Exam 2: Introduction to Financial Statement Analysis

Use the tables for the question(s)below. Balance Sheet -The balance sheet and income statement of a particular firm are shown above.What does the accounts receivable days ratio tell you about this company?

Financial statements are accounting reports issued periodically by a firm that 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.

Use of Generally Accepted Accounting Principles (GAAP)and auditors have eliminated the danger of inadvertent or deliberate fraud in financial statements.

Use the table for the question(s)below. AOS Industries Statement of Cash Flows for 2015 -Consider the above statement of cash flows.Which of the following is TRUE of AOS Industries' operating cash flows?

Solid State Software has retained earnings of $42 million,after paying dividends of $10 million.What was the firm's payout ratio?

The major components of shareholders' equity are:

Which of the following is a way that the Operating Activity section of the statement of cash flows adjusts Net Income from the balance sheet?

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

The management of public companies are not legally required to disclose any off balance sheet transactions.

Which of the following amounts would be included on the right side of a statement of financial position?

Manufacturer A has a profit margin of 2.0%,an asset turnover of 1.7,and an equity multiplier of 4.9. Manufacturer B has a profit margin of 2.3%,an asset turnover of 1.1,and an equity multiplier of 4.7. How much asset turnover should manufacturer B have to match manufacturer A's ROE?

A firm has an asset turnover ratio of 1.6 and a net profit margin of 1.3%.If the firm has 5 dollars in assets per dollar of equity,what is the firm's ROE?

Shareholders' equity is the difference between a firm's assets and liabilities,as shown on the statement of financial position.

A software company acquires a smaller company in order to acquire the patents that it holds.Where will the cost of this acquisition be recorded on the statement of cash flows?

What is the role of an auditor in financial statement analysis?

A firm has gross profit of $45 million,EBIT of $20 million,and net income of $8.5 million.If the firm has 5 million shares outstanding,what is the firm's EPS?

A manufacturer of plastic bottles for the medical trade purchases a new compression blow moulder for its bottle production plant.How will the cost to the company of this piece of equipment be recorded?

Use the table for the question(s)below. Income Statement for Xenon Manufacturing: -Consider the above Income Statement for Xenon Manufacturing.All values are in millions of dollars.Calculate the gross margin for 2014 and 2015.What does the change in the gross margin between these two years imply about the company?

Which of the following is the main lesson that analysts and investors should take from the case of Enron?

The firm's statement of cash flows uses the balance sheet and the income statement to determine the amount of cash a firm has generated and how it has used that cash during a given period.