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Financial Statement Analysis

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Terms in this set (45)

The tools for studying Classification of cash flows

industry economics do not
include

Which of the following is a Do earnings include nonrecurring gains or losses

question an analyst would ask
when assessing the quality of
a firm's financial statements?

Which of the following Extensive Competition

economic characteristics is
consistent with a grocery
store chain?

On a common size basis, Property, Plant and Equipment

which of the following assets
is normally largest for a
electrical utility?

On a common size basis, Accounts and Notes receivable

which of the following assets
is normally largest for a
commercial bank?

Which of the following is not Threat of Regulation

one of Porter's five forces?

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Financial Statement
When assessing buyer power Analysis
Large number of suppliers Study

using Porter's five forces,

which of the following is not
consistent with low buyer
power?

The second step in financial What is the company's degree of geographical

statement analysis is to diversification?
identify the company strategy.
Which of the following is a
question an analyst should
ask when performing a
strategy analysis?

The third step in financial Do earnings include revenues that appear

statement analysis is to assess mismatched with business model employed by
the quality of the firm's the firm?
financial statements. Which of
the following is a question an
analyst should ask when
performing this step?

An example of an intangible a patent

asset is

Which of the following would a labor contract

not appear as a liability on the
balance sheet?

Which of the following assets brand name

would appear on the balance
sheet at an amount greatly
below its fair market value?

The accrual basis of revenue when all or substantial portion is

accounting recognizes performed

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Financial Statement
Which of the following is not Analysis
manufacturing Study

an activity reported in the

cash flows financial
statement?

The accrual basis method of The method that matches incurred expenses with
accounting can be best related revenues when they are earned.
described as:

A value chain for an industry sequence of activities involved in the creation,

sets forth manufacture and distribution of its products

Which of the following Low profit margin on lending activities.

economic characteristics is
consistent with a commercial
bank?

Which of the following High levels of research and development.

economic characteristics is
consistent with
pharmaceutical company?

Which of the following Low barriers to entry

economic characteristics is
consistent with grocery store
chain?

When attempting to identity Does technological change play an important

the economic characteristics role in the firm maintaining a competitive
of the industry in which a advantage?
particular firm participates an
analyst might ask which of the
following questions?

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Financial Statement
Which of following would not Analysis
Lack of rivalry among current participants. Study

inhibit new entrants into a

market?

cash and other assets that the firm expects to sell

Current assets are defined or consume during the normal operating cycle of
a business, usually one year.

Which of the following is not Dividents

an expense of a business?

Which of the following is not Requires a cash outflow

a characteristic of an
extraordinary item?

Which of the following Investing in equity securities of another

activities reported in the companies
Statement of Cash Flows is
not a financing activity?

What is the principal activity to value firms

of security analysts?

All of the followings are the Targeting growth opportunities that diversify
building blocks for financial exchange rate, risk exposure, and political
statement analysis except: uncertainty.

When a firm attempting to a product differentiation strategy

create unique products or
services for particular market
niches, in order to achieve
relatively high profit margins,
this is best known as

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Financial Statement Analysis

4,1,5,2,6,3 Study

4) Identify the economic characteristics and

competitive dynamics of the industry in which
particular firm participates
1) Identify the strategies the firm pursues to gain
and sustain a competitive advantage.

The following steps make up 5)Assess the quality of the firm's financial
the steps in financial statements and, if necessary, adjust them for such
statement analysis desirable characteristics as sustainability or
comparability.

2) Analyze the current profitability and risk of the

firm using information in the financial statements

6) prepare forecasted financial statements.

3) Value the firm.

All of the followings are The largest asset is typically capital intensive
reasons that pharmaceutical Property, Plant, and Equipment.
companies have higher
barriers for entry than
grocery stores except:

Which forces typically Buyer power and supplier power

represent vertical competition
in a value chain?

Which forces typically Substitutes and potential entry

represent horizontal
competition in a value chain?

Which of the following is an IASB

independent entity
comprising 15 members and a
full-time professional staff
that specifies acceptable
accounting principles known
as the IFRS?

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Financial Statement
Which two organizations are Analysis
FASB and IASB Study

working to harmonize
financial reporting
worldwide?

Which of these is not an Equipment

intangible asset?

Extraordinary gains and losses they result from terminated involvement in a line
arise from events that have all of business
the following characteristics

Opinions on the effectiveness Assurance Opinions

of the internal control system
and the fairness of the
amounts reported in the
financial statements are
known as

Which SEC form may be the Form 10-K

best place to start learning
about the economics of an
industry and particular
strategy a firm has selected
for competing in the industry?

The primary purpose of the Report the financial position of the reporting
balance sheet is to: entity at a particular point in time

Which financial statement Balance sheet

would you look at to
determine whether a
company will be able to pay
for the goods when payment
is due in 30 days?

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Financial Statement
Which of the following is not Analysis
cost of goods sold. Study

considered to be a liability?

Assets for a particular cash, inventories, and goodwill

business might include

The two categories of common stock and retained earnings.

shareholders' equity usually
found on the balance sheet of
a corporation are

Which financial statement for Income statement

a business would you look at
to determine the company's
earnings performance during
an accounting period?

Accounts receivable amounts which are owed to the company by its

represent: customers resulting from credit sales.

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