Exam 2: Introduction to Financial Statement Analysis

A public company has a book value of $128 million. They have 20 million shares outstanding, with a market price of $4 per share. Which of the following statements is true regarding this company?

Which ratio would you use to measure the financial health of a firm by assessing that firm's leverage?

Which of the following balance sheet equations is INCORRECT?

Luther Corporation Consolidated Income Statement Year ended December 31 (in $millions) Refer to the income statement above. Luther's return on equity (ROE)for the year ending December 31, 2005 is closest to ________.

What role does Generally Accepted Accounting Principles (GAAP)play in the accounting process?

A printing company prints a brochure for a client and then bills them for this service. At the time the printing company's financial disclosure statements are prepared, the client has not yet paid the bill for this service. How will this transaction be recorded?

Which of the following is NOT a financial statement that every public company is required to produce?

U.S. public companies are required to file their annual financial statements with the U.S. Securities and Exchange Commission on which form?

According to the text, did Enron and WorldCom follow Generally Accepted Accounting Principles (GAAP)in their financial reporting process?

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

Use the table for the question(s)below. -Refer to the partial balance sheet above. If on December 31, 2005 Luther has 8 million shares outstanding trading at $15 per share, then what is Luther's market-to-book ratio?

Which of the following firms would be expected to have a high ROE based on that firm's high profitability?

Which of the following best describes why a firm produces financial statements?

The notes to the financial statements would LEAST likely be used for which of the following purposes?

International Financial Reporting Standards are taking root throughout the world. However, it is unlikely that the U.S. will report according to IFRS before the second half of the twenty-first century.

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 Luther's market-to-book ratio would be closest to ________.

A company that produces drugs is preparing a balance sheet. Which of the following would be most likely to be considered a long-term asset on this balance sheet?

What is a firm's gross profit?

A firm whose primary business is in a line of regional grocery stores would be most likely to have to include which of the following facts, if true, in the firm's management discussion and analysis (MD&A)?

Financial statements are optional accounting reports issued periodically by a firm which present information on the past performance of the firm, a summary of the firm's assets and the financing of those assets, and a prediction of the firm's future performance.