1. For both managers and external financial analysts, ______ is the single most
important accounting number found on the income statement.
a. net income (net profit after tax)
b. earnings before interest and taxes (EBIT)
c. gross profit
d. operating profit
2. When a firm has no "other income," its operating profit and blank_____ are equal.
a. net income
b. net profit after taxes
c. EPS
d. EBIT
3. When evaluating financial ratios, analysts typically first examine a firm's ratio
_________.
a. compared to firms in other industries
b. compared to the firm's previous years' ratios
c. compared to regional averages
d. compared to firms with similar net profit margins
4. ________ ratios would provide the best information regarding total return to
common stockholders.
a. Profitability
b. Activity
c. Liquidity
d. Debt
5. Which of the following is an inflow of cash to a corporation?
a. Paying a cash dividend
b. Increasing treasury stock
c. Decreasing inventory
d. Purchasing treasury bills
6. The key input required to build a cash budget is blank________.
a. the cash disbursements plan
b. the strategic plan
c. the firm's sales forecast
d. the sustainable growth model
7. Which of the following is NOT a cash disbursement?
a. rent and lease payments
b. interest payments
c. payments of accounts payable
d. depreciation expenses
8. Most pro forma statements begin with a sales forecast. One approach to deriving a sales
forecast is the top-down approach. Top-down sales forecasts rely heavily on blank_____.
a. macroeconomic and industry forecasts
b. customer input
c. forecasts from the sales force
important accounting number found on the income statement.
a. net income (net profit after tax)
b. earnings before interest and taxes (EBIT)
c. gross profit
d. operating profit
2. When a firm has no "other income," its operating profit and blank_____ are equal.
a. net income
b. net profit after taxes
c. EPS
d. EBIT
3. When evaluating financial ratios, analysts typically first examine a firm's ratio
_________.
a. compared to firms in other industries
b. compared to the firm's previous years' ratios
c. compared to regional averages
d. compared to firms with similar net profit margins
4. ________ ratios would provide the best information regarding total return to
common stockholders.
a. Profitability
b. Activity
c. Liquidity
d. Debt
5. Which of the following is an inflow of cash to a corporation?
a. Paying a cash dividend
b. Increasing treasury stock
c. Decreasing inventory
d. Purchasing treasury bills
6. The key input required to build a cash budget is blank________.
a. the cash disbursements plan
b. the strategic plan
c. the firm's sales forecast
d. the sustainable growth model
7. Which of the following is NOT a cash disbursement?
a. rent and lease payments
b. interest payments
c. payments of accounts payable
d. depreciation expenses
8. Most pro forma statements begin with a sales forecast. One approach to deriving a sales
forecast is the top-down approach. Top-down sales forecasts rely heavily on blank_____.
a. macroeconomic and industry forecasts
b. customer input
c. forecasts from the sales force
