Chapters-1 - Exam 1 An effective way to discern trends in a...

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Exam 1 An effective way to discern trends in a company is through the use of None of the above Qualitative considerations are never as important as the numerical comparisons in the financial analysis False The statement that shows all the investments in the company and all the distributions during a reporting period is called The statement of owner’s equity Which of the following ratios is the best indicator of a firm’s ability to manage its assets? ROA Which of the following statement fulffils a firm’s requirement to disclose its earning for a period? Income Statement The sustainable growth calculation measures How quickly a firm can expand its asset base without raising external capital The net result of the DuPont formula is return on total assets False Which ratio shows the average percentage by which sales price exceeds the cost of goods sold? Gross Margin Which of the following ratios measure liquidity? Although the cash flow statement using the indirect method is useful, it does not show net income for the period False Exam 2
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Which of the accounts listed below vary with sales? a) Accounts receivable b) Cost of goods sold c) Administrative salaries d) A and B e) None of the above Precise forecast which may be supported by great detail are useless if they do not approximate reality. TRUE Qualitative analysis is the first step in the development of pro TRUE the most significant portions of your projection are, no matter how carefully contrived, still little more than educated guesses. TRUE Sensitivity Analysis should not be performed On a predictable, immaterial item The most accurate pro formas contain the most detail FASLE When doing a comprehensive financial forecast, which account warrants the most thorough relational and trend analysis? Answer: Sales a) Sales b) Return on equity In projecting an income statement based on a balance sheet, which of the following categories would you contend to be least likely to vary directly with a change in sales? DEPRECIATION
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In projected assets exceed liabilities and owner’s equity, it is assumed that the difference is funded through stock issuance. FALSE Statistical methods can be employed to: ANSWER D a) Smooth out historical performance trends b) Aid the analyst in making estimates of future performance c) Establish boundaties for sensitivity analysis d) A, B, and C Which of the following companies should provide the longest time horizon for quantitative analysis? An automobile manufacturer The final and perhaps most crucial portion of financial forecasting is to test the assumptions that were used to derive the projection TRUE Hypotheses that are formed during the qualitative analysis can be verified when the analyst reviews the firm’s historical performance TRUE There are three distinct steps in developing pro forma statements. Which of the following is not one of those steps? ANSWER: C a) Qualitative analysis b) Quantitative analysis c) Corporate analysis d) Testing critical assumptions
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This note was uploaded on 04/05/2012 for the course PHY 102 taught by Professor Madison during the Spring '12 term at Jefferson College.

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Chapters-1 - Exam 1 An effective way to discern trends in a...

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