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

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Question 41

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When identifying the strategies that a particular firm pursues to gain a competitive advantage it is important to determine if its products are designed to meet the needs of a specific market segment or are they intended for a _____________________________________________.

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broader co...

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Question 42

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Which of the following is not an activity reported in the cash flows financial statement?

A) operating
B) investing
C) manufacturing
D) financing

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Question 43

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Which forces typically represent horizontal competition in a value chain?

What three financial statements are prepared by business firms and what information does each provide?

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

The primary purpose of the balance sheet is to:

Extraordinary gains and losses arise from events that have all the following characteristics except:

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

___________________________________ financial statements are helpful in highlighting the relative magnitude of changes in financial statement data from year to year.

Which of the following is an independent entity comprising 15 members and a full-time professional staff that specifies acceptable accounting principles known as the IFRS?

All of the following are reasons that pharmaceutical companies have higher barriers for entry than grocery stores except:

All of the following are the building blocks for financial statement analysis except:

Net income is equal to:

Which of the following activities reported in the Statement of Cash Flows is not a financing activity?

The following selected financial data pertain to four companies: a hotel, a travel agency, a meat packing company and a pharmaceutical company. Required: Match each with the financial information and explain why you made your choice as you did. $\begin{array}{c}\begin{array}{|l|}\hline \text {Balance Sleet Data}\\\text {(conmonent percentages)}\\\hline \text {Cash}\\\hline \text {Accounts Receivable}\\\hline \text {Inventory}\\\hline \text {Property, Plant \& Equipment}\\\hline \\\hline \text {Income Statement Data}\\\text {(conmonent percentages)}\\\hline \text {GrossProfit}\\\hline \text {Profit before Taxes}\\\hline \\\hline \text {Ratios}\\\hline \text {Current ratio (over the last five years)}\\\hline \text {Inventory turnover ratio}\\\hline \text {Debt-to-equity ratio}\\\hline \end{array}\begin{array}{l|}\hline\text {Company}\\ \mathbf{1} \\\hline 7.2 \\\hline 28.0 \\\hline 21.4 \\\hline 32.0\\\hline\\\hline\\\\\hline 15.2 \\\hline 1.8 \\\hline\\\hline\\\hline 1.6 \\\hline 27.8 \\\hline 1.8 \\\hline\end{array}\begin{array}{l|}\hline\text {Company}\\ \mathbf{2} \\\hline 22.0 \\\hline 40.0 \\\hline 0.5 \\\hline 19.0 \\\hline \\\hline \\\\\hline \text { Not Applicable } \\\hline 3.3 \\\hline \\\hline \\\hline 1.3 \\\hline \text { Not Applicable } \\\hline 2.3 \\\hline\end{array}\begin{array}{l|}\hline\text {Company 3}\\\\\hline6.0 \\\hline3.4 \\\hline0.9 \\\hline75.1\\\hline\\\hline\\\\\hline\text {Not Applicable}\\\hline2.5\\\hline\\\hline\\\hline0.5\\\hline\text {Not Applicable}\\\hline5.8\\\hline\end{array}\begin{array}{l|}\hline\text {Company 4}\\\\\hline11.2\\\hline23.0 \\\hline 27.4 \\\hline 25.0\\\hline\\\hline\\\\\hline44.0\\\hline7.0\\\hline\\\hline\\\hline1.8\\\hline3.4\\\hline1.4\\\hline\end{array}\end{array}$

An example of an intangible asset is

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

Which of the following is not an expense of a business?

___________________________________ equals net income for a period plus or minus the changes in shareholders' equity accounts other than from net income and transactions with owners.

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