Ch14 - Financial Statement Analysis 1. Which of the...

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Financial Statement Analysis 1. Which of the following assets is most liquid? a. cash equivalents b. receivables c. inventories d. plant and equipment 2. Which of the following is the least liquid current asset? a. cash equivalents b. receivables c. inventories
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d. plant and equipment 3. Many observers believe that firms "manage" their income statements to ________. a. minimize taxes over time b. manipulate their stock price c. smooth their earnings over time d. none of the above 4. One common way to "manage" earnings is to ________. a. put secret cash in a Swiss bank account b. mislead the auditors c.
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pay senior management large bonuses in good years d. adjust reserve accounts 5. FASB 33 deals with the effect of _______ on accounting statements. a. currency values b. FIFO inventory c. inflation d. none of the above 6. One of the biggest impediments to a global capital market is __________. a. volatile exchange rates b. the lack of common accounting standards
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c. timid investors in the U.S. d. transparent markets in Europe and Latin America 7. Benjamin Graham thought that the benefits from security analysis had _________ over his long professional life. a. increased greatly b. increased slightly c. remained constant d. decreased 8. If the interest rate on debt is higher than the ROA, then a firm will __________ if it increases the use of debt in its capital structure. a. decrease its ROE
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b. increase its ROE c. not change its ROE d. change its ROE in an indeterminable manner 9. Which of the following is not one of the three key financial statements available to investors in publicly traded firms? a. income statement b. balance sheet c. statement of operating earnings d. statement of cash flows 10. Which of the following balance sheet items is not considered an asset?
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a. inventory b. accounts receivable c. accrued taxes d. All of the above are assets 11. Stockholder's equity can be defined as _________________. a. total assets minus total liabilities b. liabilities minus long-term debt c. retained earnings plus additional paid-in-capital d. More than one of the above
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12. If a firm issues no new equity, book value will _______________________. a. decrease each year by the amount of retained earnings b. decrease each year by the amount of retained earnings minus depreciation on fixed assets c. increase each year by the amount of retained earnings d. increase each year by the amount of retained earnings plus depreciation on fixed assets 13. Common size balance sheets are prepared by dividing all quantities by _____________. a. total assets b. total liabilities c. shareholder's equity
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d. fixed assets 14. Accounting standards in foreign countries often differ from accounting standards in the USA with respect to __________. a.
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Ch14 - Financial Statement Analysis 1. Which of the...

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