Question 1

The major difference between IFRS and GAAP is that U.S. standards are ________ and IFRS standards are ________.

Accepted Answer

A)  strictly enforced; weakly enforced 
B)  rules-based; principles-based 
C)  evolutionary; devolutionary 
D)  based on government standards; based on corporate practice 
A)  strictly enforced; weakly enforced 
B)  rules-based; principles-based 
C)  evolutionary; devolutionary 
D)  based on government standards; based on corporate practice

Question 2

Use the following cash flow data of Haven Hardware for the year ended December 31, 2017.
 
What is the net cash provided by or used in financing activities of Haven Hardware?

Accepted Answer

A)  −$10,000 
B)  −$120,000 
C)  $10,000 
D)  $120,000 
A)  −$10,000 
B)  −$120,000 
C)  $10,000 
D)  $120,000

Question 3

Another term for EVA is ________.

Accepted Answer

A)  net income 
B)  operating income 
C)  residual income 
D)  market-based income 
A)  net income 
B)  operating income 
C)  residual income 
D)  market-based income

Question 4

The financial statements of Burnaby Mountain Trading Company are shown below.

Note: The common shares are trading in the stock market for $27 each.
Refer to the financial statements of Burnaby Mountain Trading Company. The firm's P/E ratio for 2017 is ________.

Accepted Answer

A)  2.8 
B)  3.6 
C)  6 
D)  11.11 
A)  2.8 
B)  3.6 
C)  6 
D)  11.11

Question 5

Which of the following statements is true concerning economic value added?

Accepted Answer

A)  A growing number of firms tie managers' compensation to EVA. 
B)  A profitable firm will always have a positive EVA. 
C)  EVA recognizes that the cost of capital is not a real cost. 
D)  If a firm has positive present value of growth opportunities, it will have positive EVA. 
A)  A growing number of firms tie managers' compensation to EVA. 
B)  A profitable firm will always have a positive EVA. 
C)  EVA recognizes that the cost of capital is not a real cost. 
D)  If a firm has positive present value of growth opportunities, it will have positive EVA.

Question 6

According the Financial Accounting Standards Board's Statement No. 157 on fair value accounting, Level 3 assets ________.

Accepted Answer

A)  must be reduced to book value 
B)  must be compared to market valuations 
C)  are hardest to value 
D)  are easiest to value 
A)  must be reduced to book value 
B)  must be compared to market valuations 
C)  are hardest to value 
D)  are easiest to value

Question 7

A firm has a tax burden of 0.7, a leverage ratio of 1.3, an interest burden of 0.8, and a return-on-sales ratio of 10%. The firm generates $2.28 in sales per dollar of assets. What is the firm's ROE?

Accepted Answer

A)  12.4% 
B)  14.5% 
C)  16.6% 
D)  17.8% 
A)  12.4% 
B)  14.5% 
C)  16.6% 
D)  17.8%

Question 8

Use the following cash flow data of Haven Hardware for the year ended December 31, 2017.
 
What is the net increase or decrease in cash for Haven Hardware for 2017?

Accepted Answer

A)  −$94,000 
B)  −$88,000 
C)  $88,000 
D)  $188,000 
A)  −$94,000 
B)  −$88,000 
C)  $88,000 
D)  $188,000

Question 9

Benjamin Graham thought that the benefits from detailed analysis of a firm's financial statements had ________ over his long professional life.

Accepted Answer

A)  increased greatly 
B)  increased slightly 
C)  remained constant 
D)  decreased 
A)  increased greatly 
B)  increased slightly 
C)  remained constant 
D)  decreased

Question 10

The financial statements of Burnaby Mountain Trading Company are shown below.

Note: The common shares are trading in the stock market for $27 each.
Refer to the financial statements of Burnaby Mountain Trading Company. The firm's fixed-asset turnover ratio for 2017 is ________. (Please keep in mind that when a ratio involves both income statement and balance sheet numbers, the balance sheet numbers for the beginning and end of the year must be averaged.)

Accepted Answer

A)  2.8 
B)  6 
C)  9 
D)  11.11 
A)  2.8 
B)  6 
C)  9 
D)  11.11

Question 11

The table below shows some data for Key Biscuit Company:
 
What must have caused the firm's ROE to drop?

Accepted Answer

A)  The firm began using more debt as a percentage of financing. 
B)  The firm began using less debt as a percentage of financing. 
C)  The compound leverage ratio was less than 1. 
D)  The operating ROA was declining. 
A)  The firm began using more debt as a percentage of financing. 
B)  The firm began using less debt as a percentage of financing. 
C)  The compound leverage ratio was less than 1. 
D)  The operating ROA was declining.

Question 12

The financial statements of Flathead Lake Manufacturing Company are shown below.

Note: The common shares are trading in the stock market for $15 per share.
Refer to the financial statements of Flathead Lake Manufacturing Company. The firm's return on equity ratio for 2017 is ________. (Please keep in mind that when a ratio involves both income statement and balance sheet numbers, the balance sheet numbers for the beginning and end of the year must be averaged.)

Accepted Answer

A)  6.5% 
B)  26.5% 
C)  33.4% 
D)  38% 
A)  6.5% 
B)  26.5% 
C)  33.4% 
D)  38%

Question 13

The process of decomposing ROE into a series of component ratios is called ________.

Accepted Answer

A)  DuPont analysis 
B)  technical analysis 
C)  comparative analysis 
D)  liquidity analysis 
A)  DuPont analysis 
B)  technical analysis 
C)  comparative analysis 
D)  liquidity analysis

Question 14

The financial statements of Burnaby Mountain Trading Company are shown below.

Note: The common shares are trading in the stock market for $27 each.
Refer to the financial statements of Burnaby Mountain Trading Company. The firm's market-to-book value for 2017 is ________.

Accepted Answer

A)  0.1708 
B)  0.1529 
C)  0.1462 
D)  0.1636 
A)  0.1708 
B)  0.1529 
C)  0.1462 
D)  0.1636

Question 15

The financial statements of Burnaby Mountain Trading Company are shown below.

Note: The common shares are trading in the stock market for $27 each.
Refer to the financial statements of Burnaby Mountain Trading Company. The firm's asset turnover ratio for 2017 is ________. (Please keep in mind that when a ratio involves both income statement and balance sheet numbers, the balance sheet numbers for the beginning and end of the year must be averaged.)

Accepted Answer

A)  1.3 
B)  1.5 
C)  1.69 
D)  2.83 
A)  1.3 
B)  1.5 
C)  1.69 
D)  2.83

Question 16

The tax burden of the firm is 0.5, the interest burden is 0.55, the profit margin is 0.25, the asset turnover is 1.5, and the leverage ratio is 1.65. What is the ROE of the firm?

Accepted Answer

A)  1.88% 
B)  6.68% 
C)  12.15% 
D)  17.02% 
A)  1.88% 
B)  6.68% 
C)  12.15% 
D)  17.02%

Question 17

The financial statements of Flathead Lake Manufacturing Company are shown below.

Note: The common shares are trading in the stock market for $15 per share.
Refer to the financial statements of Flathead Lake Manufacturing Company. The firm's total asset turnover for 2017 is ________. (Please keep in mind that when a ratio involves both income statement and balance sheet numbers, the balance sheet numbers for the beginning and end of the year must be averaged.)

Accepted Answer

A)  3.56 
B)  3.26 
C)  3.14 
D)  3.02 
A)  3.56 
B)  3.26 
C)  3.14 
D)  3.02

Question 18

Which of the following assets is most liquid?

Accepted Answer

A)  cash equivalents 
B)  receivables 
C)  inventories 
D)  plant and equipment 
A)  cash equivalents 
B)  receivables 
C)  inventories 
D)  plant and equipment

Question 19

Use the following cash flow data of Haven Hardware for the year ended December 31, 2017.
 
What is the net cash provided by operating activities of Haven Hardware?

Accepted Answer

A)  −$30,000 
B)  $220,000 
C)  $320,000 
D)  $780,000 
A)  −$30,000 
B)  $220,000 
C)  $320,000 
D)  $780,000

Question 20

Cash Flow Data for Interceptors, Inc.
 
What must cash flow from financing have been in 2018 for Interceptors, Inc.?

Accepted Answer

A)  $5 
B)  $28 
C)  $30 
D)  $33 
A)  $5 
B)  $28 
C)  $30 
D)  $33

The major difference between IFRS and GAAP is that U.S. standards are and IFRS standards are .

Use the following cash flow data of Haven Hardware for the year ended December 31, 2017. What is the net cash provided by or used in financing activities of Haven Hardware?

Another term for EVA is ________.

The financial statements of Burnaby Mountain Trading Company are shown below. Note: The common shares are trading in the stock market for $27 each. Refer to the financial statements of Burnaby Mountain Trading Company. The firm's P/E ratio for 2017 is ________.

Which of the following statements is true concerning economic value added?

According the Financial Accounting Standards Board's Statement No. 157 on fair value accounting, Level 3 assets ________.

