New Semester Started Get 50% OFF Study Help! --h --m --s Claim Now

Question Answers

Textbooks

Find textbooks, questions and answers

Oops, something went wrong!

Change your search query and then try again

Result Not Found

Books FREE
Study Help
Tutors
AI Study Planner NEW
Sell Books

Search
Sign In
Register

study help
business
financial statement analysis

Portfolio Management Corporate Issuers Financial Statement Analysis Volume 2 CFA Institute - Solutions

10. Jordan’s response about the impact of the different depreciation methods on net profit margin is most likely incorrect with respect to:A. accelerated depreciation.B. straight-line depreciation.C. units-of-production depreciation.
9. Jordan’s response about the ratio impact of Alpha’s decision to capitalize interest costs is most likely correct with respect to the:A. interest coverage ratio.B. fixed asset turnover ratio.C. interest coverage and fixed asset turnover ratios.
8. Jordan’s response about the financial statement impact of Alpha’s decision to capitalize the cost of its new computer system is correct with respect to:A. lower net income.B. lower total assets.C. higher cash flow from operating activities.
7. Based on Exhibit 1, the best estimate of the average remaining useful life of the company’s plant and equipment at the end of 2022 is:A. 20.75 years.B. 24.25 years.C. 30.00 years.
6. With respect to Statement 3, what is the most likely effect of the impairment loss?A. Net income in years prior to 2022 was likely understated.B. Net profit margins in years after 2022 will likely exceed the 2022 net profit margin.C. Cash flow from operating activities in 2022 was likely lower
5. With respect to Statement 2, what would be the most likely effect in 2023 if AMRC were to switch to an accelerated depreciation method for both financial and tax reporting?A. Net profit margin would increase.B. Total asset turnover would decrease.C. Cash flow from operating activities would
4. With respect to Statement 1, which of the following is the most likely effect of management’s decision to expense rather than capitalize these expenditures?A. 2022 net profit margin is higher than if the expenditures had been capitalized.B. 2022 total asset turnover is lower than if the
3. The impairment of intangible assets with finite lives affects:A. only the balance sheet.B. only the income statement.C. both the balance sheet and the income statement.
2. Under IFRS, an impairment loss on a property, plant, and equipment asset is measured as the excess of the carrying amount over the asset’s:A. fair value.B. recoverable amount.C. undiscounted expected future cash flows.
1. Based on this information, the amount of impairment loss that WLP will need to report on its income statement related to the manufacturing equipment is closest to:A. GBP2,300,000.B. GBP3,100,000.C. GBP4,600,000.
analyze and interpret financial statement disclosures regarding property, plant, and equipment and intangible assets
explain and evaluate how impairment and derecognition of property, plant, and equipment and intangible assets affect the financial statements and ratios
compare the financial reporting of the following types of intangible assets: purchased, internally developed, and acquired in a business combination
37. In a period of declining inventory unit costs and constant or increasing inventory quantities, which inventory method is most likely to result in a higher debt-to-equity ratio?A. LIFO B. FIFO C. Weighted average cost
36. Compared with a company that uses the FIFO method, during a period of rising unit inventory costs, a company using the LIFO method will most likely appear more:A. liquid.B. efficient.C. profitable.
35. During periods of rising inventory unit costs, a company using the FIFO method rather than the LIFO method will report a lower:A. current ratio.B. inventory turnover.C. gross profit margin.
34. In Exhibit 10, the Industry and Business Risk excerpt states that, “Increased competition may lead to lower unit sales and excess production capacity and excess inventory. This may result in a further downward price pressure.” The downward price pressure could lead to inventory that is
33. Exhibit 10, Note 2, indicates that “inventories valued on the LIFO basis totaled JPY94,578 million and JPY50,037 million at 31 December 2017 and 2018, respectively.”Based on this, the LIFO reserve should most likely:A. increase.B. decrease.C. remain the same.
32. Which observation is most likely a result of looking only at the information reported in Exhibit 10, Note 9?A. Increased competition has led to lower unit sales.B. There have been significant price increases in supplies.C. Management expects a further downturn in sales during 2019.
