1|Page
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Company X's current assets increased by $40 million from
2007-2008 while the companies current liabilities
increased by $25 million over the same period. the cash
impact of the change in working capital was - Answer-a
decrease of 15 million
the final component of an earnings projection model is
calculating interest expense. the calculation may create a
circular reference because - Answer-interest expense
affects net income, which affects FCF, which affects the
amount of debt a company pays down, which, in turn
affects the interest expense, hence the circular reference
a 10-q financial filing has all of the following characteristics
except - Answer-issued four times a year.
Depreciation Expense found in the SG&A line of the
income statement for a manufacturing firm would most
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likely be attributable to which of the following - Answer-
computers used by the accounting department
If a company has projected revenues of $10 billion, a
gross profit margin of 65%, and projected SG&A expenses
of $2billion, what is the company's operating (EBIT)
margin? - Answer-45%
A company has the following information, 1. 2014
revenues of $5 billion,2013 Accounts receivable of $400
million, 2014 accounts receivable of $600 million, what are
the days sales outstanding - Answer-36.5
Do companies prefer straight-line or accelerated
depreciation? - Answer-For GAAP reporting purposes,
companies generally prefer straight-line depreciation.
That's because a company will record lower depreciation
in the early years of the asset's life than if they had used
accelerated depreciation. As a result, companies using
straight-line depreciation will show higher net income than
under accelerated depreciation.
Do companies depreciate land? - Answer-No, land is
considered to have an indefinite life and is not
depreciated.
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Can companies amortize goodwill? - Answer-Under GAAP,
public companies are not allowed to amortize goodwill.
Instead, it must be tested annually for impairment.
What is generally not considered to be a pre-tax non-
recurring (unusual or infrequent) item? - Answer-
Extraordinary gains/losses
what is false about depreciation and amortization -
Answer-D&A may be classified within interest expense
The longer answer is that under GAAP, public companies
are not allowed to amortize goodwill and must instead test
it annually for impairment. However, private companies
may elect to amortize goodwill. In addition, for tax
reporting purposes, goodwill may be amortized over 15
years under some circumstances.
What is the impact of share issuance on EPS? - Answer-
The major impact to EPS is that the actual share count
increases, thereby decreasing EPS. However, there is
sometimes an impact on net income. That's because
assuming share issuances generate cash for the
company, there will be higher interest income, which
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increases net income and EPS slightly. Because returns
on excess cash for most companies are low, this impact is
usually very minor and doesn't offset the negative impact
to EPS from a higher share count.
What is the impact of share repurchases on EPS? -
Answer-The major impact to EPS is that the actual share
count is reduced, thereby increasing EPS. However, there
is sometimes an impact on net income. That's because
assuming share repurchases are funded with the
company's excess cash, any interest income that would
have otherwise been generated on that cash is no longer
available, thereby reducing net income - and EPS -
slightly. Because returns on excess cash for most
companies are low, this impact is usually very minor and
doesn't offset the positive impact to EPS from a lower
share count.
How do you calculate earnings per share? - Answer-
Earnings per share (EPS) is calculated as net income
divided by the company's weighted average shares
outstanding during the period.
There are two ways to measure EPS - Basic and Diluted.
Basic
Wall Street Prep Premium Exam ||Verified Exam!!||
Most Recent Exam Actual Complete Real Exam
Questions And Correct Answers (Verified Answers)
Already Graded A+ | Guaranteed Success | Newest
Exam!!!
Company X's current assets increased by $40 million from
2007-2008 while the companies current liabilities
increased by $25 million over the same period. the cash
impact of the change in working capital was - Answer-a
decrease of 15 million
the final component of an earnings projection model is
calculating interest expense. the calculation may create a
circular reference because - Answer-interest expense
affects net income, which affects FCF, which affects the
amount of debt a company pays down, which, in turn
affects the interest expense, hence the circular reference
a 10-q financial filing has all of the following characteristics
except - Answer-issued four times a year.
Depreciation Expense found in the SG&A line of the
income statement for a manufacturing firm would most
,2|Page
likely be attributable to which of the following - Answer-
computers used by the accounting department
If a company has projected revenues of $10 billion, a
gross profit margin of 65%, and projected SG&A expenses
of $2billion, what is the company's operating (EBIT)
margin? - Answer-45%
A company has the following information, 1. 2014
revenues of $5 billion,2013 Accounts receivable of $400
million, 2014 accounts receivable of $600 million, what are
the days sales outstanding - Answer-36.5
Do companies prefer straight-line or accelerated
depreciation? - Answer-For GAAP reporting purposes,
companies generally prefer straight-line depreciation.
That's because a company will record lower depreciation
in the early years of the asset's life than if they had used
accelerated depreciation. As a result, companies using
straight-line depreciation will show higher net income than
under accelerated depreciation.
Do companies depreciate land? - Answer-No, land is
considered to have an indefinite life and is not
depreciated.
,3|Page
Can companies amortize goodwill? - Answer-Under GAAP,
public companies are not allowed to amortize goodwill.
Instead, it must be tested annually for impairment.
What is generally not considered to be a pre-tax non-
recurring (unusual or infrequent) item? - Answer-
Extraordinary gains/losses
what is false about depreciation and amortization -
Answer-D&A may be classified within interest expense
The longer answer is that under GAAP, public companies
are not allowed to amortize goodwill and must instead test
it annually for impairment. However, private companies
may elect to amortize goodwill. In addition, for tax
reporting purposes, goodwill may be amortized over 15
years under some circumstances.
What is the impact of share issuance on EPS? - Answer-
The major impact to EPS is that the actual share count
increases, thereby decreasing EPS. However, there is
sometimes an impact on net income. That's because
assuming share issuances generate cash for the
company, there will be higher interest income, which
, 4|Page
increases net income and EPS slightly. Because returns
on excess cash for most companies are low, this impact is
usually very minor and doesn't offset the negative impact
to EPS from a higher share count.
What is the impact of share repurchases on EPS? -
Answer-The major impact to EPS is that the actual share
count is reduced, thereby increasing EPS. However, there
is sometimes an impact on net income. That's because
assuming share repurchases are funded with the
company's excess cash, any interest income that would
have otherwise been generated on that cash is no longer
available, thereby reducing net income - and EPS -
slightly. Because returns on excess cash for most
companies are low, this impact is usually very minor and
doesn't offset the positive impact to EPS from a lower
share count.
How do you calculate earnings per share? - Answer-
Earnings per share (EPS) is calculated as net income
divided by the company's weighted average shares
outstanding during the period.
There are two ways to measure EPS - Basic and Diluted.
Basic
