Financial Reporting, Statement Analysis & Valuation Test Bank | Practice Questions & Solutions

Test_BankFinancial_Reporting,Financial_Statement_Ana lysis j


_and_Valuation


MULTIPLEjCHOICE



1. Thejtoolsjforjstudyingjindustryjeconomicsjdoesjnotjinclude:

a. Valuejchainjanalysis

b. ClassificationjusingjPorter’sjfivejforces

c. Classificationjofjcashjflows

d. Economicjattributesjframework


ANS: C PTS: 1



2. Whichjofjthejfollowingjisjajquestionjanjanalystjwouldjaskjwhenjassessingjthejqualityjofjajfirm’sjfinancialjsta
tements?

a. Arejthejcompany’sjproductsjdesignedjtojmeetjajspecificjmarketjsegment?

b. Hasjthejfirmjintegratedjforwardjintojretailingjtojfinaljconsumers?

c. Isjthejfirmjdiversifiedjacrossjseveraljgeographicaljmarkets?

d. Dojearningsjincludejnonrecurringjgainsjorjlosses?


ANS: D PTS: 1



3. Whichjofjthejfollowingjeconomicjcharacteristicsjisjconsistentjwithjajgroceryjstorejchain?

a. Minimaljcompetition

b. Extensivejcompetition

c. Highjnetjincomejtojsales

d. Differentiatedjproduct

, ANS: B PTS: 1



4. Onjajcommonjsizejbasis,jwhichjofjthejfollowingjassetsjisjnormallyjlargestjforjanjelectricjutility?

a. Accountsjreceivable

b. Inventory

c. Property,jPlantjandjEquipment

d. CashjandjMarketablejSecurities


ANS: C PTS: 1



5. Onjajcommonjsizejbasis,jwhichjofjthejfollowingjassetsjisjnormallyjlargestjforjajcommercialjbank?

a. AccountsjandjNotesjReceivable

b. Inventory

c. Property,jPlantjandjEquipment

d. CashjandjMarketablejSecurities


ANS: A PTS: 1



6. WhichjofjthejfollowingjisjnotjonejofjPorter’sjfivejforces?

a. BuyerjPower

b. SupplierjPower

c. ThreatjofjRegulation

d. ThreatjofjSubstitutes


ANS: C PTS: 1



7. WhenjassessingjbuyerjpowerjusingjPorter’sjfivejforces,jwhichjofjthejfollowingjisjnotjconsistentjwithjlowjbu
yerjpower?

, a. Brandjloyalty

b. Controljofjdistributionjchannel

c. Largejnumberjofjsuppliers

d. Lowjprice


ANS: C PTS: 1



8. Thejsecondjstepjinjfinancialjstatementjanalysisjisjtojidentifyjthejcompanyjstrategy.jWhichjofjthejfol
lowingjisjajquestionjanjanalystjshouldjaskjwhenjperformingjajstrategyjanalysis?

a. Arejindustryjsalesjgrowingjrapidlyjorjslowly?

b. Dojearningsjincludejrevenuesjthatjappearjmismatchedjwithjthejbusinessjmodelje
mployedjbyjthejfirm?

c. Doesjthejindustryjincludejajlargejnumberjofjfirmsjsellingjsimilarjproducts?

d. Whatjisjthejcompany’sjdegreejofjgeographicaljdiversification?


ANS: D PTS: 1



9. Thejthirdjstepjinjfinancialjstatementjanalysisjisjtojassessjthejqualityjofjthejfirm’sjfinancialjstatements.jW
hichjofjthejfollowingjisjajquestionjanjanalystjshouldjaskjwhenjperformingjthisjstep?

a. Arejindustryjsalesjgrowingjrapidlyjorjslowly?

b. Dojearningsjincludejrevenuesjthatjappearjmismatchedjwithjthejbusinessjmodelje
mployedjbyjthejfirm?

c. Doesjthejindustryjincludejajlargejnumberjofjfirmsjsellingjsimilarjproducts?

d. Whatjisjthejcompany’sjdegreejofjgeographicaljdiversification?


ANS: B PTS: 1



10. Anjexamplejofjanjintangiblejassetjis:

a. Ajpatent

, b. Land

c. Investmentjinjanotherjcompany

d. Rawjmaterialjinventory


ANS: A PTS: 1



11. Whichjofjthejfollowingjwouldjnotjappearjasjajliabilityjonjthejbalancejsheet?

a. Ajlaborjcontract

b. Ajnotejduejtojajbank

c. Salaryjduejemployeesjatjyear-end

d. Accountsjpayable


ANS: A PTS: 1



12. Whichjofjthejfollowingjassetsjwouldjappearjonjthejbalancejsheetjatjanjamountjgreatlyjbelowjitsjfairjma
rketjvalue?

a. Inventory

b. Marketablejsecurities

c. Equipment

d. Brandjname


ANS: D PTS: 1



13. Thejaccrualjbasisjofjaccountingjrecognizes:

a. Revenuejwhenjcashjisjreceivedjfromjcustomers

b. Expensesjwhenjpaid

c. Revenuejwhenjalljorjajsubstantialjportionjisjperformed

d. Revenuejwhenjcontractsjarejsigned