Exhibit 10.2 Use the Information Below for the Following Problem(S) STAR CORPORATION INCOME STATEMENT FISCAL YEAR ENDING 12/31/2004 (DOLIARS IN THOUSANDS) $\begin{array}{c} \begin{array}{lll} Net Sales\\ Cost of Goods Sold\\ Gross Profit Margin\\ Depreciation\\ Operating Expense\\ Administrative Expense\\ Operating Profit\\ Interest\\ Profit Before Tax\\ Taxes\\ \end{array} \begin{array}{lll} &&& \end{array} \begin{array}{r} \$ 1075 \\ 706 \\ \hline 369 \\ 30 \\ 109 \\ 129 \\ \hline 101 \\ 29 \\ \hline 72 \\ 21 \\ \hline \$ 51\\ \end{array} \end{array}$ STAR CORPORATION BALANCE SHEET FISCAL YEAR ENDING 12/31/2004 (DOLIARS IN THOUSANDS) $\begin{array}{c} \begin{array}{lll} \text{Assets}\\ \text{Cash}\\ \text{Accounts receivable}\\ \text{Inventory}\\ \text{Total current assets}\\ \text{Net fixed assets}\\ \\\\\\\\ \text{Total assets}\\ \end{array} \begin{array}{r} \\ \$ \quad 69 \\ 233 \\ 348 \\ \hline 650 \\ 886 \\ \hline\\\\\\\\ \$ 1536 \end{array} \begin{array}{lll} \text{Liabilities}\\ \text{Notes payable}\\ \text{Accounts payable}\\ \text{Accruals}\\ \text{Total current liabilities}\\ \text{Long term debt}\\ \text{Common stock (\$1.50 par)}\\ \text{Paid in surplus}\\ \text{Retained earnings}\\ \text{Total liabilities and}\\ \text{Stockholders' equity}\\ \end{array} \begin{array}{r} \\ \$ \quad 231 \\ 146 \\ 31 \\ \hline 408 \\ 318 \\ 111 \\ 190 \\ 509 \\ \hline\\ \$1536 \end{array} \end{array}$ -Refer to Exhibit 10.2.What is Star's operating profit margin?

A) 0.104 B) 0.094 C) 0.084 D) 0.067 E) 0.047 A) 0.104 B) 0.094 C) 0.084 D) 0.067 E) 0.047

Exhibit 10.9 Use the Information Below for the Following Problem(S) You are provided with the following year end information for All Systems Corporation. $\begin{array}{c} \begin{array}{lll} \text{Income Statement Data}\\ \text{Sales}\\ \text{Operating Income}\\ \text{Depreciation}\\ \text{Interest Expense}\\ \text{Pretax Income}\\ \text{Income Taxes}\\ \text{Net Income after tax}\\\\ \text{Balance Sheet Data}\\ \text{Fixed Assets}\\ \text{Total Assets}\\ \text{Working Capital}\\ \text{Total Debt}\\ \text{Equity}\\ \end{array} \begin{array}{lll} && \end{array} \begin{array}{r} \\ 800 \\ 280 \\ 85 \\ 48 \\ 147 \\ 52 \\ 95\\\\\\ 810 \\ 1050 \\ 85 \\ 640 \\ 410 \end{array} \end{array}$ -Refer to Exhibit 10.9.Calculate the total asset turnover ratio for the firm.

