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Test Bank Bank for for Financia Financia Statement Analysis Analysis an Valuation 2nd Edition by Easton Complete downloadable file at: https:testbanku!euTest"Bank"for" Financial"Statement"Analysis"and" Valuation"2nd"Edition"by"Easton
#earnin$ %b&ecti'es ( co'era$e by )uestion Multiple Choice
Exercises
Problems
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1
Essay Questions
#%* Identify and discuss the
users and suppliers of financial statement information.
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.odule *: Framework for Analysis and Valuation Valuation
.ultiple Choice
opic /sers of 0inancial 0inancia l tatement Information 3 1 1. 4hich of the follo+in follo+in roups +ould li5ely not be interested interested in the financial statements of of a la public company such as 6er5shire 7atha+ay8 a. hareholders b. Employees c. Competitors d. axin aencies e. 9one of the aboe
:ns+er e ;ationale :ll of these parties +ould use the financial statements, albeit in different different +ays and for different purposes. opic /sers of 0inancial 0inancia l tatement Information 3 1 2. he EC adopted ;eulation ;eulation 0*, to curb public companies companies practice of a. ;outinely filin extensions for annual reports <0orm 1&-5= b. electiely disclosin information c. ;eportin pro forma ::P= numbers d. 7irin auditors for non-audit serices such as consultin enaements e. 9one of the aboe :ns+er b ;ationale ;e 0* reads as follo+s ?4heneer ?4heneer an issuer discloses any material material nonpublic information reardin that issuer, issuer, the issuer shall ma5e public disclosure of that information . . . simultaneously, simultaneously, in the case of an intentional disclosure@ and . . . promptly, promptly, in the case of a nonintentional disclosure.A Read Free Foron 30this Days Sign up to vote title
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3 2 Only $4.99/month. Special offer for students: ". : list list of assets, liabilities and e!uity can be found on +hich of the follo+in8
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opic 6alance heet 3 2 ). 4hich of the follo+in follo+in items +ould not be found on a balance sheet8 <elect <elect all that apply= a. toc5holdersB E!uity b. Property, plant and e!uipment c. 9ono+ner financin d. ales e. Cost of >oods old
:ns+er d and e ;ationale he balance sheet reports assets oods old appear on the income statement. opic Profit and Cash 0lo+ 3 2 %. : companyBs company Bs net cash flo+ +ill e!ual its net income a. :lmost al+ays b. ;arely c. 3ccasionally d. 3nly +hen the company has no inestin cash flo+ for the period e. 3nly +hen the company has no inestin or financin cash flo+ for the period
:ns+er b ;ationale 9et income reflects reflects the companyBs companyBs reenue minus expenses for the ien period. period. cash flo+ represents the amount of money receied
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4hat did >oodyear report for ;etained earnins at *ecember "1, 2&&$8 a. F1,'(# million b. F1,%2% million c. F1,&22 million d. F#)% million e. here is not enouh information to determine the ans+er.
:ns+er e ;ationale o o determine the balance in retained earnins at the end of the year +e must also 5no the amount of diidends
F2%,"$% 2",#)1 F ),)22
4hat +as :merican :irlinesB otal liabilities and toc5holdersB E!uity at *ecember "1, 2&&(8 a. F2%,"$% million b. F2",#)1 million c. F2$,"'" million Read Free Foron 30this Days Sign up to vote title d. F),)22 million Useful Not useful e. here is not enouh information to determine the ans+er. Cancel anytime. Special offer for students: Only $4.99/month. :ns+er a
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opic 6alance heet D 9umerical calculations calculatio ns re!uired 3 2 #. 3n eptember "&, 2&&$ tarbuc5Bs Corporation Corporation reported, on its 0orm 1&-, the follo+in
F%,'(2.' 2,)#&.# F2,1$#.(
4hat did tarbuc5Bs report as otal liabilities on eptember "&, 2&&$8 a. F%,'(2.' million b. F",)$2.# million c. F",1$1.( million d. F##2 million e. 9one of the aboe
:ns+er c ;ationale :ssets G iabilities iabilities H toc5holders E!uity. E!uity. F%,'(2.' G iabilities iabilities H F2,)#&.#. herefor iabilities G F",1$1.( on eptember "&, 2&&$. opic 6alance heet D 9umerical calculations calculatio ns re!uired 3 2 1&. In its 2&&$ annual report, nap-3n Incorporated reported the follo+in
F1,1)&.( F1,1$'.% F1,%2".$
4hat did nap-3n report as total assets at year-end 2&&$8 a. F1,%'#.' million b. F1,1)&.( million c. F",$%1.& million d. F2,(1&." million e. 9one of the aboe Read Free Foron 30this Days Sign up to vote title
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Special offer for students: Only $4.99/month. ;ationale :ssets :ssets G iabilities H toc5holders E!uity. E!uity. :ssets G F1,%2".$ H F1,1$'.%. herefore, :ssetsG F2,(1&." at year end.
