BAR: FS Analysis: Test 2 Mistakes

Question 1

Data visualization

Answer 1

Displaying data in charts

Question 2

Book value per share

Answer 2

(Common stock + retained earnings) / Outstanding shares

Question 3

Return on Investment (ROI)

Answer 3

Net income / average invested capital (assets)

Question 4

DuPont ROI Analysis

Answer 4

Return on sales * asset turnover

Question 5

Return on equity

Answer 5

(Net income - preferred dividends) / average common shareholders’ equity

Question 6

Residual income

Answer 6

Operating profit - interest on investment

Question 7

Solvency (also Liquidity)

Answer 7

Used in working capital financial management to assess a firm’s ability to pay its obligations as they come due

Question 8

Operation Activity measures

Answer 8

used in working capital management to assess the efficiency with which a firm carries out its operating activities.

Question 9

Price indexes

Answer 9

convert prices of one period to what those prices would have been in terms of prices of a prior period.

Question 10

Financing analysis

Answer 10

detailed analysis of average collection periods (e.g. debt to equity, debt ratio, return on equity, operating profitability, etc.)

Question 11

Cash ratio

Answer 11

(cash + marketable securities) / current liabilities

Question 12

Accounting rate of return

Answer 12

average annual profit / average investment