Test Bank for Financial Statement Analysis &
Valuation, 7th Edition
Balance Sheet: - ANSWERSAssets = Liabilities + Equity
(Investing = Nonowner financing + Equity)
_____ and _____ are the two ways a company can finance its assets - ANSWERS-Owners
Financing (Raise money from stockholders)
-Non-owners Financing: (banks, creditors, suppliers)
Investing activities are represented by the company's _______ - ANSWERSassets
_____ are at the top of the balance sheet in order to their nearness to cash - ANSWERSShort-
term assets
*Cash then accounts receivable, and then inventories
*Can be sold quickly
_____ are assets that will generate cash over a long period of time - ANSWERSLong-term assets
*Land, buildings, and equipment (PPE)
Income statement - ANSWERSRevenue - Expenses = Net Income
(Top line- Expenses = Bottom line)
______ reports on a company's performance over a period of time and lists amounts for its top
line revenues and its expenses - ANSWERSIncome statement
,Revenues less expenses equals the bottom-line _________ amount - ANSWERSNet Income
______ and ______ are the two basic kinds of operating expenses - ANSWERSCost of goods
sold(COGS)
-Selling, general, and administrative expenses (SG&A)
_______ include the amount paid to purchase or manufacture the goods (inventories) that it
sold to customers - ANSWERSCost of goods sold
_______ is the overhead expenses that include salaries, marketing costs, occupancy costs, HR
and IT costs, and all other operating expenses - ANSWERSSG&A
______ reports on year-over-year changes in the equity accounts that are reported on the
balance sheet - ANSWERSStatement of stockholders' equity
______, _______, and ______ are the three categories listed on the statement of stockholders'
equity - ANSWERS-Contributed capital
-Retained Earnings
-Other equity
_____ represents assets the company received from issuing stock to stockholders
Example: The balance sheet of UA account at the beginning of the year was 508.4 During the
year, UA sold additional shares for 22 and recorded miscellaneous adjustments of 106.3. What is
the year-end balance for contributed capital - ANSWERSContributed capital
*636.7 million
,______ represents the cumulative total amount of income the company has earned and that
has been retained in the business
(Ending retained earnings= beginning retained earnings + Net income for period- Dividends for
period) - ANSWERSRetained earnings
______ Reports the change in a company's cash balance over a period of time. (cash inflows and
outflows from operating, investing, and financing activities over a period of time) -
ANSWERSStatement of cash flows
The following financial information is from Nike for May 31, 2015 ($Millions).
-Prepare Nike's balance sheet as of May 31, 2015
2) Prepare an income statement and statement of cash flows for Nike for the year ended May
31, 2015.
Short term liabilities= 6334
Cash flows from financing = (2,873)
Revenues = 30,601
Stockholder's equity = 12,707
Cash inflows from operations = 4,680
SG&A expenses = 9,892
Long-term assets = 5,624
Cash flows from investing = (175)
Cost of goods sold = 16,534
Cash, beginning- year = 2,220
Tax expense = 932
, Short-term assets= 15,976
Interest income= 30
Long-term liabilities = 2,559
Cash, ending year = 3,852 - ANSWERSBalance Sheet:
Nike Inc.
Balance sheet ($ millions)
May 31, 2015
Short term assets.. 15,976 Short term liab 6,334
Long term assets.... 5,624 Long term liab 2,559
Stockholders eq 12,707
------- -------
Total assets ...............21,600 Total liab & E... 21,600
------- --------
------- --------
Income Statement:
Nike Inc.
Income Statement ($millions)
For year ended May 31, 2015
Valuation, 7th Edition
Balance Sheet: - ANSWERSAssets = Liabilities + Equity
(Investing = Nonowner financing + Equity)
_____ and _____ are the two ways a company can finance its assets - ANSWERS-Owners
Financing (Raise money from stockholders)
-Non-owners Financing: (banks, creditors, suppliers)
Investing activities are represented by the company's _______ - ANSWERSassets
_____ are at the top of the balance sheet in order to their nearness to cash - ANSWERSShort-
term assets
*Cash then accounts receivable, and then inventories
*Can be sold quickly
_____ are assets that will generate cash over a long period of time - ANSWERSLong-term assets
*Land, buildings, and equipment (PPE)
Income statement - ANSWERSRevenue - Expenses = Net Income
(Top line- Expenses = Bottom line)
______ reports on a company's performance over a period of time and lists amounts for its top
line revenues and its expenses - ANSWERSIncome statement
,Revenues less expenses equals the bottom-line _________ amount - ANSWERSNet Income
______ and ______ are the two basic kinds of operating expenses - ANSWERSCost of goods
sold(COGS)
-Selling, general, and administrative expenses (SG&A)
_______ include the amount paid to purchase or manufacture the goods (inventories) that it
sold to customers - ANSWERSCost of goods sold
_______ is the overhead expenses that include salaries, marketing costs, occupancy costs, HR
and IT costs, and all other operating expenses - ANSWERSSG&A
______ reports on year-over-year changes in the equity accounts that are reported on the
balance sheet - ANSWERSStatement of stockholders' equity
______, _______, and ______ are the three categories listed on the statement of stockholders'
equity - ANSWERS-Contributed capital
-Retained Earnings
-Other equity
_____ represents assets the company received from issuing stock to stockholders
Example: The balance sheet of UA account at the beginning of the year was 508.4 During the
year, UA sold additional shares for 22 and recorded miscellaneous adjustments of 106.3. What is
the year-end balance for contributed capital - ANSWERSContributed capital
*636.7 million
,______ represents the cumulative total amount of income the company has earned and that
has been retained in the business
(Ending retained earnings= beginning retained earnings + Net income for period- Dividends for
period) - ANSWERSRetained earnings
______ Reports the change in a company's cash balance over a period of time. (cash inflows and
outflows from operating, investing, and financing activities over a period of time) -
ANSWERSStatement of cash flows
The following financial information is from Nike for May 31, 2015 ($Millions).
-Prepare Nike's balance sheet as of May 31, 2015
2) Prepare an income statement and statement of cash flows for Nike for the year ended May
31, 2015.
Short term liabilities= 6334
Cash flows from financing = (2,873)
Revenues = 30,601
Stockholder's equity = 12,707
Cash inflows from operations = 4,680
SG&A expenses = 9,892
Long-term assets = 5,624
Cash flows from investing = (175)
Cost of goods sold = 16,534
Cash, beginning- year = 2,220
Tax expense = 932
, Short-term assets= 15,976
Interest income= 30
Long-term liabilities = 2,559
Cash, ending year = 3,852 - ANSWERSBalance Sheet:
Nike Inc.
Balance sheet ($ millions)
May 31, 2015
Short term assets.. 15,976 Short term liab 6,334
Long term assets.... 5,624 Long term liab 2,559
Stockholders eq 12,707
------- -------
Total assets ...............21,600 Total liab & E... 21,600
------- --------
------- --------
Income Statement:
Nike Inc.
Income Statement ($millions)
For year ended May 31, 2015