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opic 6alance heet D 9umerical calculations calculatio ns re!uired 3 2 11. In its 2&&( annual a nnual report, ohlBs Corporation reported the follo+in
F1&,%'& F ', ',1&2 F ),)%$
4hat proportion of ohlBs Corporation is financed by non-o+ners8 a. )2J b. %$J c. "(J d. ("J e. 9one of the aboe
:ns+er a ;ationale 9on-o+ner financin for ohlBs assets is proided from liabilities
opic 6alance heet D 9umerical calculations calculations re!uired
F",)#$ F1,"&(
4hat proportion of Mattel is financed by non-o+ners8 a. 2(J b. "(J c. ("J d. '"J e. 9one of the aboe
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Special offer for students: Only:ssets $4.99/month. o+ners=. G iabilities H E!uity. E!uity. :ssets G F",)#$ H F1,"&( G F),$&%. F",)#$ K F),$&% G ("J
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opic Income tatement D 9umerical calculations calculations re!uired 3 2 1". he >oodyear ire ;ubber CompanyBs *ecember "1, 2&&$ financial statements reported t follo+in
F1#,)$$ F1',1"# F ",)2'
4hat did >oodyear report for 9et income for the year endin *ecember "1, 2&&$8 a. F(( million b. F<((= million c. F",")# million d. F1',&'2 million e. here is not enouh information to determine the ans+er :ns+er b ;ationale ales D Cost of sales D 3ther expenses G 9et income. F1#,)$$ D F1',1"# D F",)2' G F<((=. opic Income tatement D 9umerical calculations calculations re!uired 3 2 1). E. I. du Pont reported the follo+in on its 2&&( income statement ross profit otal expenses expense s
F2#,"($ (,$1" F2',"#&
4hat did E. I. du Pont report for Cost of oods sold durin 2&&(8 a. F1$,%(( million b. F21,%'% million c. F"(,1#1 million d. F2,#$$ million e. 9one of the aboe Read Free Foron 30this Days Sign up to vote title
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Special offer for students: Only $4.99/month. ;ationale ales D Cost of oods sold G >ross profit. F2#,"($ D Cost of oods sold G F(,$1". herefore, Cost of oods sold G F21,%'%.
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opic Income tatement D 9umerical calculations calculations re!uired 3 2 1%. 3n eptember "&, 2&&$ tarbuc5Bs Corporation Corporation reported, on its 0orm 1&-, the follo+in
2&&$ F1&,&'(.% %&".# F "1%.%
2&&( F$,("$.# 1,&%".# F '(2.'
4hat amount of reenues did tarbuc5Bs report for the year endin eptember "&, 2&&$8 a. F1&,"$".& b. F#,)11.% c. F1&,%(1.) d. F#,(%2.& e. 9one of the aboe
:ns+er a ;ationale ;eenues D otal otal expenses G 9et earnins. ;eenues D F1&,&'(.% G F"1%.%. heref ;eenues +ere F1&,"$".&
opic Income tatement D 9umerical calculations calculations re!uired
2&&$ F %&".# F "1%.%
2&&( F1,&%".# F '(2.'
Calculate year-oer-year decline in 9et earnins, in percentae terms. a. -21"J b. -11"J Read Free Foron 30this Days Sign up to vote title c. -%"J Useful Not useful d. -)(J Cancel anytime. Special offer for students: Only e. 9one of $4.99/month. the aboe
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opic Income tatement D 9umerical calculations calculations re!uired ross profit and ratios for t+o years.= 3 2 1(. In its 2&&( annual report, Caterpillar, Caterpillar, Inc. reported the follo+in
2&&( F)),#%$ F"2,'2'
2&&' F)1,%1( F2#,%)#
:s a percentae of ales, ales, did CaterpillarBs CaterpillarBs >ross profit profit increase or decrease decrease durin 2&&(8 a. >ross profit increased from 2(J to 2#J b. >ross profit decreased from 2#J to 2(J c. >ross profit increased from (1J to ("J d. >ross profit decreased from ("J to (1J e. here is not enouh information to ans+er the !uestion :ns+er b ;ationale ales G Cost Cost of oods sold G >ross profit. profit. In 2&&', ross profit to sales +as 2#J. ratio decreased to 2(J in 2&&(.
