer

A) The income statement shows the earnings and expenses at a given point in time. 
B) The income statement shows the flow of earnings and expenses generated by the firm between two dates. 
C) The last or "bottom" line of the income statement shows the firm's net income. 
D) The first line of an income statement lists the revenues from the sales of products or services.

Question 17

Which of the following is (are)deducted from EBIT to determine pretax income?

Accepted Answer

A) Earnings per share 
B) Interest expense 
C) Corporate taxes 
D) Both B and C

Question 18

The DuPont Identity expresses the firm's ROE in terms of:

Accepted Answer

A) profitability,asset efficiency,and leverage. 
B) valuation,leverage,and interest coverage. 
C) profitability,margins,and valuation. 
D) equity,assets,and liabilities.

Question 19

Use the table for the question(s)below.
Consider the following income statement and other information:
Luther Corporation
Consolidated Income Statement
Year ended December 31 (in $ millions) 
-Luther's return on assets (ROA)for the year ending December 31,2019 is closest to:

Accepted Answer

A) 1.6%. 
B) 6.7%. 
C) 2.3%. 
D) 2.6%.

Question 20

Use the table for the question(s)below.
Consider the following balance sheet:  
-Luther Corporation's cash ratio for 2019 is closest to:

Accepted Answer

A) 1.19. 
B) 10.6. 
C) 0.44. 
D) 0.41.

Exam 2: Introduction to Financial Statement Analysis

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 Market value Debt-Equity Ratio for 2009 is closest to:

If Moon Corporation has an increase in sales,which of the following would result in no change in its EBIT margin?

Use the table for the question(s) below. Consider the following balance sheet: -If in 2019 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share,then Luther's market-to-book ratio would be closest to:

Zoe Dental Implements has gross property,plant and equipment totaling $1.4 million,depreciation expense this year of $200,000,and accumulated depreciation of $750,000.What is the book value of Zoe's property,plant and equipment?

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

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?

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

Use the following information for ECE incorporated: -If ECE's return on assets (ROA) is 12%,then ECE's net income is:

The Dodd-Frank Wall Street Reform and Consumer Protection Act does the following:

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:

Suppose Novak Company experienced a reduction in its ROE over the last year.This decrease could be attributed to:

Use the table for the question(s) below. Consider the following balance sheet: -If in 2019 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share,then using the market value of equity,the debt to equity ratio for Luther in 2009 is closest to:

Use the table for the question(s) below. Consider the following income statement and other information: Luther Corporation Consolidated Income Statement Year ended December 31 (in $ millions) -Luther's Net Profit Margin for the year ending December 31,2018 is closest to:

The statement of financial position is also known as the:

Which of the following statements regarding the income statement is INCORRECT?

Which of the following is (are) deducted from EBIT to determine pretax income?

The DuPont Identity expresses the firm's ROE in terms of:

Use the table for the question(s) below. Consider the following income statement and other information: Luther Corporation Consolidated Income Statement Year ended December 31 (in $ millions) -Luther's return on assets (ROA) for the year ending December 31,2019 is closest to:

Use the table for the question(s) below. Consider the following balance sheet: -Luther Corporation's cash ratio for 2019 is closest to: