13 - Name Chapter 13--Valuation: Earnings-Based Approaches...

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Unformatted text preview: Name Chapter 13--Valuation: Earnings-Based Approaches Description Instructions Modify Add Question Here Question 1 Multiple Choice 0 points Modify Remove Question If an analyst expects a firm to generate net income each period exactly equal to required earnings, then the value of the firm will be Answer exactly equal to the book value of common shareholders' equity. greater than the book value of common shareholders' equity. less than the book value of common shareholders' equity. exactly equal to working capital. Add Question Here Question 2 Multiple Choice 0 points Modify Remove Question Residual income valuation focuses on Answer dividend-paying capacity in free-cash flows. earnings as a periodic measure of shareholder wealth creation. free cash flows as a periodic measure of shareholder wealth creation. dividends as a periodic measure of shareholder wealth creation. Add Question Here Question 3 Multiple Choice 0 points Modify Remove Question Over the life of a firm, the capital invested in the firm by the shareholders plus the income of the firm will reflect Answer the dividend paying ability of the firm. the free cash flows available to shareholders. the value of the firm to shareholders. the value of the firm for debtholders and shareholders. Add Question Here Question 4 Multiple Choice 0 points Modify Remove Question Assume that a firm had shareholders' equity on the balance sheet at a book value of $1,200 at the end of 2005. During 2006 the firm earns net income of $900, pays dividends to shareholders of $400, and issues new stock to raise $250 of capital. The book value of shareholders equity at the end of 2006 is: Answer $2,750 $250 $1,450 $1,950 Add Question Here Question 5 Multiple Choice 0 points Modify Remove Question Assume that a firm had shareholders' equity on the balance sheet at a book value of $1,600 at the end of 2005. During 2006 the firm earns net income of $1,300, pays dividends to shareholders of $600, and uses $300 to repurchase common shares. The book value of shareholders equity at the end of 2006 is: Answer $2,000 $400 $3,800 $2,600 Add Question Here Question 6 Multiple Choice 0 points Modify Remove Question Residual income is Answer adjusted net income the firm reports. the difference between the net income the analyst expects the firm to generate and the required earnings of the firm. the difference between the net income the analyst expects the firm to generate and the reported earnings of the firm. the book value of common equity capital at the beginning of the period multiplied by the required rate of return on common equity capital. Add Question Here Question 7 Multiple Choice 0 points Modify Remove Question Required earnings are the Answer adjusted net income multiplied by the required rate of return on common equity capital....
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13 - Name Chapter 13--Valuation: Earnings-Based Approaches...

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