财务报表分析期中考试试题.docx

财务报表分析期中考试试题.docx

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财务报表分析期中考试试题

StudentsRandomNumber:

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MScINAPPLIEDFINANCE

FinancialStatementsAnalysis

INSTRUCTIONSTOSTUDENTS

1Thetimeallowedforthisexaminationpaperis2.5hours.

2Thisexaminationpapercontainsthirty-four（34）multiple-choicequestionsandthreeanalyticquestions.YouareREQUIREDtoanswerALLquestions.Nomarkswillbedeductedforwronganswers.

3Pleaseselectthemostsuitableanswertoeachquestionbyshadingyouranswerwithpencilonlyintheanswersheetprovided.

4Thisisaclosed-bookexamination.Youareallowedtouseafinancialcalculator.

5Thereareten（10）printedpagesincludingthisinstructionsheet.

6Youarerequiredtoreturnthefullsetofquestionpaperattheendoftheexamination.Pleasewriteyournameonthetoprighthandcornerofthisinstructionsheet.

一、SingleChoices（1.5pointsforeachquestion,51pointsintotal）

1.Asageneralrule,revenueisnormallyrecognizedwhen

A.Itismeasurable

B.Itismeasurableandreceived,

C.Themeasurementprocessiscomplete.

D.Theearningsprocessiscompleteandcashreceiptisassured.

2.Ifacompanyrecognizesrevenueearlierthanjustifiedunderaccrualaccounting,whichofthefollowingbestdescribestheimpactonaccountsreceivableandequity,respectively?

AccountsReceivableEquity

A.OverstatedOverstated

B.OverstatedUnderstated

C.UnderstatedOverstated

D.UnderstatedUnderstated

3.Ifacompanyusesthecompletedcontractmethodratherthanthepercentage-of-completionmethodforathree-yearcontract,thenetincomeandcashfromoperationsthecompanyrecognizesinthefirstyearare:

A.willbegreaterandhigherrespectively,ifthecompleted-contractmethodisused

B.willbelowerandthesamerespectively,ifthecompleted-contractmethodisused

C.willbethesameforbothmethods

D.willbelowerandlowerrespectively,ifthecompleted-contractmethodisused

4.Foramaterialitemtobeclassifiedasanextraordinaryitemontheincomestatement,theitemmustbe:

A.estimatedandprobable

B.unusualinnatureandinfrequentinoccurrence

C.probableandinfrequentinnature

D.currentandunusualinfrequency

5.InthestatementofCashFlows,whichofthefollowingbestdescribeswhetherinterestpaidanddividendspaid,respectively,areclassifiedasoperatingorinvestingcashflows?

DividendspaidInterestpaid

A.OperatingOperating

B.OperatingFinancing

C.FinancingOperating

D.FinancingFinancing

6.Amongthefollowingitems,whichisaddedtonetincomeforcalculationofcashflowsfromoperatingactivitiesintheindirectmethod?

A.Increaseofinventory

B.Decreaseofprepaidexpenses

C.Decreaseofdividendpaid

D.Increaseofaccountsreceivable

7.ThefollowinginformationwasavailablefortheBInc.for2006:

Netincome

132

Exchangedequityfordebt

34

Increaseininventory

42

Increaseinaccountspayable

30

Retirementofcommonstock

45

Depreciationexpense

25

WhatwasBnetcashflowfromoperations?

A.229B.145C.169D.184

8.WhichofthefollowingisNOTreportedasanoncashtransactiononafirm’sstatementofcashflows?

A.Exchangedequipmentwithabookvalueof$1.7millionforequipmentvaluedat$2.1million.

B.Purchaseoftreasurystock

C.Issued5,000sharesofpreferredstockforlandwithafairvalueof$4.8million

D.conversionofbondspayableintocommonstock

9.Acompany’scurrentratiois0.8.Ifthecompanyusescashtoretirenotespayablethatareduewithinoneyear,wouldthistransactionmostlikelyIncreaseorDecreasethecurrentrationandassetturnoverratio,respectively?

CurrentratioAssetTurnoverRatio

A.IncreaseDecrease

B.IncreaseIncrease

C.DecreaseIncrease

D.DecreaseDecrease

10.Thecashconversioncyclemeasures:

A.thenumberofdayscashistiedupinworkingcapital

B.theaveragecollectionperiodofaccoutsreceivable

C.thetimetoconvertcashintoprofit

D.noneofabove

11.Common-sizeincomestatementsexpressacompany’saccountsrelativelyto:

A.theaggregateeconomy

B.thecompany’sownassets

C.thecompany’ssales

D.thecompany’scashcollectionsfromcustomers

12.Duringperiodsofsustainedrisingprices,comparedwithLIFOmethod,howwilltheFIFOmethodaffectacompany’sCOGS,netincomeandincometaxliability,respectively?

A.increase,increase,increase

B.increase,increase,decrease

C.decrease,decrease,increase

D.decrease,increase,increase

13.SelectedfinancialdatafromKrandall,Inc.’sfinancialstatementswasasfollows（in$）:

InventoryatJan.1

374,000

LIFOReserveatJan.1

23,000

InventoryatDec.31

348,400

LIFOReserveatDec.31

25,000

COGS

1,900,000

Netincome

170,000

Krandallusesthelastin,firstout（LIFO）inventorycostflowassumption.Thetaxrateis35percent.WhatistheInventoryturnoverratioifKrandallusedfirstin,firstout（FIFO）insteadofLIFO?