A firm has a tax burden of 0.7, a leverage ratio of 1.3, an interest burden of 0.8, and a return-on-sales ratio of 10%. The firm generates $2.28 in sales per dollar of assets. What is the firm's ROE?

Use the following cash flow data of Haven Hardware for the year ended December 31, 2017. What is the net increase or decrease in cash for Haven Hardware for 2017?

Benjamin Graham thought that the benefits from detailed analysis of a firm's financial statements had ________ over his long professional life.

The table below shows some data for Key Biscuit Company: What must have caused the firm's ROE to drop?

The process of decomposing ROE into a series of component ratios is called ________.

The financial statements of Burnaby Mountain Trading Company are shown below. Note: The common shares are trading in the stock market for $27 each. Refer to the financial statements of Burnaby Mountain Trading Company. The firm's market-to-book value for 2017 is ________.

The tax burden of the firm is 0.5, the interest burden is 0.55, the profit margin is 0.25, the asset turnover is 1.5, and the leverage ratio is 1.65. What is the ROE of the firm?

Which of the following assets is most liquid?

Use the following cash flow data of Haven Hardware for the year ended December 31, 2017. What is the net cash provided by operating activities of Haven Hardware?

Cash Flow Data for Interceptors, Inc. What must cash flow from financing have been in 2018 for Interceptors, Inc.?

Investments: Background and Issues

Asset Classes and Financial Instruments

Securities Markets

Mutual Funds and Other Investment Companies

Risk, Return, and the Historical Record

Efficient Diversification

Capital Asset Pricing and Arbitrage Pricing Theory

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Bond Prices and Yields

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation

Options Markets

Option Valuation

Futures Markets and Risk Management

Evaluating Investment Performance

International Diversification

Hedge Funds

Taxes, Inflation, and Investment Strategy

Investors and the Investment Process

Filters

Exam 14: Financial Statement Analysis

The major difference between IFRS and GAAP is that U.S. standards are ________ and IFRS standards are ________.

Use the following cash flow data of Haven Hardware for the year ended December 31, 2017. What is the net cash provided by or used in financing activities of Haven Hardware?

Another term for EVA is ________.

The financial statements of Burnaby Mountain Trading Company are shown below. Note: The common shares are trading in the stock market for $27 each. Refer to the financial statements of Burnaby Mountain Trading Company. The firm's P/E ratio for 2017 is ________.

Which of the following statements is true concerning economic value added?

According the Financial Accounting Standards Board's Statement No. 157 on fair value accounting, Level 3 assets ________.

A firm has a tax burden of 0.7, a leverage ratio of 1.3, an interest burden of 0.8, and a return-on-sales ratio of 10%. The firm generates $2.28 in sales per dollar of assets. What is the firm's ROE?

Use the following cash flow data of Haven Hardware for the year ended December 31, 2017. What is the net increase or decrease in cash for Haven Hardware for 2017?

Benjamin Graham thought that the benefits from detailed analysis of a firm's financial statements had ________ over his long professional life.

The table below shows some data for Key Biscuit Company: What must have caused the firm's ROE to drop?

The process of decomposing ROE into a series of component ratios is called ________.

The financial statements of Burnaby Mountain Trading Company are shown below. Note: The common shares are trading in the stock market for $27 each. Refer to the financial statements of Burnaby Mountain Trading Company. The firm's market-to-book value for 2017 is ________.

The tax burden of the firm is 0.5, the interest burden is 0.55, the profit margin is 0.25, the asset turnover is 1.5, and the leverage ratio is 1.65. What is the ROE of the firm?

Which of the following assets is most liquid?

Use the following cash flow data of Haven Hardware for the year ended December 31, 2017. What is the net cash provided by operating activities of Haven Hardware?

Cash Flow Data for Interceptors, Inc. What must cash flow from financing have been in 2018 for Interceptors, Inc.?

Investments: Background and Issues

Asset Classes and Financial Instruments

Securities Markets

Mutual Funds and Other Investment Companies

Risk, Return, and the Historical Record

Efficient Diversification

Capital Asset Pricing and Arbitrage Pricing Theory

The Efficient Market Hypothesis

Behavioral Finance and Technical Analysis

Bond Prices and Yields

Managing Bond Portfolios

Macroeconomic and Industry Analysis

Equity Valuation

Options Markets

Option Valuation

Futures Markets and Risk Management

Evaluating Investment Performance

International Diversification

Hedge Funds

Taxes, Inflation, and Investment Strategy

Investors and the Investment Process

Filters

The major difference between IFRS and GAAP is that U.S. standards are and IFRS standards are .