A) 0.76 B) 1.31 C) 1.64 D) 2.81 E) 3.24 A) 0.76 B) 1.31 C) 1.64 D) 2.81 E) 3.24

Exhibit 10.1 Use the Information Below for the Following Problem(S) BMC CORPORATION INCOME STATEMENT FISCAL YEAR ENDING 12/31/2004 (DOLLARS IN THOUSANDS) $\begin{array}{l} \text { Net Sales } &&&&&&&&&&&&& \$ 1025 \\ \text { Cost of Goods Sold } &&&&&&&&&&&&& \underline{682} \\ \text { Gross Profit Margin } &&&&&&&&&&&&& 343 \\ \text { Depreciation } &&&&&&&&&&&&& 31 \\ \text { Operating Expense } &&&&&&&&&&&&& 103 \\ \text { Administrative Expense } &&&&&&&&&&&&& \underline{127} \\ \text { Operating Profit } &&&&&&&&&&&&& 82 \\ \text { Interest } &&&&&&&&&&&&& \underline{27} \\ \text { Profit Before Tax } &&&&&&&&&&&&& 55 \\ \text { Taxes } &&&&&&&&&&&&& \underline{17} \\ \text { Net Income } &&&&&&&&&&&&& \$ 38 \end{array}$ BMC CORPORATION BAIANCE SHEET FISCAL YEAR ENDING 12/31/2004 (DOLIARS IN THOUSANDS) $\begin{array}{lrlr} \begin{array}{c} Assets\\ Cash\\ Accts rec\\ Inventory\\ \text{Ttl cur assts}\\ \text{Net fixed assets}\\ \\ \\ \\\\ \text{Total assets}\\\\ \end{array} \begin{array}{c} \$61\\ 286\\ 354\\ \hline 701\\ 802\\ \hline\\ \\ \\\\ \$ 1503\\ \end{array} \begin{array}{c} Liabilities\\ \text{Notes payable}\\ \text{Accounts payable}\\ Accruals\\ \text{Total current liabilities}\\ \text{Long term debt}\\ \text{Common stock (\$1.50 par)}\\ \text{Paid in surplus}\\ \text{Retained earnings}\\ \text{Total liabilities and}\\ \text{Stockholders' equity}\\\\ \end{array} \begin{array}{c} \$ 223 \\ 152 \\ 32 \\ \hline 407\\ 306 \\ 102 \\ 226 \\ 462 \\ \hline\\ \$ 1503 \end{array} \end{array}$ -Refer to Exhibit 10.1.What was BMC'S fixed asset turnover ratio?

A) 0.680 B) 0.780 C) 1.278 D) 1.874 E) 8.220 A) 0.680 B) 0.780 C) 1.278 D) 1.874 E) 8.220

Exhibit 10.5 Use the Information Below for the Following Problem(S) You are provided with the following information about Albermarle Corp. $\begin{array}{c} \begin{array}{lll} \text{Income Statement Data}\\ \text{Sales}\\ \text{Operating Income}\\ \text{Depreciation}\\ \text{Interest Expense}\\ \text{Pretax Income}\\ \text{Income Taxes}\\ \text{Net Income after tax}\\\\ \text{Balance Sheet Data}\\ \text{Fixed Assets}\\ \text{Total Assets}\\ \text{Working Capital}\\ \text{Total Debt}\\ \text{Equity}\\ \end{array} \begin{array}{lll} && \end{array} \begin{array}{r} \\ 542\\ 38\\ 3\\ 3\\ 32\\ 13\\ 19\\\\\\ 41\\ 245\\ 123\\ 16\\ 159\\ \end{array} \end{array}$ -Refer to Exhibit 10.5.Calculate the income tax rate.