31. Inventory levels decreased from 2017 to 2018 for all of the following reasons except:A. LIFO liquidation.B. decreased sales volume.C. fluctuations in foreign currency translation rates.
30. If ZP had prepared its financial statement in accordance with IFRS, the inventory turnover ratio (using average inventory) for 2018 would be:A. lower.B. higher.C. the same.
29. According to Exhibit 10, the 2018 Annual Report, if the company had used the FIFO inventory valuation method instead of the LIFO inventory valuation method for a portion of its inventory, the 2017 inventory value would be closest to:A. JPY104,698 million.B. JPY506,125 million.C. JPY618,692
28. The management discussion and analysis (MD&A) indicated that the prices of raw material, other production materials, and parts increased. Based on the inventory valuation methods described in Note 2, which inventory classification would least accurately reflect current prices?A. Raw materials
27. Which group of ratios usually appears more favorable with an inventory write-down?A. Activity ratios B. Solvency ratios C. Profitability ratios
26. Would Rolby’s valuation method show a higher gross profit margin than Crux’s under an inflationary, a deflationary, or a stable price scenario?A. Stable B. Inflationary C. Deflationary
25. Which company’s gross profit margin would best reflect current costs of the industry?A. Crux.B. Rolby.C. Mikko.
24. Compared with its unadjusted debt-to-equity ratio, Mikko’s debt-to-equity ratio as of 31 December 2018, after the adjustments suggested by Groff, is:A. lower.B. higher.C. the same.
23. Rolby’s net profit margin for the year ended 31 December 2018, after the adjustments suggested by Groff, is closest to:A. 6.01 percent.B. 6.20 percent.C. 6.28 percent.
22. Crux’s inventory turnover ratio computed as of 31 December 2018, after the adjustments suggested by Groff, is closest to:A. 5.67.B. 5.83.C. 6.13.
21. If the trend noted in the ICCO report continues and Century Chocolate plans to maintain constant or increasing inventory quantities, the most likely impact on Century Chocolate’s financial statements related to its raw materials inventory will be:A. a cost of sales that more closely reflects
20. Ignoring any tax effect, the change in net realizable value of the black licorice jelly beans from 2017 to 2018 will most likely result in:A. an increase in gross profit of CHF7,775.B. an increase in gross profit of CHF11,670.C. no impact on cost of sales because under IFRS, write-downs cannot
19. Annan’s statement regarding the perpetual and periodic inventory systems is most significant when which of the following costing systems is used?A. LIFO B. FIFO C. Specific identification
18. The most accurate statement regarding Annan’s reasoning for requiring Kern to select a competitor that reports under IFRS for comparative purposes is that under US GAAP:A. fair values are used to value inventory.B. the LIFO method is permitted to value inventory.C. the specific identification
17. In Kern’s comparative ratio analysis, the 2018 inventory turnover ratio for Century Chocolate is closest to:A. 5.07.B. 5.42.C. 5.55.
16. What is the most likely justification for Century Chocolate’s choice of inventory valuation method for its purchased finished goods?A. It is the preferred method under IFRS.B. It allocates the same per unit cost to both cost of sales and inventory.C. Ending inventory reflects the cost of
15. The costs least likely to be included by the CFO as inventory are:A. storage costs for the chocolate liquor.B. excise taxes paid to the government of Brazil for the cacao beans.C. storage costs for chocolate and purchased finished goods awaiting shipment to customers.
14. Carey Company reports under US GAAP, whereas Jonathan Company reports under IFRS. It is least likely that:A. Carey has reversed an inventory write-down.B. Jonathan has reversed an inventory write-down.C. Jonathan and Carey both use the FIFO inventory accounting method.
13. Compared to using the FIFO method to account for inventory, during periods of rising prices, a company using the LIFO method is most likely to report higher:A. net income.B. cost of sales.C. income taxes.
12. Nutmeg, Inc. uses the LIFO method to account for inventory. During years in which inventory unit costs are generally rising and in which the company purchases more inventory than it sells to customers, its reported gross profit margin will most likely be:A. lower than it would be if the company
11. Compared to a company that uses the FIFO method, during periods of rising prices a company that uses the LIFO method will most likely appear more:A. liquid.B. efficient.C. profitable.
10. Zimt AG wrote down the value of its inventory in 2017 and reversed the write-down in 2018. Compared to the results the company would have reported if the write-down had never occurred, Zimt’s reported that the 2018:A. profit was overstated.B. cash flow from operations was overstated.C.
9. Zimt AG wrote down the value of its inventory in 2017 and reversed the write-down in 2018. Compared to the ratios that would have been calculated if the write-down had never occurred, Zimt’s reported that the 2017:A. current ratio was too high.B. gross margin was too high.C. inventory turnover
8. Compared to using the weighted average cost method to account for inventory, during a period in which prices are generally rising, the current ratio of a company using the FIFO method would most likely be:A. lower.B. higher.C. dependent upon the interaction with accounts payable.
7. Like many technology companies, TechnoTools operates in an environment of declining prices. Its reported profits will tend to be highest if it accounts for inventory using the:A. FIFO method.B. LIFO method.C. Weighted average cost method.
6. Zimt AG uses the FIFO method, and Nutmeg Inc. uses the LIFO method. Compared to the cost of replacing the inventory, during periods of rising prices the ending inventory balance reported by:A. Zimt is too high.B. Nutmeg is too low.C. Nutmeg is too high.
5. Zimt AG uses the FIFO method, and Nutmeg Inc. uses the LIFO method. Compared to the cost of replacing the inventory, during periods of rising prices, the cost of sales reported by:A. Zimt is too low.B. Nutmeg is too low.C. Nutmeg is too high.
4. A write-down of the value of inventory to its net realizable value will have a positive effect on the:A. balance sheet.B. income statement.C. inventory turnover ratio.
3. Fernando’s Pasta purchased inventory and later wrote it down. The current net realizable value is higher than the value when written down. Fernando’s inventory balance will most likely be:A. higher if it complies with IFRS.B. higher if it complies with US GAAP.C. the same under US GAAP and
2. Eric’s Used Book Store prepares its financial statements in accordance with IFRS. Inventory was purchased for GBP1 million and later marked down to GBP550,000. One of the books, however, was later discovered to be a rare collectible item, and the inventory is now worth an estimated GBP3
1. Carrying inventory at a value above its historical cost would most likely be permitted if:A. the inventory was held by a producer of agricultural products.B. financial statements were prepared using US GAAP.C. the change resulted from a reversal of a previous write-down.
describe the presentation and disclosures relating to inventories and explain issues that analysts should consider when examining a company’s inventory disclosures and other sources of information
calculate and explain how inflation and deflation of inventory costs affect the financial statements and ratios of companies that use different inventory valuation methods
describe the measurement of inventory at the lower of cost and net realisable value and its implications for financial statements and ratios
4. An analyst has calculated a ratio using as the numerator the sum of operating cash flow, interest, and taxes and as the denominator the amount of interest.What is this ratio, what does it measure, and what does it indicate?A. This ratio is an interest coverage ratio, measuring a company’s
3. The first step in cash flow statement analysis should be to:A. evaluate consistency of cash flows.B. determine operating cash flow drivers.C. identify the major sources and uses of cash.
2. Which of the following is an appropriate method of computing free cash flow to the firm?A. Add operating cash flows to capital expenditures and deduct after-tax interest payments.B. Add operating cash flows to after-tax interest payments and deduct capital expenditures.C. Deduct both after-tax
1. One appropriate method of preparing a common-size cash flow statement is to show each line item:A. of revenue and expense as a percentage of net revenue.B. on the cash flow statement as a percentage of net revenue.C. on the cash flow statement as a percentage of total cash outflows.
calculate and interpret free cash flow to the firm, free cash flow to equity, and performance and coverage cash flow ratios
analyze and interpret both reported and common-size cash flow statements
