Question 1

Luther Corporation's total sales for 2009 were $610.1,and gross profit was $109.0.Inventory days for 2009 is closest to:

Accepted Answer

A) 27.5 
B) 33.4 
C) 153.7 
D) 10.9

Question 2

If Alex Corporation takes out a bank loan to purchase a machine used in production and everything else stays the same,its equity multiplier will ________,and its ROE will ________.

Accepted Answer

A) increase;increase 
B) decrease;decrease 
C) increase;decrease 
D) decrease;increase

Question 3

If in 2009 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share,then using the market value of equity,the debt to equity ratio for Luther in 2009 is closest to:

Accepted Answer

A) 1.47 
B) 1.78 
C) 2.31 
D) 4.07

Question 4

Which of the following statements regarding the balance sheet is INCORRECT?

Accepted Answer

A) The balance sheet provides a snapshots of the firm's financial position at a given point in time. 
B) The balance sheet lists the firm's assets and liabilities. 
C) The balance sheet reports stockholders' equity on the right hand side. 
D) The balance sheet reports liabilities on the left hand side.

Question 5

Luther's current ratio for 2009 is closest to:

Accepted Answer

A) 0.84 
B) 0.92 
C) 1.09 
D) 1.19

Question 6

Use the table for the question(s)below.
Consider the following income statement and other information: 
-For the year ending December 31,2009 Luther's earnings per share are closest to:

Accepted Answer

A) $0.96 
B) $1.04 
C) $1.28 
D) $1.33

Question 7

The change in Luther's quick ratio from 2008 to 2009 is closest to:

Accepted Answer

A) a decrease of .10 
B) an increase of .10 
C) a decrease of .15 
D) an increase of .15

Question 8

Which of the following statements regarding the income statement is INCORRECT?

Accepted Answer

A) The income statement shows the earnings and expenses at a given point in time. 
B) The income statement shows the flow of earnings and expenses generated by the firm between two dates. 
C) The last or "bottom" line of the income statement shows the firm's net income. 
D) The first line of an income statement lists the revenues from the sales of products or services.

Question 9

Gross profit is calculated as:

Accepted Answer

A) Total sales - cost of sales - selling,general and administrative expenses - depreciation and amortization. 
B) Total sales - cost of sales - selling,general and administrative expenses. 
C) Total sales - cost of sales. 
D) None of the above

Question 10

Luther's Net Profit Margin for the year ending December 31,2008 is closest to:

Accepted Answer

A) 1.8% 
B) 2.7% 
C) 5.4% 
D) 16.7%

Question 11

Use the following information for ECE incorporated:
Assets $200 million
Shareholder Equity $100 million
Sales $300 million
Net Income $15 million
Interest Expense $2 million
-If ECE reported $15 million in net income,then ECE's Return on Equity (ROE)is:

Accepted Answer

A) 5.0% 
B) 7.5% 
C) 10.0% 
D) 15.0%

Question 12

Wyatt Oil has a net profit margin of 4.0%,a total asset turnover of 2.2,total assets of $525 million,and a book value of equity of $220 million.Wyatt Oil's current return-on-assets (ROA)is closest to:

Accepted Answer

A) 8.8% 
B) 9.5% 
C) 21.0% 
D) 22.8%

Question 13

The statement of financial position is also known as the:

Accepted Answer

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

Question 14

Which of the following is an example of an intangible asset?

Accepted Answer

A) Brand names and trademarks 
B) Patents 
C) Customer relationships 
D) All of the above are intangible assets.

Question 15

Which of the following statements regarding net income transferred to retained earnings is correct?

Accepted Answer

A) Net income = net income transferred to retained earnings - dividends 
B) Net income transferred to retained earnings = net income + dividends 
C) Net income = net income transferred to retained earnings + dividends 
D) Net income transferred to retained earnings - net income = dividends

Question 16

Use the following information for ECE incorporated:
Assets $200 million
Shareholder Equity $100 million
Sales $300 million
Net Income $15 million
Interest Expense $2 million
-IECE's Return on Assets (ROA)is:

Accepted Answer

A) 5.0% 
B) 8.5% 
C) 7.5% 
D) 15.0%

Question 17

For the year ending December 31,2009 Luther's cash flow from financing activities is:

Accepted Answer

The answer of For the year ending December 31,2009 Luther's...

Question 18

Dolan Corporation has Gross Profit of $2.3 million,cost of sales of $1.7 million,operating expenses of $0.8 million,and "other" income of $0.5 million.What is its EBIT?

Accepted Answer

A) $2 million 
B) $0.3 million 
C) $1 million 
D) $0.6 million

Question 19

A 30 year mortgage loan is a:

Accepted Answer

A) long-term liability. 
B) current liability. 
C) current asset. 
D) long-term asset.

Question 20

The firm's equity multiplier measures:

Accepted Answer

A) the value of assets held per dollar of shareholder equity. 
B) the return the firm has earned on its past investments. 
C) the firm's ability to sell a product for more than the cost of producing it. 
D) how efficiently the firm is utilizing its assets to generate sales.

Exam 2: Introduction to Financial Statement Analysis