A) 40.6% B) 25.6% C) 16.8% D) 28.9% E) 44.9% A) 40.6% B) 25.6% C) 16.8% D) 28.9% E) 44.9%

Exhibit 10.1 Use the Information Below for the Following Problem(S) BMC CORPORATION INCOME STATEMENT FISCAL YEAR ENDING 12/31/2004 (DOLLARS IN THOUSANDS) $\begin{array}{l} \text { Net Sales } &&&&&&&&&&&&& \$ 1025 \\ \text { Cost of Goods Sold } &&&&&&&&&&&&& \underline{682} \\ \text { Gross Profit Margin } &&&&&&&&&&&&& 343 \\ \text { Depreciation } &&&&&&&&&&&&& 31 \\ \text { Operating Expense } &&&&&&&&&&&&& 103 \\ \text { Administrative Expense } &&&&&&&&&&&&& \underline{127} \\ \text { Operating Profit } &&&&&&&&&&&&& 82 \\ \text { Interest } &&&&&&&&&&&&& \underline{27} \\ \text { Profit Before Tax } &&&&&&&&&&&&& 55 \\ \text { Taxes } &&&&&&&&&&&&& \underline{17} \\ \text { Net Income } &&&&&&&&&&&&& \$ 38 \end{array}$ BMC CORPORATION BAIANCE SHEET FISCAL YEAR ENDING 12/31/2004 (DOLIARS IN THOUSANDS) $\begin{array}{lrlr} \begin{array}{c} Assets\\ Cash\\ Accts rec\\ Inventory\\ \text{Ttl cur assts}\\ \text{Net fixed assets}\\ \\ \\ \\\\ \text{Total assets}\\\\ \end{array} \begin{array}{c} \$61\\ 286\\ 354\\ \hline 701\\ 802\\ \hline\\ \\ \\\\ \$ 1503\\ \end{array} \begin{array}{c} Liabilities\\ \text{Notes payable}\\ \text{Accounts payable}\\ Accruals\\ \text{Total current liabilities}\\ \text{Long term debt}\\ \text{Common stock (\$1.50 par)}\\ \text{Paid in surplus}\\ \text{Retained earnings}\\ \text{Total liabilities and}\\ \text{Stockholders' equity}\\\\ \end{array} \begin{array}{c} \$ 223 \\ 152 \\ 32 \\ \hline 407\\ 306 \\ 102 \\ 226 \\ 462 \\ \hline\\ \$ 1503 \end{array} \end{array}$ -Refer to Exhibit 10.1.What is BMC'S traditional cash flow?

A) 69 B) 86 C) 38 D) 55 E) 701 A) 69 B) 86 C) 38 D) 55 E) 701

Exhibit 10.2 Use the Information Below for the Following Problem(S) STAR CORPORATION INCOME STATEMENT FISCAL YEAR ENDING 12/31/2004 (DOLIARS IN THOUSANDS) $\begin{array}{c} \begin{array}{lll} Net Sales\\ Cost of Goods Sold\\ Gross Profit Margin\\ Depreciation\\ Operating Expense\\ Administrative Expense\\ Operating Profit\\ Interest\\ Profit Before Tax\\ Taxes\\ \end{array} \begin{array}{lll} &&& \end{array} \begin{array}{r} \$ 1075 \\ 706 \\ \hline 369 \\ 30 \\ 109 \\ 129 \\ \hline 101 \\ 29 \\ \hline 72 \\ 21 \\ \hline \$ 51\\ \end{array} \end{array}$ STAR CORPORATION BALANCE SHEET FISCAL YEAR ENDING 12/31/2004 (DOLIARS IN THOUSANDS) $\begin{array}{c} \begin{array}{lll} \text{Assets}\\ \text{Cash}\\ \text{Accounts receivable}\\ \text{Inventory}\\ \text{Total current assets}\\ \text{Net fixed assets}\\ \\\\\\\\ \text{Total assets}\\ \end{array} \begin{array}{r} \\ \$ \quad 69 \\ 233 \\ 348 \\ \hline 650 \\ 886 \\ \hline\\\\\\\\ \$ 1536 \end{array} \begin{array}{lll} \text{Liabilities}\\ \text{Notes payable}\\ \text{Accounts payable}\\ \text{Accruals}\\ \text{Total current liabilities}\\ \text{Long term debt}\\ \text{Common stock (\$1.50 par)}\\ \text{Paid in surplus}\\ \text{Retained earnings}\\ \text{Total liabilities and}\\ \text{Stockholders' equity}\\ \end{array} \begin{array}{r} \\ \$ \quad 231 \\ 146 \\ 31 \\ \hline 408 \\ 318 \\ 111 \\ 190 \\ 509 \\ \hline\\ \$1536 \end{array} \end{array}$ -Refer to Exhibit 10.2.What was Star's total asset turnover for 2004?

