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Course 171016- Analysis and Uses of Financial Statements
  Final Exam
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171016v - Analysis and Uses of Financial Statements

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20 CPE Credit Hours

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Read 'Chapter 1: Objectives Of Financial Statement Analysis And Financial Reporting' & answer the following question(s):
1. ___________________ are least interested in financial statement analysis.
2. According to SFAC (Statement of Financial Accounting Concepts) No. 1, the objectives of financial reporting for business firms are based on
3. Representational faithfulness is part of the primary decision-specific quality of ________.
Read 'Chapter 2: Basic Time Value Applications' & answer the following question(s):
4. The going concern or continuity assumption
5. Valuing assets at their liquidation values is NOT consistent with
6. The business being separate and distinct from the owners is an integral part of the
7. The accounting assumption requiring that financial information be measured and accounted for in the basic monetary unit of the country in which the enterprise is located is
8. The assumption that enables us to prepare periodic statements between the time that a business commences operations and the time it goes out of business is
9. Valuing inventory at the lower of cost or market is an application of the
10. Charging off equipment that cost less than $20 would be an example of the application of
Read 'Chapter 3: Personal Financial Statements And Budgeting' & answer the following question(s):
11. The basic financial statements include a
12. ________ is NOT normally classified as a current liability on the balance sheet.
13. Which of the following is not one of the four basic financial statements?
14. Which of the following regarding retained earnings is false?
15. Which of the following is not a typical footnote included in an annual report?
16. Which of the following would be classified as a current liability?
17. The accounting equation could be expressed as:
18. The financial statement that shows the origin and disposition of an enterprise's cash flows is called the:
19. Which of the following is a primary use of cash?
20. A statement of cash flows is to be presented in general purpose external financial statements by which of the following?
21. A statement of cash flows is intended to help users of financial statements
22. Footnote disclosures usually do NOT include
23. Section 404, in conjunction with the related SEC rules and____________________, established by PCAOB, requires management of a public company and the company's independent auditor to issue new reports at the end of every fiscal year.
24. Operating expenses do NOT include
25. Which of the following items is NOT found on a manufacturer’s income statement in the cost of goods sold calculation?
26. On its 2x09 balance sheet, Sherman Books had retained earnings equal to $510 million. On its 2x10 balance sheet, retained earnings were also equal to $510 million. Which of the following statements is most correct?
27. Which of the following statements is most correct?
28. The organization that has by federal law the responsibility to adopt auditing standards is
29. The annual report of a public company must be filed with:
30. Which of the following is NOT a type of audit opinion?
31. Which of the following statements is NOT true?
32. In addition to a balance sheet, income statement and the statement of cash flows, a complete set of financial statements must include:
33. Which of the following is NOT a purpose of the statement of cash flows?
34. Which of the following is NOT a typical cash flow under operating activities?
35. Which of the following is NOT a typical cash flow under investing activities?
36. Which of the following is NOT a typical cash flow under financing activities?
Read 'Chapter 4: Career Planning And Financial Success' & answer the following question(s):
37. Factors that an investor considers in evaluating a firms stock include all EXCEPT
38. Various techniques are used in the analysis of financial data to emphasize the comparative and relative importance of the data presented and to evaluate the position of the firm. Which of the following is NOT one of the techniques used in analysis?
39. Which of the following is NOT a source of industry statistics listed by the author?
40. Risk Management Associates’ Annual Statement Studies reported the following figures for manufacturers of screw machine products for the ratio of current assets to current debt. The following figures are for a particular industry's current ratio: 1.6; 1.3; 1.2. Which best describes these three numbers?
41. Which of the following is a government document that provides industry statistics?
42. Statements in which all items are expressed only in relative terms (percentages of a base) are termed:
43. Which of these statements is false?
44. In financial statement analysis, ratios are
45. Ratios assume significance when they are compared with
46. Denver Dynamics has net income of $2,000,000. Oakland Enterprises has net income of $2,500,000. Which of the following best compares the profitability of Denver and Oakland?
47. Which of the following is NOT be a meaningful comparison in financial statement analysis?
48. Liquidity ratios can be used
49. ______________________ ratios are used to examine how successful a firm is in using its operating processes and resources to earn income.
50. Which of these statements is false?
51. Which one of the following is NOT a problem with ratio analysis?
Read 'Chapter 5: Planning For Your Children'S College Education ' & answer the following question(s):
52. Which of the following is an example of liquidity ratios?
53. In comparing the current ratios of two companies, why might it be incorrect to assume that the company with the higher current ratio is in a better financial position?
54. If a business enterprise has a current ratio of 3 to 1, which of the following transactions increases the ratio?
55. Are the following included in the acid-test (quick) ratio?
56. If current assets exceed current liabilities, payments to creditors on the last day of the month will
57. All else being equal, which of the following will increase a company’s current ratio?
58. Pepsi Corporation’s current ratio is 0.5, while Coke Company’s current ratio is 1.5. Both firms want to “window dress” their coming end-of-year financial statements. As part of its window dressing strategy, each firm will double its current liabilities by adding short-term debt and placing the funds obtained in the cash account. Which of the statements below best describes the actual results of these transactions?
