Question 1

Use the table for the question(s) below.
Consider the following balance sheet:
  
-Luther Corporation's total sales for 2009 were $610.1,and gross profit was $109.0.Inventory days for 2009 is closest to:

Accepted Answer

A)  27.5 
B)  33.4 
C)  153.7 
D)  10.9

Question 2

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 3

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

Question 4

Off-balance sheet transactions are required to be disclosed:

Accepted Answer

A)  in the management discussion and analysis. 
B)  in the auditor's report. 
C)  in the Securities and Exchange Commission's commentary. 
D)  in the statement of stockholders' equity.

Question 5

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

Accepted Answer

A)  1.64 
B)  1.78 
C)  1.98 
D)  2.19

Question 6

Luther's quick ratio for 2008 is closest to:

Accepted Answer

A)  0.77 
B)  0.87 
C)  1.15 
D)  1.30

Question 7

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

Accepted Answer

A)  10-A 
B)  10-K 
C)  10-Q 
D)  10-SEC

Question 8

The Sarbanes-Oxley Act (SOX)forced companies to validate their internal financial control processes by:

Accepted Answer

A)  putting strict limits on the amount of non-audit fees (consulting or otherwise) that an accounting firm can earn from a firm that it audits. 
B)  requiring the CEO and CFO to return bonuses or profits from the sale of stock that are later shown to be due to misstated financial reports. 
C)  requiring auditing firms to have long-standing relationships with their clients and receive lucrative auditing and consulting fees from them. 
D)  requiring senior management and the boards of public companies to validate and certify the process through which funds are allocated and controlled.

Question 9

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 Debt -Capital Ratio for 2009 is closest to:

Accepted Answer

A)  0.696 
B)  0.37 
C)  1.89 
D)  0.654

Question 10

Use the table for the question(s) below.
Consider the following income statement and other information:
 
-Luther's Operating Margin for the year ending December 31,2008 is closest to:

Accepted Answer

A)  0.5% 
B)  0.7% 
C)  5.4% 
D)  6.8%

Question 11

Use the following information for ECE incorporated:
Assets $200 million
Shareholder Equity $100 million
Sales $300 million
Net Income $15 million
Interest Expense $2 million
-If ECE reported $15 million in net income,then ECE's Return on Equity (ROE)is:

Accepted Answer

A)  5.0% 
B)  7.5% 
C)  10.0% 
D)  15.0%

Question 12

The third party who checks annual financial statements to ensure that they are prepared according to GAAP and verifies that the information reported is reliable is the:

Accepted Answer

A)  NYSE Enforcement Board. 
B)  Accounting Standards Board. 
C)  Securities and Exchange Commission (SE
C) . 
D)  auditor.

Question 13

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

Question 14

Wyatt Oil has a net profit margin of 4.0%,a total asset turnover of 2.2,total assets of $525 million,and a book value of equity of $220 million.Wyatt Oil's current return-on-equity (ROE)is closest to:

Accepted Answer

A)  8.8% 
B)  9.5% 
C)  21.0% 
D)  22.8%

Question 15

Use the table for the question(s) below.
Consider the following income statement and other information:
 
-Luther's return on equity (ROE)for the year ending December 31,2009 is closest to:

Accepted Answer

A)  2.0% 
B)  6.5% 
C)  8.4% 
D)  12.7%

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 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 17

Suppose Novak Company experienced a reduction in its ROE over the last year.This fall 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 18

If on December 31,2008 Luther has 8 million shares outstanding trading at $15 per share,then what is Luther's market-to-book ratio?

Accepted Answer

The answer of If on December 31,2008 Luther has 8...

Question 19

Use the following information for ECE incorporated:
Assets $200 million
Shareholder Equity $100 million
Sales $300 million
Net Income $15 million
Interest Expense $2 million
-IECE's Return on Assets (ROA)is:

Accepted Answer

A)  5.0% 
B)  8.5% 
C)  7.5% 
D)  15.0%

Question 20

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

Exam 2: Introduction to Financial Statement Analysis

Use the table for the question(s) below. Consider the following balance sheet: -Luther Corporation's total sales for 2009 were $610.1,and gross profit was $109.0.Inventory days for 2009 is closest to:

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

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:

Off-balance sheet transactions are required to be disclosed:

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

Luther's quick ratio for 2008 is closest to:

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

The Sarbanes-Oxley Act (SOX) forced companies to validate their internal financial control processes by:

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 Debt -Capital Ratio for 2009 is closest to:

Use the table for the question(s) below. Consider the following income statement and other information: -Luther's Operating Margin for the year ending December 31,2008 is closest to:

Use the following information for ECE incorporated: Assets $200 million Shareholder Equity $100 million Sales $300 million Net Income $15 million Interest Expense $2 million -If ECE reported $15 million in net income,then ECE's Return on Equity (ROE) is:

The third party who checks annual financial statements to ensure that they are prepared according to GAAP and verifies that the information reported is reliable is the:

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:

Wyatt Oil has a net profit margin of 4.0%,a total asset turnover of 2.2,total assets of $525 million,and a book value of equity of $220 million.Wyatt Oil's current return-on-equity (ROE) is closest to:

Use the table for the question(s) below. Consider the following income statement and other information: -Luther's return on equity (ROE) for the year ending December 31,2009 is closest to:

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:

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

If on December 31,2008 Luther has 8 million shares outstanding trading at $15 per share,then what is Luther's market-to-book ratio?

Use the following information for ECE incorporated: Assets $200 million Shareholder Equity $100 million Sales $300 million Net Income $15 million Interest Expense $2 million -IECE's Return on Assets (ROA) is:

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 .