11. The information in Exhibit 1 is extracted from Sweetfall Incorporated’s financial statements.Exhibit 1: Sweetfall Inc.Income Statement Balance Sheet Changes Revenue USD56,800 Decrease in accounts receivable USD1,324 Cost of goods sold 27,264 Decrease in inventory 501 Other operating expense
10. Golden Cumulus Corp., a commodities trading company, reported interest expense of USD19 million and taxes of USD6 million. Interest payable increased by USD3 million, and taxes payable decreased by USD4 million over the period.How much cash did the company pay for interest and taxes?A. USD22
9. An analyst gathered the information in Exhibit 1 from a company’s 2018 financial statements:Exhibit 1: 2018 Financial Statements (US dollars, millions)Year ended 31 December 2017 2018 Net sales 245.8 254.6 Cost of goods sold 168.3 175.9 Accounts receivable 73.2 68.3 Inventory 39.0 47.8
8. White Flag, a women’s clothing manufacturer, reported salaries expense of USD20 million. The beginning balance of salaries payable was USD3 million, and the ending balance of salaries payable was USD1 million. How much cash did the company pay in salaries?A. USD18 million B. USD21 million C.
7. Purple Fleur S.A., a retailer of floral products, reported cost of goods sold for the year of USD75 million. Total assets increased by USD55 million, but inventory declined by USD6 million. Total liabilities increased by USD45 million, and accounts payable increased by USD2 million. The cash
6. Green Glory Corp., a garden supply wholesaler, reported cost of goods sold for the year of USD80 million. Total assets increased by USD55 million, including an increase of USD5 million in inventory. Total liabilities increased by USD45 million, including an increase of USD2 million in accounts
5. In 2018, a company using US GAAP made cash payments of USD6 million for salaries, USD2 million for interest expense, and USD4 million for income taxes.Additional information for the company is provided in the Exhibit 1:Exhibit 1: Cash Payments(US dollars, millions) 2017 2018 Revenue 42 37 Cost
4. Based on the information in Exhibit 1 for Star Inc., what are the total net adjustments that the company would make to net income to derive operating cash flow?Exhibit 1: Star Inc.Year Ended Income Statement Item 12/31/2018 Net income USD20 million Depreciation USD2 million Balance Sheet Item
3. An analyst gathered the information in Exhibit 1 from a company’s 2018 financial statements:Exhibit 1: 2018 Financial Statement (US dollars, millions)Balances as of Year Ended 31 December 2017 2018 Retained earnings 120 145 Accounts receivable 38 43 Inventory 45 48 Accounts payable 36 29 In
2. When computing net cash flow from operating activities using the indirect method, an addition to net income is most likely to occur when there is a:A. gain on the sale of an asset.B. loss on the retirement of debt.C. decrease in a deferred tax liability.
1. Based on the information in Exhibit 1 for Pinkerly Inc., a fictitious company, what are the total adjustments that the company would make to net income in order to derive operating cash flow?Exhibit 1: Pinkerly Inc.Year Ended Income statement item 12/31/2018 Net income USD30 million Depreciation
contrast cash flow statements prepared under International Financial Reporting Standards (IFRS) and US generally accepted accounting principles (US GAAP)
demonstrate the conversion of cash flows from the indirect to direct method
describe the steps in the preparation of direct and indirect cash flow statements, including how cash flows can be computed using income statement and balance sheet data
describe how the cash flow statement is linked to the income statement and the balance sheet
15. Which ratio indicates lower liquidity risk for Company A compared with Company B?A. Cash ratio B. Quick ratio C. Current ratio
14. The financial leverage ratio for Company B is closest to:A. 0.55.B. 1.22.C. 2.22.
13. The quick ratio for Company A is closest to:A. 0.43.B. 0.57.C. 1.00.
12. Consider the common-size balance sheets in Exhibit 1 for Company A, Company B, as well as the industry average. Which statement is correct?Exhibit 1: Balance Sheet and Industry Average Company ACompany BIndustry Average ASSETS Current assets Cash and cash equivalents 5 5 7 Marketable securities
11. An investor worried about a company’s long-term solvency would most likely examine its:A. current ratio.B. return on equity.C. debt-to-equity ratio.
10. The most stringent test of a company’s liquidity is its:A. cash ratio.B. quick ratio.C. current ratio.
9. An investor concerned about a company’s ability to meet its near-term obligations is most likely to calculate the:A. current ratio.B. return on total capital.C. financial leverage ratio.
