How much cash did Lagos collect from customers in 2010?
$345,000 +$65,000 - $90,000 = $320,000
24. Which of the following companies would you expect to report s
13. During July 2012 Ralston Company decides to dispose of one of its subsidiaries which
qualifies for accounting as a discontinued operation. At the July 2012 measurement date
Ralston Company estimates that it will report net losses of $1,5
d. Restricted stock issued (grant date).
13. In bankruptcy prediction analysis a type _ error is classifying a firm as
nonbankrupt when it ultimately goes bankrupt.
14. In bankruptcy prediction analysis a type _ error is classifying a firm as
bankrupt and it ultimately survives.
NOTE: The following multiple choice questions require present value information.
On January 1, 2012, Porter Corporation signed a five-year noncancelable lease for certain
machinery. The terms of the lease called for:
4. Rattigan had no minority interest in its equity. Total assets were $1,440,000 at the
beginning of Year 4 and $1,550,000 at the end of Year 4.
Rate of Return on Common Shareholders Equity:
($60,615 $22,100)/[.5($298,150 + $365,000)] = 11.6%
3. Another important step in financial statement analysis is to assess the quality of a firms
_ and if necessary adjust them for such
characteristics as sustainability or comparability.
ANS: financial statements
4. The fourth step in financial stat
At Dec. 31, 2012, the companys ABO exceeds its plan assets by $40,000, given that
the company does not have prepaid or accrued pension cost than its minimum
pension liability will also be $40,000.
2. Given the following information, compute Dece
12. Based on the information provided by Falcon Networks how much cash did income taxes use
a. $154.19 million
b. $54.17 million
c. $208.36 million
d. $284.84 million
13. Using the information provided by Falcon Networks determi
Selected Income Statement data
Fiscal year end
Cost of Goods Sold
(amounts in thousands of dollars)
Revenues to Cash Ratio:
$2,500/.5($421 + $625) = 4.8
Days Revenues in Cash:
365/4.8 = 76 days
$1,618/$1,094 = 1.5
($625 + $579)/$1,094 = 1.1
Operating Cash Flow
Current Liabilities Ratio:
14. When there are two or more investing firms in an entity, how is it determined which entity
consolidates the variable interest entity?
Determining whether an investing firm should consolidate the VIE is at the heart of
Interpretation No. 46
Common Stockholders' Equity at year-end
a. Compute the rate of return on assets for the years 2009-2011. Lindas has an effective
tax rate of 35%.
b. Compute the rate of return o
32. Changes in foreign exchange rates can affect a firm in all of the following ways except:
a. The prices a firm pays to acquire raw materials from suppliers abroad.
b. The amount of cash a firm receives when it collects an account receivab
Commitment to Purchase
Loss on Firm
Loss on Firm Commitment . 1,731
Commitment to Purchase Equipment.
= Liabilities +
3. The conceptual framework for free cash flows separates all assets and liabilities into the
a. Current and non -current
b. Monetary and non -monetary
c. Operating and non -operating
d. Operating and financial
Income taxes payable
Total Current Liabilities
Selected Income Statement Data - for the year ending December 31, 2010:
Cost of Goods Sold
b. Infrequent in occurrence
c. Material in amount
d. All of the above
How is a disposal of a segment of the business reported?
a. separately stated item on the income statement
c. statement of cash flows
d. statement of
1. Even if markets are perfectly efficient, someone must do the analysis to bring about
2. A finding that the market is efficient on average does not preclude temporary
mispricing of securities. Financial analysis can identify spe
Using this information calculate the following ratios:
Liabilities to Assets Ratio
Liabilities to Shareholders' Equity Ratio
LT Debt to LT Capital Ratio
LT Debt to Shareholders' Equity Ratio
Interest Coverage Ratio
Operating Cash Flow to Tot
Banks income statement:
Income before tax (X - .35X=$595,000)
Income tax expense (35%)
The analyst may decide to adjust income totals because the gains or los
21. All of the following statements are true regarding ratios and forecasts except:
a. Ratios cannot confirm whether forecast assumptions will turn out to be correct.
b. Ratios can tell whether future sales growth was accurately captured.
c. Ratios cannot
This company is in the late mature to early decline phase. CFO-positive and declining,
CFI-positive and declining, CFF-negative due to dividends.
This company is in the growth phase. CFO-positive, CFI-negative, CFF-positive maybe
starting to tu
d. ROCE does not differentiate based on how a company finances its assets; ROA does.
2. Asset turnover represents
a. The ability of the firm to generate income from operations for a particular level of sales.
b. The ability to generate sales
1. The expense occurs in the same period as the cash outflow when the economic
resource is sacrificed.
2. Firms must replace intangibles that are consumed if they expect to continue operating
3. Immediate expensing reduces the opportuniti
Chapter 1Overview of Financial Reporting, Financial Statement Analysis, and Valuation
1. The tools for studying industry economics does not include
a. Value chain analysis
b. Classification using Porters five forces
c. Classification of ca