Question 1

Which forces typically represent horizontal competition in a value chain?

Accepted Answer

A)   rivalry among existing firms and supplier power.
B)   potential entry and buyer power.
C)   substitutes and potential entry.
D)   buyer power and supplier power. C

Question 2

Which of the following economic characteristics is consistent with a pharmaceutical company?

Accepted Answer

A)   Low barriers to entry.
B)   High levels of research and development.
C)   Low profit margins.
D)   Low business risk. B

Question 3

Under the Sarbanes-Oxley Act ____________________ assumes responsibility for establishing and maintaining adequate internal control structure and procedures.

Accepted Answer

management

Question 4

When a firm attempting to create unique products or services for particular market niches,in order to achieve relatively high profit margins,this is best known as

Accepted Answer

A)   a quality strategy
B)   a low-cost leadership strategy
C)   a vertical integration strategy
D)   a product differentiation strategy

Question 5

Under the ____________________ basis of accounting,a firm recognizes revenue when it performs all or a substantial portion,of the services it expects to perform and receives either cash or a receivable.

Accepted Answer

The answer of Under the ____________________ basis of accounting,a firm...

Question 6

The first step in financial statement analysis is to identify the __________________________________________________ of the industry in which a firm participates.

Accepted Answer

The answer of The first step in financial statement analysis...

Question 7

A firm obtains cash from short and long-term ____________________ and from issuing preferred and _________________________.

Accepted Answer

The answer of A firm obtains cash from short and...

Question 8

Which of the following assets would appear on the balance sheet at an amount greatly below its fair market value?

Accepted Answer

A)   inventory
B)   marketable securities
C)   equipment
D)   brand name

Question 9

The third step in financial statement analysis is to assess the quality of the firm's financial statements.Which of the following is a question an analyst should ask when performing this step?

Accepted Answer

A)   Are industry sales growing rapidly or slowly?
B)   Do earnings include revenues that appear mismatched with the business model employed by the firm?
C)   Does the industry include a large number of firms selling similar products?
D)   What is the company's degree of geographical diversification?

Question 10

Nonmonetary assets include assets that are ____________________,such as inventories,and assets that are ____________________ such as brand names.

Accepted Answer

The answer of Nonmonetary assets include assets that are ____________________,such...

Question 11

Labor contracts and purchase order commitments are examples of ____________________ contracts.

Accepted Answer

The answer of Labor contracts and purchase order commitments are...

Question 12

Use the current asset section of the balance sheets of the El Paso Company as of January 31,2012 and 2011 presented below to answer the questions that follow.
  Required:
(a)In the spaces provided below,complete a Percentage Change analysis of the current asset section of El Paso Company's balance sheet for 2012,using the following format to provide your answers for the amount of dollar change and the amount of percentage change,rounding "% Change" to one decimal place,e.g.,8.3%.
Accounts $ Change % Change
(b)Provide a short evaluation of this analysis.

Accepted Answer

The answer of Use the current asset section of the...

Question 13

The primary purpose of the balance sheet is to:

Accepted Answer

A)   report the current value of the business.
B)   measure the net income of a business up to a particular point in time.
C)   report the difference between cash inflows and cash outflows for the period.
D)   report the financial position of the reporting entity at a particular point in time.

Question 14

On a common size basis,which of the following assets is normally largest for a commercial bank?

Accepted Answer

A)   Accounts and Notes Receivable
B)   Inventory
C)   Property, Plant and Equipment
D)   Cash and Marketable Securities

Question 15

How easily can new firms enter a market is a question one might ask when assessing _____________________________________________.

Accepted Answer

The answer of How easily can new firms enter a...

Question 16

Most financial statement analysis aims to assess a firm's ____________________ and ____________________.

Accepted Answer

The answer of Most financial statement analysis aims to assess...

Question 17

Which of the following would not appear as a liability on the balance sheet?

Accepted Answer

A)   a labor contract
B)   a note due to a bank
C)   salary due employees at year-end
D)   accounts payable

Question 18

Prepare an analysis of the grocery industry using Porter's Five Forces framework.For each component force provide support for your conclusion.In addition,at the completion of your analysis provide a conclusion,along with support,of whether you expect the grocery industry to report high or low profitability in the near future.

Accepted Answer

The answer of Prepare an analysis of the grocery industry...

Question 19

Which financial statement would you look at to determine whether a company will be able to pay for the goods when payment is due in 30 days?

Accepted Answer

A)   statement of cash flows.
B)   statement of stockholders' equity.
C)   income statement.
D)   balance sheet.

Question 20

A value chain for an industry sets forth

Accepted Answer

A)   the layers of management the needed to be successful
B)   sequence of activities involved in the creation, manufacture and distribution of its products.
C)   Sequence of activities involved in a firm's research and development activities.
D)   Whether the industry is horizontally or vertically integrated.

Exam 1: Overview of Financial Reporting, Financial Statement Analysis, and Valuation