A.4.927B.5.260C.4.904D.5.084

14.ThesameconditionsasinQuestion13.WhatisInventoryturnoverratiounderthecurrentcostmethod?

A.4.927B.5.260C.5.255D.4.932

15.ThesameconditionsasinQuestion13.IftheROEforKrandallis4.6%,WhatisROEifKrandallusedfirstin,firstout（FIFO）insteadofLIFO?

A.4.616%B.4.581%C.4.635%D.4.932%

16.Duringperiodsofdecliningpricesandstableinventorylevels:

A.LIFOCOGS>weightedaverageCOGS>FIFOCOGS

B.LIFOCOGS

C.LIFOCOGS=weightedaverageCOGS=FIFOCOGS

D.weightedaverageCOGSFIFOCOGS

17.Inaperiodofrisingprices,LIFOliquidationresultsin:

A.higherearnings.

B.increaseinaccountsreceivable.

Cincreaseininventory.

D.lowerearnings.

18.JMEpurchased400unitsofinventorythatcost$6.00each.Laterthefirmpurchasedanadditional500unitsthatcost$7.50each.JMEsold700unitsofinventoryfor$10.5each.IfJMEusesafirstin,firstout（FIFO）costflowmethod,theamountofgrossprofitappearingontheincomestatementis:

A.$3,600.B.$4,650.C.$7,350.D.$2,700.

19.Comparedwithfirmsthatexpensecosts,firmsthatcapitalizecostscanbeexpectedtoreport:

A.higherassetlevelsandhigherequitylevelsintheearlyyearsoftheasset'slife.

B.lowerassetlevelsandhigherequitylevelsintheearlyyearsoftheasset'slife.

C.higherassetlevelsandlowerequitylevelsintheearlyyearsoftheasset'slife.

D.lowerassetlevelsandlowerequitylevelsintheearlyyearsoftheasset'slife.

20.Comparedtofirmsthatexpensecosts,firmsthatcapitalizeexpenseswillhave:

A.lowerincomevariability.

B.lowercashflowfromoperations.

C.higherleverageratios.

D.lowercurrentnetincome.

21.Thecapitalizationofinterestcostsduringconstruction:

A.decreasesnetincomeduringtheconstructionphase

B.increasesfuturenetincome

C.decreasefuturedepreciationexpense

D.increasesfuturedepreciationexpense

22.Softwaredevelopmentcostsincurredbeforeandafteraproductisproveneconomicallyfeasibleare:

A.expensedbothbeforeandafter

B.expensedbeforeandcapitalizedafter

C.capitalizedbothbeforeandafter

D.capitalizedbeforeandexpensedafter

23.Train,Inc.’scashflowfromoperations（CFO）in2004was$28million.Trainpaid$16millioncashtoacquireafranchiseatthebeginningof2004thatwasexpensedin2004.IfTrainhadselectedtoamortizethecostofthefranchiseovereightyears,2004cashflowfromoperations（CFO）wouldhavebeen:

A.$44million.B.$42million.C.$14million.D.unchanged.

24.ThesameconditionsasinQuestion.AssumingthatpretaxincomeofTrain,Inc.in2004is20million.IfTrainhadselectedtoamortizethecostofthefranchiseovereightyears,2004pretaxincomewouldhavebeen:

A.$24million.B.$36million.C.$34million.D.unchanged.

25.SelectedfinancialdatafromDiso,Inc.’sincomestatementfor2007wasasfollows（in$）:

Interestexpense

$802

Capitalizedinterest

282

Pretaxincome

3578

Amortizationofcapitalizedinterest

94

Netincome

1860

Diso,Inc.capitalizesinterestexpenseincurredinitsself-constructedassets.Thetaxrateis35percent.IfDiso,Inc.hadchosentoexpenseinterestcostsincurredinitsself-constructedassets,thenetincomewouldhavebeen:

A.1738B.2048C.1860D.1794

26.ThesameconditionsasinQuestion25.WhatisinterestcoverageratioIfDiso,Inc.hadchosentoexpenseinterestcostsincurredinitsself-constructedassets?

A.5.46B.4.13C.3.30D.4.26

27.Assumingassetsaredepreciated,therecognitionofassetspriceincrease（assetrevaluation）wouldresultin:

A.higherassetturnoverB.higherfuturedepreciationexpense

C.highercashflowfromoperationsD.higherfutureROA

28.Withtheexceptionoflegalcosts,generallyacceptedaccountingprinciplesrequirethatcostincurredin:

DevelopingPatentPurchasedPatents

A.expensedexpensed

B.capitalizedcapitalized

C.capitalizedexpensed

D.expensedCapitalized

29.TheRRCorporationhadcashflowfromoperationsof$40million.RRpurchased$10millioninequipmentandsold$6millionofequipmentduringtheperiod.Cashflowsfromfinancingwere-$4million.WhatisRR'sfreecashflowfortheperiod?

A.$46million.B.$30millionC.$36millionD.$44million

30.TheRRCorporationhadcashflowfromoperationsof$40million.RRpurchased$10millioninequipmentandsold$6millionofequipmentduringtheperiod.Cashflowsfromfinancingwere-$4million.WhatisRR'sfreecashflowfortheperiod?

A.$36.B.$30.C.$46.D.$44

31.FortheyearendedDecember31,2007,CobraCompanyreportedthefollowingfinancialinformation:

Revenue

$50,000

Costof