{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

quiz.acctg

# quiz.acctg - Rev Revenues Exp Less Operating Expenses EBIT...

This preview shows pages 1–2. Sign up to view the full content.

University of Houston C. T. Bauer College of Business Finance 3332 Principles of Financial Management Accounting Quiz 1. Construct a simplified Income Statement beginning with Revenues and ending with Earnings per Share. 2. Construct a simplified Balance Sheet. 3. List the types of financial statements commonly found in annual reports. 1. 2. 3. 4. Characterize each statement by circling T for True or F for False. T F 1. The appropriate goal of the financial manager is to maximize the firm’s earnings per share. T F 2. Finance consists of three primary areas: Corporate Finance, Investments, and Financial Markets and Institutions T F 3. For investment purposes, real estate is an example of a financial asset. T F 4. Financial assets can be characterized as fixed income, equity, or real. T F 5. Agency problems arise from the potential conflict of interest due to the separation of ownership and control.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Quiz Solutions 1. Simplified Income Statement:
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Rev Revenues- Exp Less Operating Expenses EBIT Earnings before Interest and Taxes or Operating Income- Int Less Interest Paid EBT Earnings before taxes- taxes Less Income Taxes EAT Earnings after Taxes or Net Income EAT / Number of shares of Common Stock Outstanding = EPS In algebraic form: EPS = [(Rev – Exp – Int)(1-t)] / (number of shares of common stock outstanding) where t is the marginal tax rate 2. Simplified Balance Sheet: Assets Liabilities Short-term assets Short-term liabilities Long-term assets Long-term liabilities Stockholders Equity: Common stock at par Additional paid in capital Retained earnings . Total Assets Total liabilities and stockholders’ equity 3. Types of financial statements commonly found in annual reports: 1. Income statement 2. Balance sheet 3. Statement of cash flows 4. Statement of retained earnings Statements 2 and 5 are True...
View Full Document

{[ snackBarMessage ]}