A) 1.65 B) 1.21 C) 0.92 D) 0.033 E) 0.70 A) 1.65 B) 1.21 C) 0.92 D) 0.033 E) 0.70

Exhibit 10.2 Use the Information Below for the Following Problem(S) STAR CORPORATION INCOME STATEMENT FISCAL YEAR ENDING 12/31/2004 (DOLIARS IN THOUSANDS) $\begin{array}{c} \begin{array}{lll} Net Sales\\ Cost of Goods Sold\\ Gross Profit Margin\\ Depreciation\\ Operating Expense\\ Administrative Expense\\ Operating Profit\\ Interest\\ Profit Before Tax\\ Taxes\\ \end{array} \begin{array}{lll} &&& \end{array} \begin{array}{r} \$ 1075 \\ 706 \\ \hline 369 \\ 30 \\ 109 \\ 129 \\ \hline 101 \\ 29 \\ \hline 72 \\ 21 \\ \hline \$ 51\\ \end{array} \end{array}$ STAR CORPORATION BALANCE SHEET FISCAL YEAR ENDING 12/31/2004 (DOLIARS IN THOUSANDS) $\begin{array}{c} \begin{array}{lll} \text{Assets}\\ \text{Cash}\\ \text{Accounts receivable}\\ \text{Inventory}\\ \text{Total current assets}\\ \text{Net fixed assets}\\ \\\\\\\\ \text{Total assets}\\ \end{array} \begin{array}{r} \\ \$ \quad 69 \\ 233 \\ 348 \\ \hline 650 \\ 886 \\ \hline\\\\\\\\ \$ 1536 \end{array} \begin{array}{lll} \text{Liabilities}\\ \text{Notes payable}\\ \text{Accounts payable}\\ \text{Accruals}\\ \text{Total current liabilities}\\ \text{Long term debt}\\ \text{Common stock (\$1.50 par)}\\ \text{Paid in surplus}\\ \text{Retained earnings}\\ \text{Total liabilities and}\\ \text{Stockholders' equity}\\ \end{array} \begin{array}{r} \\ \$ \quad 231 \\ 146 \\ 31 \\ \hline 408 \\ 318 \\ 111 \\ 190 \\ 509 \\ \hline\\ \$1536 \end{array} \end{array}$ -Refer to Exhibit 10.2.What was Star's quick ratio for 2004?

A) 0.11 B) 0.44 C) 0.38 D) 0.74 E) 0.98 A) 0.11 B) 0.44 C) 0.38 D) 0.74 E) 0.98

Exhibit 10.9 Use the Information Below for the Following Problem(S) You are provided with the following year end information for All Systems Corporation. $\begin{array}{c} \begin{array}{lll} \text{Income Statement Data}\\ \text{Sales}\\ \text{Operating Income}\\ \text{Depreciation}\\ \text{Interest Expense}\\ \text{Pretax Income}\\ \text{Income Taxes}\\ \text{Net Income after tax}\\\\ \text{Balance Sheet Data}\\ \text{Fixed Assets}\\ \text{Total Assets}\\ \text{Working Capital}\\ \text{Total Debt}\\ \text{Equity}\\ \end{array} \begin{array}{lll} && \end{array} \begin{array}{r} \\ 800 \\ 280 \\ 85 \\ 48 \\ 147 \\ 52 \\ 95\\\\\\ 810 \\ 1050 \\ 85 \\ 640 \\ 410 \end{array} \end{array}$ -Refer to Exhibit 10.9.Calculate the return on equity (ROE).

A) 31.3% B) 23.2% C) 18.4% D) 13.2% E) 7.5% A) 31.3% B) 23.2% C) 18.4% D) 13.2% E) 7.5%

Exam 10: Analysis of Financial Statements

Exhibit 10.2 Use the Information Below for the Following Problem(S) STAR CORPORATION INCOME STATEMENT FISCAL YEAR ENDING 12/31/2004 (DOLIARS IN THOUSANDS) NetSales CostofGoodsSold GrossProfitMargin Depreciation OperatingExpense AdministrativeExpense OperatingProfit Interest ProfitBeforeTax Taxes \ 1075 706 369 30 109 129 101 29 72 21 \ 51 STAR CORPORATION BALANCE SHEET FISCAL YEAR ENDING 12/31/2004 (DOLIARS IN THOUSANDS) Assets Cash Accounts receivable Inventory Total current assets Net fixed assets Total assets \ 69 233 348 650 886 \ 1536 Liabilities Notes payable Accounts payable Accruals Total current liabilities Long term debt Common stock ( \1 .50 par) Paid in surplus Retained earnings Total liabilities and Stockholders' equity \ 231 146 31 408 318 111 190 509 \1 536 -Refer to Exhibit 10.2.What is Star's operating profit margin?

