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Corporate Finance (Berk/DeMarzo)- Chapter 2 - Introduction to Financial Statement Analysis




Question;Corporate Finance (Berk/DeMarzo)- Chapter 2- Introduction to Financial Statement Analysis;2.1 The Disclosure of Financial Information;1) U.S. public companies are required to file their annual;financial statements with the U.S. Securities and Exchange Commission on which;form?;A);10-A;B);10-K;C);10-Q;D);10-SEC;2);Which of the following is not a financial statement that;every public company is required to produce?;A);Income Statement;B);Statement of Sources and Uses of Cash;C);Balance Sheet;D);Statement of Stockholders' Equity;3);The third party who checks;annual financial statements to ensure that they are prepared according;to GAAP and verifies that the information reported is reliable is the;A);NYSE Enforcement Board.;B);Accounting Standards Board.;C);Securities and Exchange Commission (SEC).;D);auditor.;2.2 The Balance Sheet;1);Which of the following balance sheet equations is;incorrect?;A);Assets- Liabilities= Shareholders' Equity;B);Assets= Liabilities+ Shareholders' Equity;C);Assets- Current Liabilities= Long Term Liabilities;D);Assets- Current Liabilities= Long Term Liabilities+ Shareholders;Equity;3);Accounts payable is a;A);Long-term liability.;B);Current Asset.;C);Long-term asset.;D);Current Liability.;4);A 30 year mortgage loan is a;A);Long-term liability.;B);Current Liability.;C);Current Asset.;D);Long-term asset.;5);Which of the following statements regarding the balance;sheet is incorrect?;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.;Use the table for the question(s) below.;Consider the following balance sheet;Luther;Corporation;Consolidated;Balance Sheet;December 31;2006 and 2005 (in $ millions);Assets;2006;2005;Liabilities and Stockholders' Equity;2006;2005;Current Assets;Current Liabilities;Cash;63.6;58.5;Accounts payable;87.6;73.5;Accounts receivable;55.5;39.6;Notes payable /;short-term debt;10.5;9.6;Inventories;45.9;42.9;Current maturities of long-term debt;39.9;36.9;Other current assets;6.0;3.0;Other current liabilities;6.0;12.0;Total current assets;171.0;144.0;Total current liabilities;144.0;132.0;Long-Term Assets;Long-Term Liabilities;Land;66.6;62.1;Long-term debt;239.7;168.9;Buildings;109.5;91.5;Capital lease;obligationss;---;---;Equipment;119.1;99.6;Total Debt;239.7;168.9;Less accumulated;depreciation;(56.1);(52.5);Deferred taxes;22.8;22.2;Net property, plant, and equipment;239.1;200.7;Other long-term liabilities;---;---;Goodwill;60.0;--;Total long-term;liabilities;262.5;191.1;Other long-term assets;63.0;42.0;Total liabilities;406.5;323.1;Total long-term assets;362.1;242.7;Stockholders' Equity;126.6;63.6;Total Assets;533.1;386.7;Total liabilities and Stockholders' Equity;533.1;386.7;6);What is Luther's net working capital in 2005?;A);$12 million;B);$27 million;C);$39 million;D);$63.6 million;7);If in 2006 Luther has 10.2 million shares outstanding and;these shares are trading at $16 per share, then Luther's Market-to-book ratio;would be closest to;A);0.39;B);0.76;C);1.29;D);2.57;8);When using the book value of equity, the debt to equity;ratio for Luther in 2006 is closest to;A);2.21;B);2.29;C);2.98;D);3.03;9);If in 2006 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 2006 is closest to;A);1.71;B);1.78;C);2.31;D);2.35;10);If in 2006 Luther has 10.2 million shares outstanding and;these shares are trading at $16 per share, then what is Luther's Enterprise;Value?;A);-$63.3;million;B);$353.1 million;C);$389.7 million;D);$516.9 million;11);Luther's current ratio for 2006 is closest to;A);0.84;B);0.87;C);1.15;D);1.19;15);If on December 31, 2005;Luther has 8 million shares outstanding trading at $15 per share., then;what is Luther's enterprise value?;2.3 The Income Statement;1);Which of the following statements regarding the income;statement is incorrect?;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);Use the tables for the;question(s) below.;Consider the following;financial information;6);For the year ending December 31, 2006 Luther's cash flow;from operating activities is?;2.6 Accounting Manipulation;1);In response to corporate scandals such as Enron and;WorldCom, in 2002 congress passed a law that requires, among other things, that;CEOs and CFOs certify the accuracy and appropriateness of their firm's;financial statements and increases he penalties against them if the financial;statements later prove to be fraudulent.;The name of this act is?;A);The Glass-Steagall Act;B);The Sarbanes-Oxley Act;C);The Accuracy in Accounting Act;D);The McCain-Feingold Act


Paper#51334 | Written in 18-Jul-2015

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