Financial Statement Analysis and Valuation 2nd Edition by Easton
Financial Statement Analysis and Valuation 2nd Edition Description
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Test Bank for Financial Statement Analysis and Valuation 2nd Edition
A company’s return on assets (ROA) can be disaggregated to reveal which of the following (select all that apply):
a. Financial leverage
b. Profit Margin
c. Sales growth
d. Asset growth
e. Asset turnover
On December 31, 2008 Harley-Davidson Inc. reported, on its Form 10-K, the following (in millions):
2008 2007
Total assets $7,829 $5,657
Total sales 5,594 5,727
Net income $ 655 $ 934
Calculate return on assets (ROA) for 2008.
a. 8.4%
b. 11.7%
c. 71.5%
d. 9.7%
e. None of the above
Which of the following are relevant in an analysis of a company’s business environment? (select as many as apply)
a. Financing
b. Labor
c. Buyers
d. Governance
e. All of the above
A clean audit opinion includes which of the following assertions:
a. Financial statements present fairly the company’s financial condition
b. The auditor certifies the financials to be error free
c. The financial statements are management’s responsibility
d. Management has handled transactions efficiently in all material respects
e. All of the above
The Goodyear Tire & Rubber Company’s December 31, 2008 financial statements reported the following (in millions)
Total assets $15,226
Total liabilities 14,204
Total shareholders’ equity 1022
Net income (loss) (77)
Retained earnings, December 31, 2007 $ 1,602
What did Goodyear report for Retained earnings at December 31, 2008?
a. $1,679 million
b. $1,525 million
c. $1,022 million
d. $945 million
e. There is not enough information to determine the answer.
The audit report is addressed to:
a. The audit committee
b. The board of directors
c. The shareholders
d. The board of directors and the shareholders
e. The Securities and Exchange Commission (SEC)
Procter & Gamble’s June 30, 2008 financial statements reported the following (in millions)
Cash, beginning of year $ 5,354
Cash, end of year 3,313
Cash from operating activities 15,814
Cash from investing activities $(2,549)
What did Procter & Gamble report for Cash from financing activities for the year ended June 30, 2008?
a. $(21,932) million
b. $15,306 million
c. $(15,306) million
d. $(13,265) million
e. $13,265 million
On September 30, 2008 Starbuck’s Corporation reported, on its Form 10-K, the following (in millions):
Total assets $5,672.6
Total stockholders’ equity 2,490.9
Total current liabilities $2,189.7
What did Starbuck’s report as Total liabilities on September 30, 2008?
a. $5,672.6 million
b. $3,482.9 million
c. $3,181.7 million
d. $992 million
e. None of the above
The ratio of net income to equity is also known as:
a. Total net equity ratio
b. Profit margin
c. Return on equity
d. Net income ratio
e. None of the above
In its 2007 annual report, Kohl’s Corporation reported the following (in millions):
Total assets $10,560
Total shareholders’ equity $ 6,102
Total liabilities $ 4,458
What proportion of Kohl’s Corporation is financed by non-owners?
a. 42%
b. 58%
c. 37%
d. 73%
e. None of the above
On September 30, 2008 Starbuck’s Corporation reported, on its Form 10-K, the following (in millions):
2008 2007
Total expenses $10,067.5 $8,738.9
Operating income 503.9 1,053.9
Net earnings $ 315.5 $ 672.6
What amount of revenues did Starbuck’s report for the year ending September 30, 2008?
a. $10,383.0
b. $9,411.5
c. $10,571.4
d. $9,752.0
e. None of the above
Sales for the year = $107,229, Net Income for the year= $12,144, Income from equity investments = $4,309, and average Equity during the year = $48,556. Return on equity (ROE) for the year is:
a. 25.0%
b. 20.8%
c. 45.3%
d. 8.9%
e. There is not enough information to answer the question
Sales for the year = $177,022, Profit margin = 16%, and average Assets during the year = $259,108. Return on Assets (ROA) for the year is:
a. 16%
b. 4.27%
c. 10.9%
d. There is not enough information to calculate ROA
e. None of the above
In its 2008 annual report, Snap-On Incorporated reported the following (in millions):
Current assets $1,140.7
Total shareholders’ equity $1,186.5
Total liabilities $1,523.8
What did Snap-On report as total assets at year-end 2008?
a. $1,569.6 million
b. $1,140.7 million
c. $3,851.0 million
d. $2,710.3 million
e. None of the above
The Goodyear Tire & Rubber Company’s December 31, 2008 financial statements reported the following (in millions)
Sales $19,488
Cost of sales $16,139
Other expenses (excluding cost of sales) $ 3,426
What did Goodyear report for Net income for the year ending December 31, 2008?
a. $77 million
b. $(77) million
c. $3,349 million
d. $16,062 million
e. There is not enough information to determine the answer
The Goodyear Tire & Rubber Company’s December 31, 2008 financial statements reported the following (in millions)
Cash December 31, 2008 $ 1,894
Cash from operating activities (745)
Cash from investing activities (1,136)
Cash from financing activities $ 312
What did Goodyear report for Cash on its December 31, 2007 balance sheet?
