Question 1

The third step in financial statement analysis is to assess the quality of the firm's financial statements.Which of the following is a question an analyst should ask when performing this step?

Accepted Answer

A)  Are industry sales growing rapidly or slowly? 
B)  Do earnings include revenues that appear mismatched with the business model employed by the firm? 
C)  Does the industry include a large number of firms selling similar products? 
D)  What is the company's degree of geographical diversification?

Question 2

____________________ assets include the rights established by law or contract to the future use of property.

Accepted Answer

The answer of ____________________ assets include the rights established by...

Question 3

The threat of new entrants is measured by whether there are entry barriers,such as capital investment,________________________________________,patents,or regulation that inhibit new entrants.

Accepted Answer

The answer of The threat of new entrants is measured...

Question 4

When a firm attempting to create unique products or services for particular market niches,in order to achieve relatively high profit margins,this is best known as:

Accepted Answer

A)  A quality strategy 
B)  A low-cost leadership strategy 
C)  A vertical integration strategy 
D)  A product differentiation strategy

Question 5

When a company sells a subsidiary or a product line on what financial statement is it reported and how is it reported?

Accepted Answer

The answer of When a company sells a subsidiary or...

Question 6

Which of the following is not considered to be a liability?

Accepted Answer

A)  Wages payable. 
B)  Accounts payable. 
C)  Notes payable. 
D)  Cost of goods sold.

Question 7

How easily can new firms enter a market is a question one might ask when assessing _____________________________________________.

Accepted Answer

The answer of How easily can new firms enter a...

Question 8

Which of the following economic characteristics is consistent with a pharmaceutical company?

Accepted Answer

A)  Low barriers to entry. 
B)  High levels of research and development. 
C)  Low profit margins. 
D)  Low business risk.

Question 9

Assets for a particular business might include:

Accepted Answer

A)  Cash,retained earnings,and accounts payable. 
B)  Cash,common shareholders' equity,and accounts receivable. 
C)  Cash,property,plant,and equipment,and accumulated other comprehensive income. 
D)  Cash,inventories,and goodwill.

Question 10

The _____________________________________________ defines more clearly the explicit responsibility of managers for financial statements,the relation between the independent auditor and the firm audited and the kinds of services permitted and not permitted.

Accepted Answer

The answer of The _____________________________________________ defines more clearly the explicit...

Question 11

Under the ____________________ basis of accounting,a firm recognizes revenue when it performs all or a substantial portion,of the services it expects to perform and receives either cash or a receivable.

Accepted Answer

The answer of Under the ____________________ basis of accounting,a firm...

Question 12

Many people view the balance sheet as being a representation of a firm's economic position.What are some issues that reduce the quality of this representation?

Accepted Answer

The answer of Many people view the balance sheet as...

Question 13

Comparative financial statements for Larson Company,prepared on December 31 are shown below:  Required:
Assume that one-third of sales are on credit and that cash dividends of $3,000 were declared and paid in 2012.Then,complete a percentage change income statement and a percentage change balance sheet for the company,using both amount and percentage changes from 2011 to 2012.

Accepted Answer

The answer of Comparative financial statements for Larson Company,prepared on...

Question 14

What is an industry's value chain?

Accepted Answer

The answer of What is an industry's value chain?...

Question 15

Prepare an analysis of the automobile manufacturing industry using Porter's five forces framework.For each component force provide support for your conclusion.In addition,at the of your analysis provide a conclusion,along with support,of whether you expect the automobile industry to report high or low profitability in the near future.

Accepted Answer

The answer of Prepare an analysis of the automobile manufacturing...

Question 16

___________________________________ financial statements are helpful in highlighting the relative magnitude of changes in financial statement data from year to year.

Accepted Answer

The answer of ___________________________________ financial statements are helpful in highlighting...

Question 17

Many market participants argue that financial markets are efficient and that financial statement users cannot routinely analyze financial statements to find mispriced securities.This view would lead some to suggest that there is little value to financial statement analysis.
Required:
Provide a discussion of the role of financial statement analysis in an efficient capital market and reasons why financial statement analysis is still valuable.

Accepted Answer

The answer of Many market participants argue that financial markets...

Question 18

Depreciation is a(n)___________________ added back to net income when preparing the operating activities section of the Statement of Cash Flows.

Accepted Answer

The answer of Depreciation is a(n)___________________ added back to net...

Question 19

Current assets are defined as:

Accepted Answer

A)  Cash and cash equivalents. 
B)  All assets expected to be quickly used by the firm. 
C)  Cash and other assets that the firm expects to sell or consume during the normal operating cycle of a business,usually one year. 
D)  Cash and other assets that the firm expects maintain for a period including the normal operating cycle of a business,usually one year.

Question 20

Another important step in financial statement analysis is to assess the quality of a firm's _____________________________ and if necessary adjust them for such characteristics as sustainability or comparability.

Accepted Answer

The answer of Another important step in financial statement analysis...

Exam 1: Overview of Financial Reporting,financial Statement Analysis,and Valuation