(Multiple Choice)

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Question 81

An estimate of the discounted value of future lease payments can be obtained by:

(Multiple Choice)

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Question 82

Which of the following statements regarding financial risk and business risk is true?

(Multiple Choice)

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Question 83

Exhibit 10.9 Use the Information Below for the Following Problem(S) You are provided with the following year end information for All Systems Corporation. Income Statement Data Sales Operating Income Depreciation Interest Expense Pretax Income Income Taxes Net Income after tax Balance Sheet Data Fixed Assets Total Assets Working Capital Total Debt Equity 800 280 85 48 147 52 95 810 1050 85 640 410 -Refer to Exhibit 10.9.Calculate the total asset turnover ratio for the firm.

(Multiple Choice)

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Question 84

Exhibit 10.1 Use the Information Below for the Following Problem(S) BMC CORPORATION INCOME STATEMENT FISCAL YEAR ENDING 12/31/2004 (DOLLARS IN THOUSANDS) Net Sales \ 1025 Cost of Goods Sold Gross Profit Margin 343 Depreciation 31 Operating Expense 103 Administrative Expense Operating Profit 82 Interest Profit Before Tax 55 Taxes Net Income \ 38 BMC CORPORATION BAIANCE SHEET FISCAL YEAR ENDING 12/31/2004 (DOLIARS IN THOUSANDS) Assets Cash Acctsrec Inventory Ttl cur assts Net fixed assets Total assets \6 1 286 354 701 802 \ 1503 Liabilities Notes payable Accounts payable Accruals Total current liabilities Long term debt Common stock ( \1 .50 par) Paid in surplus Retained earnings Total liabilities and Stockholders' equity \ 223 152 32 407 306 102 226 462 \ 1503 -Refer to Exhibit 10.1.What was BMC'S fixed asset turnover ratio?

(Multiple Choice)

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Question 85

Exhibit 10.5 Use the Information Below for the Following Problem(S) You are provided with the following information about Albermarle Corp. Income Statement Data Sales Operating Income Depreciation Interest Expense Pretax Income Income Taxes Net Income after tax Balance Sheet Data Fixed Assets Total Assets Working Capital Total Debt Equity 542 38 3 3 32 13 19 41 245 123 16 159 -Refer to Exhibit 10.5.Calculate the income tax rate.

(Multiple Choice)

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Question 86

Which of the following is not a use of financial ratios?

(Multiple Choice)

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Question 87

Exhibit 10.1 Use the Information Below for the Following Problem(S) BMC CORPORATION INCOME STATEMENT FISCAL YEAR ENDING 12/31/2004 (DOLLARS IN THOUSANDS) Net Sales \ 1025 Cost of Goods Sold Gross Profit Margin 343 Depreciation 31 Operating Expense 103 Administrative Expense Operating Profit 82 Interest Profit Before Tax 55 Taxes Net Income \ 38 BMC CORPORATION BAIANCE SHEET FISCAL YEAR ENDING 12/31/2004 (DOLIARS IN THOUSANDS) Assets Cash Acctsrec Inventory Ttl cur assts Net fixed assets Total assets \6 1 286 354 701 802 \ 1503 Liabilities Notes payable Accounts payable Accruals Total current liabilities Long term debt Common stock ( \1 .50 par) Paid in surplus Retained earnings Total liabilities and Stockholders' equity \ 223 152 32 407 306 102 226 462 \ 1503 -Refer to Exhibit 10.1.What is BMC'S traditional cash flow?