8. Defining total asset turnover as revenue divided by average total assets, all else equal, impairment write-downs of long-lived assets owned by a company will most likely result in an increase for that company in:A. the debt-to-equity ratio but not the total asset turnover.B. the total asset
7. Which of the following would an analyst most likely be able to determine from a common-size analysis of a company’s balance sheet over several periods?A. An increase or decrease in sales B. An increase or decrease in financial leverage C. A more efficient or less efficient use of assets
6. A company has total liabilities of GBP35 million and total stockholders’ equity of GBP55 million. Total liabilities are represented on a vertical common-size balance sheet by a percentage closest to:A. 35 percent.B. 39 percent.C. 64 percent.
5. For financial assets classified as held to maturity, how are unrealized gains and losses reflected in shareholders’ equity?A. They are not recognized.B. They flow through retained earnings.C. They are a component of accumulated other comprehensive income.
4. For financial assets classified as available for sale, how are unrealized gains and losses reflected in shareholders’ equity?A. They are not recognized.B. They flow through retained earnings.C. They are a component of accumulated other comprehensive income.
3. For financial assets classified as trading securities, how are unrealized gains and losses reflected in shareholders’ equity?A. They are not recognized.B. They flow through income into retained earnings.C. They are a component of accumulated other comprehensive income.
2. The initial measurement of goodwill is most likely affected by:A. an acquisition’s purchase price.B. the acquired company’s book value.C. the fair value of the acquirer’s assets and liabilities.
1. All of the following are current assets except:A. cash.B. goodwill.C. inventories.
calculate and interpret common-size balance sheets and related financial ratios
explain the financial reporting and disclosures related to non-current liabilities
explain the financial reporting and disclosures related to financial instruments
explain the financial reporting and disclosures related to goodwill
explain the financial reporting and disclosures related to intangible assets
14. Which statement is most accurate? A common size income statement:A. restates each line item of the income statement as a percentage of net income.B. allows an analyst to conduct cross-sectional analysis by removing the effect of company size.C. standardizes each line item of the income
13. When calculating diluted EPS, which of the following securities in the capital structure increases the weighted average number of common shares outstanding without affecting net income available to common shareholders?A. Stock options B. Convertible debt that is dilutive C. Convertible
12. Cell Services Inc. (CSI) had 1,000,000 average shares outstanding during all of 2009. During 2009, CSI also had 10,000 options outstanding with exercise prices of USD10 each. The average stock price of CSI during 2009 was USD15. For purposes of computing diluted earnings per share, how many
11. Laurelli Builders (LB) reported the financial data shown in Exhibit 1 for year-end 31 December:Exhibit 1: Laurelli Builders Common shares outstanding, 1 January 2,020,000 Common shares issued as stock dividend, 1 June 380,000 Warrants outstanding, 1 January 500,000 Net income USD3,350,000
10. For its fiscal year-end, Calvan Water Corporation (CWC) reported net income of USD12 million and a weighted average of 2,000,000 common shares outstanding.The company paid USD800,000 in preferred dividends and had 100,000 options outstanding with an average exercise price of USD20. CWC’s
9. For its fiscal year-end, Sublyme Corporation reported net income of USD200 million and a weighted average of 50,000,000 common shares outstanding. There are 2,000,000 convertible preferred shares outstanding that paid an annual dividend of USD5. Each preferred share is convertible into two

Showing 1200 - 1300 of 5656

First
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Last

Step by Step Answers

Services

Sitemap
Fun
Definitions
Become Tutor
Used Textbooks
Study Help Categories
Recent Questions
Expert Questions
Campus Wear
Sell Your Books

Company Info

Security
Copyrights
Privacy Policy
Terms & Conditions
SolutionInn Fee
Scholarship
Online Quiz
Give Feedback, Get Rewards

Get In Touch

About Us
Contact Us
Career
Jobs
FAQ
Student Discount
Campus Ambassador

Secure Payment

Download Our App

© 2026 SolutionInn. All Rights Reserved