opic tatement of Cash 0lo+ D 9umerical calculations calculatio ns re!uired 3 2 1$. he >oodyear ire ;ubber CompanyBs *ecember "1, 2&&$ financial statements reported t follo+in
F 1, 1,$#) <()%= <1,1"'= F "12
4hat did >oodyear report for Cash on its *ecember "1, 2&&( balance sheet8 a. F1,$#) million b. F",)'" million c. F"2% million Read Free Foron 30this Days Sign up to vote title d. F1,#(" million Useful Not useful e. 9one of the aboe Cancel anytime. Special offer for students: Only $4.99/month. :ns+er b
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opic tatement of Cash 0lo+ D 9umerical calculations calculatio ns re!uired 3 2 1#. Procter >ambleBs Lune "&, 2&&$ financial statements reported the follo+in
F %, %,"%) ","1" 1%,$1) F<2,%)#=
4hat did Procter >amble report for Cash from financin actiities for the year ended Lune "&, 2&&$8 a. F<21,#"2= million b. F1%,"&' million c. F<1%,"&'= million d. F<1",2'%= million e. F1",2'% million
:ns+er c ;ationale Cash, beinnin of year H Cash from operatin actiities H Cash from inestin actiit Cash from financin actiities G Cash at end of year F%,)%) H F1%,$1) D F2,%)# H Cash from financin G F","1". Cash from financin G F<1%,"&'= opic ;eturn on :ssets 3 " 2&. : companyBs companyBs return on assets <;3:= can be disareated to reeal +hich of the follo+in
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opic ;eturn on E!uity D 9umerical calculations re!uired re!uired 3 " 22. ales for the year G F1&(,22#, 9et Income for the yearG F12,1)), F12,1)), Income from e!uity inestments G F),"&#, and aerae E!uity durin the year G F)$,%%'. ;eturn on e!uity <;3E= fo year is a. 2%.&J b. 2&.$J c. )%."J d. $.#J e. here is not enouh information to ans+er the !uestion :ns+er a. ;ationale ;eturn on e!uity G 9et income K :erae :erae E!uity G F12,1)) K F)$,%%' G 2%J.
opic ;eturn on :ssets :ssets D 9umerical calculations re!uired 3 " 2". ales for the year G F$1,22#, 9et 9et Income for the yearG F(,1$', and and aerae :ssets :ssets durin t year G F%",))%. ;eturn on :ssets <;3:= for the year is a. 1".)J b. '%.$J c. $.$J d. here is not enouh information to calculate ;3: e. 9one of the aboe
:ns+er a ;ationale ;3: G 9et Income K:erae K:erae assets. herefore ;3: e!uals F(,1$' K F%",))% G 1".)
opic ;eturn on :ssets :ssets D 9umerical calculations re!uired
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opic ;eturn on :ssets D 9umerical calculations re!uired
2&&$ F(,$2# %,%#) F '%%
2&&( F%,'%( %,(2( F #")
Calculate return on assets <;3:= for 2&&$. a. $.)J b. 11.(J c. (1.%J d. #.(J e. 9one of the aboe
:ns+er d ;ationale ;eturn on assets G 9et income K :erae :erae :ssets. : simple +ay to calculate aerae assets is to ta5e the aerae of the beinnin and endin endin assets F(,$2# H F%,'%( G F',()". ;3 F'%% K F',()" G #.(J. opic 0ie 0orces of Competitie Competiti e Industry Industry 3 ) 2'. 4hich of the follo+in are 93 one of the fie forces that determine a companyBs competi intensity8
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opic Clean audit opinion 3 % 2$. : clean audit opinion opinion includes +hich of the follo+in assertions a. 0inancial statements present fairly the companyBs financial condition b. he auditor certifies the financials to be error free c. he financial statements are manaementBs responsibility d. Manaement has handled transactions efficiently efficiently in all material respects e. :ll of the aboe
:ns+er a and c ;ationale he audit is not a certification certification ::P 3 % "&. >enerally :ccepted :ccountin :ccountin Principles <>::P= <>::P= are created by
