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32 Cards in this Set

  • Front
  • Back
Why is the figure for operating profit important?
The figure for operating profit provides a basis for assesing the sucess of a company apart from its financing and investment cativities and seperate from its tax status
What is a creditors' objective in performing an analysis of financial statements?
To decide whether the borrower has the ability to repay interest and principal on burrowed funds
Which of the following ratios would you MOST like to see decrease?
Average collection period
Use any of the above data that you this is relevant to determine Goodbye Doggie's dividends for the year ended December 31,2003.
Which of the following items would NOT be classified as an operatin expense on a muti-step income statement?
Cost of Goods Solg
How are costs of assets that benefit a firm for more than one year allocated?
Both A and B
Depreciation, Depeletion and Amortization
Which of the following statements is TRUE regardgin common stock?
Common Stockholders have more risk and more potential and either preferred of bonholders.
Which of the following is FALSE concerning goodwill?
As of 2004 goodwill is written off through amortization over a perioid of a year.
What do the asset turnover ratios measure?
Management's effectiveness in generating sales from investments in assets.
Which of the following expenses for a manufacturing company/plant would be considered a fixed cost?
Straight line depreciation for the manufacturing plant/business.
What is the impact of operating leverage on business?
it increases both risk and potential for profit
Which of the folowing ANALYSIS would NOT be appropriate when explaining the following financial data for research and development expenses incurred by a company in the pharmaceutical business?
The common size R&D ratio is decreasing because net income is increasing at a faster rate than R&D
Which of the following would be classified as long-term debt?
Mortgages, Long-term notes payable, bonds due in 10 years
Which of the following statements is FALSE regarding Commitments and Contingencies?
Information related to disputes between a company and the IRS can be found in the Commitments section of the notes
If telly company has MORE operating leverage than tubby, an equivalent increase in sales for both companies should result in:
A greater increase in net income for Telly than Tubby
Which of the following ratios is NOT a liquidity ratio?
Cash Interest coverage
All of the following expenses rely on estimates from managment and therefor are potential areas for earnings management EXCEPT
Which of the following statements is TRUE regarding closing entries?
Closing entries zero out balances for income statement accounts at the end of each year
If you did accounts receivable analysis and found the the companys Salges Growth Rate was 15% their gross Accounts receivable growth rate was 30% and their allowance for bad debt growth rate was 45%, which of the following would be the BEST statement for your ANALYSIS statement?
This company may have loosened its credit policy
Which statement is FALSE?
deferred taxes arise from the use of the same methods of depreciation for tax and reporting purposes.
Which of the following would NOT be helpful to a creditor/investor when analyzing a company's financial data?
random Sampling
when can high Financial Leverage be beneficial for a company?
The company has predictable earnings
Which of the following ANALYZIZ statements WOULD NOT be appropriate when explaining the following financial date for a manufacturing companys PPE balances?
The company's common size PPE ratio indicates that they should have financial leverage
If a company is in the airline industry,some of their costs are fixed over a certain level of activity. Which of the following statements would be correct regarding the cost driver for airline industry fixed costs?
For this industy, the number of passengers would be considered the cost driver for fixed costs.
Based on the ratio information below, which company's operating strategy is "cost leader"?
Company A- Net profit margin is 1.87% and Total asset turnover is 3.12x
Which of the following ANALYSIS statements WOULD NOT be appropriate when explainin the financial data for a retail clothing store's inventory balances?
The common size inventory ratio is increasing because inventory is increasing at a faster rate than current assets
Which of the following expenses WOULD be considered either nonrecurring or non-operating in nature?
Interest Expense
Under what circumstances could Basic EPS and Diluted EPS be the same?
If the company does not have any stock options
If a company's debt ratio is 22%, what prediction can be made about the company's financial leverage?
You can predict the company has financial leverage of greater than 1
What accounts are most likely to be found in the stockholders' equity section of the balance sheet?
Common stock, additional paid-in capital. retained earnings
you have the following information for bigger and better company..
ROA is being driven by net profit margin and ROE is being driven by ROA
which of following is a TRUE statement regarding solvency and profitability
A company can be solvent but not be profitable