59. A company’s current ratio is 2.2 to 1 and quick (acid test) ratio is 1.0 to 1 at the beginning of the year. At the end of the year, the company has a current ratio of 2.5 to 1 and a quick ratio of .8 to 1. Which of the following could help explain the diver­gence in the ratios from the beginning to the end of the year?
60. What ratio is used to measure a firm's pressing liquidity?
61. The ratio of cash divided by current liabilities is called
62. Given the following data: Sales =$2000; Cost of goods sold = $1500; Average receivables = $100, calculate the average collection period.
63. Which of the following statements is FALSE regarding accounts receivable ratios?
64. An increase in the current ratio while the quick ratio remains constant means a buildup in
65. Assuming stable business conditions, a decline in the number of days’ sales in receivables a company’s accounts receivable at year-end from one year to the next might indicate
66. If, just prior to a period of rising prices, a company changed its inventory measurement method from FIFO to LIFO, the effect in the next period would be to
67. Shaffer Company presents the following data for 2010: 1) Net Sales for 2010 = $3,007,124; Net Sales for 2009 = $93,247; 2) Cost of Goods Sold for 2010 = $2,000,326; Cost of Goods Sold for 2009 = $1,000,120; 3) Inventory at beginning of 2010 = $341,169; Inventory at end of 2010 = $376,526. The merchandise inventory turnover for 2010 is:
68. Mr. Sparks, the owner of School Supplies, Inc., is interested in keeping control over accounts receivable. He understands that accounts receivable turnover will give a good indication of how well receivables are being managed. School Supplies, Inc. does seventy percent of its business during June, July and August. The terms of sale are 2/10, n/60. Net sales for the year ended December 31, 20x9, and receivables balances are: Net Sales = $1,500,000; Receivables at January 1, 20x9 = $80,000; Receivables at December 31, 20x9 = $70,000. The average accounts receivable turnover calculated from the data above is
69. If the firm has a high current ratio but a low acid-test ratio, one can conclude that
70. Which of the following measures the time needed to turn cash into inventory, inventory into receivables, and receivables back into cash?
71. What ratio is used to measure a firm's efficiency at using its productive capacity?
Read 'Chapter 6: The Return And Riskiness Of Your Investments ' & answer the following question(s):
72. __________________ refers to the extent that fixed costs are utilized in the production process during an operating cycle.
73. Which of the following is an example of leverage ratios?
74. If the debt ratio is 0.5 what is the debt-equity ratio?
75. A measure of long-term debt-paying ability is a company’s
76. Stock market analyst has forecasted the following year-end numbers for Raedebe Technology: Sales=$70 million; EBITDA=$20 million; Depreciation=$7 million; Amortization=$0. The company’s tax rate is 40 percent. The company does not expect any changes in its net operating working capital. This year the company’s planned gross capital expenditures will total $12 million. (Gross capital expenditures represent capital expenditures before deducting depreciation.) What is the company’s forecasted free cash flow for the year?
77. Free cash flow (FCF) is
78. The degree of financial leverage is
Read 'Chapter 7: Banking And Cash Management ' & answer the following question(s):
79. Gross profit margin is
80. Operating expenses to sales ratio is a measure of
81. What ratio is used to measure the profit earned on each dollar invested in a firm?
82. The DuPont formula separates return on assets into two component ratios. What are they?
83. Which of the following is an appropriate computation for the return on investment?
84. If a company is profitable and is effectively using leverage, which one of the following ratios is likely to be the largest?
85. To enhance ROI:
86. Du Pont formula II, also called modified Du Pont formula, states that ROE is
87. The return on total assets (ROA):
Read 'Chapter 8: How To Take On And Manage Debt' & answer the following question(s):
88. The earnings per share is computed for
89. What type of ratio is book value per share?
90. For computing earnings per share, a potentially dilutive security would be:
91. Market test ratios do NOT include
92. The price-earnings ratio
93. Book value per share may NOT approximate market value per share because:
94. Earnings-per-share disclosures are required
95. In calculating book value per common share:
96. How are the dividends per share for common stock used in the calculation of the Dividend Yield and Earnings per Share ratios?
97. Which ratio measures the portion of current earnings per common share paid out in dividends?
Read 'Chapter 9: How To Determine And Save On The Costs Of Living ' & answer the following question(s):
98. Which of the following is NOT a cash adequacy ratio?
99. Information presented on the statement of cash flows can also be used to analyze the performance of a firm from a cash flow perspective. This does NOT include:
100. ___________________ is one of market value ratios.
101. The ratio that measures a firm’s ability to repay both its short- and long-term debt is
102. _____________________ is an indicator of the quality of earnings.
Read 'Chapter 10: Where And How You Choose To Live' & answer the following question(s):
103. Interim financial reporting should be viewed primarily in which of the following ways?
104. A segment is reportable if any one of the following conditions exists EXCEPT:
105. Interim financial reports:
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