(Multiple Choice)

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Question 88

Exhibit 10.2 Use the Information Below for the Following Problem(S) STAR CORPORATION INCOME STATEMENT FISCAL YEAR ENDING 12/31/2004 (DOLIARS IN THOUSANDS) NetSales CostofGoodsSold GrossProfitMargin Depreciation OperatingExpense AdministrativeExpense OperatingProfit Interest ProfitBeforeTax Taxes \ 1075 706 369 30 109 129 101 29 72 21 \ 51 STAR CORPORATION BALANCE SHEET FISCAL YEAR ENDING 12/31/2004 (DOLIARS IN THOUSANDS) Assets Cash Accounts receivable Inventory Total current assets Net fixed assets Total assets \ 69 233 348 650 886 \ 1536 Liabilities Notes payable Accounts payable Accruals Total current liabilities Long term debt Common stock ( \1 .50 par) Paid in surplus Retained earnings Total liabilities and Stockholders' equity \ 231 146 31 408 318 111 190 509 \1 536 -Refer to Exhibit 10.2.What was Star's total asset turnover for 2004?

(Multiple Choice)

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Question 89

It is important to compare a firm's performance relative to: the aggregate economy,its industry,its major competitors and its past performance.

(True/False)

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Question 90

Exhibit 10.2 Use the Information Below for the Following Problem(S) STAR CORPORATION INCOME STATEMENT FISCAL YEAR ENDING 12/31/2004 (DOLIARS IN THOUSANDS) NetSales CostofGoodsSold GrossProfitMargin Depreciation OperatingExpense AdministrativeExpense OperatingProfit Interest ProfitBeforeTax Taxes \ 1075 706 369 30 109 129 101 29 72 21 \ 51 STAR CORPORATION BALANCE SHEET FISCAL YEAR ENDING 12/31/2004 (DOLIARS IN THOUSANDS) Assets Cash Accounts receivable Inventory Total current assets Net fixed assets Total assets \ 69 233 348 650 886 \ 1536 Liabilities Notes payable Accounts payable Accruals Total current liabilities Long term debt Common stock ( \1 .50 par) Paid in surplus Retained earnings Total liabilities and Stockholders' equity \ 231 146 31 408 318 111 190 509 \1 536 -Refer to Exhibit 10.2.What was Star's quick ratio for 2004?

(Multiple Choice)

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Question 91

Exhibit 10.9 Use the Information Below for the Following Problem(S) You are provided with the following year end information for All Systems Corporation. Income Statement Data Sales Operating Income Depreciation Interest Expense Pretax Income Income Taxes Net Income after tax Balance Sheet Data Fixed Assets Total Assets Working Capital Total Debt Equity 800 280 85 48 147 52 95 810 1050 85 640 410 -Refer to Exhibit 10.9.Calculate the return on equity (ROE).

(Multiple Choice)

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Question 92

In common size analysis all assets and liabilities on the balance sheet are divided by total sales.

(True/False)

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Question 93

An estimate of the discounted value of future lease payments can be obtained by:

Which of the following statements regarding financial risk and business risk is true?

Which of the following is not a use of financial ratios?

It is important to compare a firm's performance relative to: the aggregate economy,its industry,its major competitors and its past performance.

In common size analysis all assets and liabilities on the balance sheet are divided by total sales.

An Overview of the Investment Process

The Asset Allocation Decision

The Global Market Investment Decision

Securities Markets: Organization and Operation

Security-Market Indexes

Efficient Capital Markets

An Introduction to Portfolio Management

An Introduction to Asset Pricing Models

Multifactor Models of Risk and Return

Security Valuation Principles

Macroanalysis and Microvaluation of the Stock Market

Industry Analysis

Company Analysis and Stock Valuation

Equity Portfolio Management Stragtegies

Technical Analysis

Bond Fundamentals

The Analysis and Valuation of Bonds

Bond Portfolio Management Strategies

An Introduction to Derivative Markets and Securities

Forward and Futures Contracts

Option Contracts

Swap Contracts,convertible Securities,and Other Embedded Derivatives

Professional Money Management, alternative Assets, and Industry Ethics

Evaluation of Portfolio Performance

Investment Return and Risk Analysis Questions

Investment and Retirement Plans

Calculating Covariance and Correlation Coefficient of Assets

Portfolio Variance and Stock Weight Calculations

Portfolio Optimization with Negative Correlation: Finding Minimum Variance and Weight Allocation

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