a. $1,894 million
b. $3,463 million
c. $325 million
d. $1,973 million
e. None of the above
The SEC adopted Regulation FD, to curb public companies practice of:
a. Routinely filing extensions for annual reports (Form 10-k)
b. Selectively disclosing information
c. Reporting pro forma (non-GAAP) numbers
d. Hiring auditors for non-audit services such as consulting engagements
e. None of the above
Which of the following statements are correct (select all that apply):
a. A balance sheet reports on investing and financing activities.
b. An income statement reports on financing activities.
c. The statement of equity reports on changes in the accounts that make up equity.
d. The statement of cash flows reports on cash flows from operating, investing, and financing activities over a period of time.
e. A balance sheet reports on a company’s assets and liabilities over a period of time.
Which of the following are NOT one of the five forces that determine a company’s competitive intensity? (select as many as apply)
a. Bargaining power of suppliers
b. Threat of substitution
c. Ability to obtain financing
d. Threat of entry
e. Threat of regulatory intervention
E. I. du Pont reported the following on its 2007 income statement (in millions)
Sales revenue $29,378
Gross profit 7,813
Total expenses $26,390
What did E. I. du Pont report for Cost of goods sold during 2007?
a. $18,577 million
b. $21,565 million
c. $37,191 million
d. $2,988 million
e. None of the above
American Airlines’ 2007 balance sheet reported the following (in millions)
Total Assets $25,385
Total Liabilities 23,941
Contributed Capital $ 4,422
What was American Airlines’ Total liabilities and Stockholders’ Equity at December 31, 2007?
a. $25,385 million
b. $23,941 million
c. $28,363 million
d. $4,422 million
e. There is not enough information to determine the answer.
A list of assets, liabilities and equity can be found on which of the following?
a. Balance Sheet
b. Income Statement
c. Statement of Assets and Liabilities
d. Statement of Cash Flows
e. Statement of Stockholders’ Equity
In its 2007 annual report, Caterpillar, Inc. reported the following (in millions):
2007 2006
Sales $44,958 $41,517
Cost of goods sold $32,626 $29,549
As a percentage of Sales, did Caterpillar’s Gross profit increase or decrease during 2007?
a. Gross profit increased from 27% to 29%
b. Gross profit decreased from 29% to 27%
c. Gross profit increased from 71% to 73%
d. Gross profit decreased from 73% to 71%
e. There is not enough information to answer the question
On September 30, 2008 Starbuck’s Corporation reported, on its Form 10-K, the following (in millions):
Total assets $5,672.6
Total stockholders’ equity 2,490.9
Total current liabilities $2,189.7
What did Starbuck’s report as Total liabilities on September 30, 2008?
Which of the following items would not be found on a balance sheet? (Select all that apply)
a. Stockholders’ Equity
b. Property, plant and equipment
c. Nonowner financing
d. Sales
e. Cost of Goods Sold
A company’s net cash flow will equal its net income: …
a. Almost always
b. Rarely
c. Occasionally
d. Only when the company has no investing cash flow for the period
e. Only when the company has no investing or financing cash flow for the period
Generally Accepted Accounting Principles (GAAP) are created by: (select all that apply)
a. The Securities and Exchange Commission
b. The Generally Accepted Accounting Principles Task Force
c. The Sarbanes Oxley Act
d. The Financial Accounting Standards Board
e. The Emerging Issues Task Force
In its 2007 annual report, Mattel Inc. reported the following (in millions):
Total liabilities $3,498
Total shareholders’ equity $1,307
What proportion of Mattel is financed by non-owners?
a. 27%
b. 37%
c. 73%
d. 63%
e. None of the above
In its 2008 annual report, Snap-On Incorporated reported the following (in millions):
Current assets $1,140.7
Total shareholders’ equity $1,186.5
Total liabilities $1,523.8
What did Snap-On report as total assets at year-end 2008?
Sales for the year = $81,229, Net Income for the year= $7,186, and average Assets during the year = $53,445. Return on Assets (ROA) for the year is:
a. 13.4%
b. 65.8%
c. 8.8%
d. There is not enough information to calculate ROA
e. None of the above
Which of the following groups would likely not be interested in the financial statements of a large public company such as Berkshire Hathaway?
a. Shareholders
b. Employees
c. Competitors
d. Taxing agencies
e. None of the above
On September 30, 2008 Starbuck’s Corporation reported, on its Form 10-K, the following (in millions):
2008 2007
Operating income $ 503.9 $1,053.9
Net earnings $ 315.5 $ 672.6
Calculate year-over-year decline in Net earnings, in percentage terms.
a. -213%
b. -113%
c. -53%
d. -47%
e. None of the above
On September 30, 2008 Starbuck’s Corporation reported, on its Form 10-K, the following (in millions):
2008 2007
Total expenses $10,067.5 $8,738.9
Operating income 503.9 1,053.9
Net earnings $ 315.5 $ 672.6
What amount of revenues did Starbuck’s report for the year ending September 30, 2008?