Question 1

The major components of stockholders' equity are ________.

Accepted Answer

A) cash, common stock, and paid-in surplus 
B) common stock, paid-in surplus, and net income 
C) common stock, paid-in surplus, and retained earnings 
D) common stock, liabilities, and retained earnings

Question 2

The above data is for four regional trucking firms. Based on price-earnings ratios, which firm's stock is the best value?

Accepted Answer

A) Firm A 
B) Firm B 
C) Firm C 
D) Firm D

Question 3

What will be the effect on the income statement if a firm buys a new processing plant through a new loan?

Accepted Answer

The answer of What will be the effect on the...

Question 4

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?

Accepted Answer

A) 0.67 
B) 1.08 
C) 2.80 
D) 1.35

Question 5

Use the table for the question(s)below.
 
-If the above balance sheet is for a retail company, what indications about this company would best be drawn from the changes in quick ratio between 2007 and 2008?

Accepted Answer

A) The company has eliminated the risk that it will experience a cash shortfall in the near future. 
B) The company has reduced the risk that it will experience a cash shortfall in the near future. 
C) The risk that the company will experience a cash shortfall in the near future is unchanged. 
D) The company has increased the risk that it will experience a cash shortfall in the near future.

Question 6

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

Accepted Answer

A) 3.45 
B) 1.72 
C) 0.86 
D) 2.41

Question 7

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

Accepted Answer

A) from investment activities 
B) by sale of stock 
C) from its operations 
D) by issuing debt

Question 8

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

Accepted Answer

A) True 
 B)False

Exam 2: Introduction to Financial Statement Analysis

The major components of stockholders' equity are ________.

The above data is for four regional trucking firms. Based on price-earnings ratios, which firm's stock is the best value?

What will be the effect on the income statement if a firm buys a new processing plant through a new loan?

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?

Use the table for the question(s) below. -If the above balance sheet is for a retail company, what indications about this company would best be drawn from the changes in quick ratio between 2007 and 2008?

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

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