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Financial Statement Analysis G. Bern ND > Chap 5 > Flashcards

Chap 5 Flashcards

1
Q

Liquidity

A

Ability to pay for short-term obligations; nearness to cash

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2
Q

US GAAP balance sheet configuration

A

Most liquid to least

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3
Q

IFRS balance sheet configuration

A

Least liquid to most

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4
Q

Balance sheet with separately classified current and noncurrent assets/liabilities

A

Classified Balance Sheet

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5
Q

IFRS and GAAP require distinguishment between current and non-current
A True
B False

A

A True

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6
Q

Assets expected to be sold, used within 1 year

A

Current Assets

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7
Q

Assets expected to be sold, used greater than 1 year

A

Non Current Assets

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8
Q

Working Capital formula

A

current assets minus current liabilities

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9
Q

current assets minus current liabilities

A

Working Capital

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10
Q

Liabilities expected to be settled within 1 year

A

Current Liabilities

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11
Q

Liabilities expected to be settled greater 1 year

A

Non Current Liabilities

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12
Q

Working Capital defined

A

Tells an anlyst about the ability of the entity to meet liabilities as the come due.

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13
Q

Assets that are reported at amortized or fair market value

A

Financial Assets

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14
Q

Bank Overdrafts are considered
A. Investment
B. Expense
C. Financing

A

C Financing; presented in current borrowings and debt

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15
Q

Amounts owed to a company by its customers for products and services already delivered

A

Trade Receivables or Accounts Receivables

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16
Q

Trade Receivables or Accounts Receivables are reported at

  1. Historic cost
  2. NRV/FV
  3. Factoring price
A
  1. approximate fair value based on estimates of collectibility
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17
Q

Revelvant A/R metrics

A
  1. A/R relative to sales
  2. Allowance for doubtful accounts
  3. Concentration of credit risk
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18
Q

Contra Asset Account related to A/R
A. Allowance for doubtful accounts
B. Credit memo’s
C. DOH

A

A. Allowance for doubtful accounts. Netted against A/R balance to reach Net Receivables

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19
Q

Estimated % of credit sales uncollectible

A

Bad Debt Expense

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20
Q

Bad Debt Expense hits the P/L
A. True
B. False

A

A. True
Dr. Bad Debt Expense
Cr. Allowance for Doubtful Accounts

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21
Q 
What improves Allowance for Doubtful Accounts
A. Improved Economy
B. Improved Credit Quality of Customer
C. Stricter Credit Policy
D. All
A

D. All

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22
Q

Inventory Flow

Beg Inv + Goods Purch =

A

Goods Available for Sale

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23
Q

Goods Available for Sale-Ending Inventory =

A

Cost of Good Sold

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24
Q

Cost of Good Sold affects the
A. B/S
B. I/S
C. O/E

A

B. Income Statement

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25
Q

Reversal of write-downs on Inventory are allowed under
A. GAAP
B. IFRS
C. Both

A

B. IFRS

GAAP does not allow reversals of write downs

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26
Q

Inventories are measured at Lower Cost or Market under
A. GAAP
B. IFRS
C. Neither

A

A GAAP

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27
Q

Inventories are measured at Lower Cost or Net Realizable Vlaue under
A. GAAP
B. IFRS
C. Neither

A

B. IFRS

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28
Q

If inventory falls below its XXX it must take a write down in value
A. Historic value
B. Market value
C. Carrying value

A

C. Carrying value

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29
Q 
Costs of Goods Sold; Inventory Methods allowed under GAAP
A. FIFO
B. LIFO
C. WAVG
D. SPID
E. All
A

E. All

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30
Q 
Costs of Goods Sold; Inventory Methods allowed under IFRS
A. FIFO
B. LIFO
C. WAVG
D. SPID
E. All
A

A. C. D. LIFO is not allowed under IFRS

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31
Q

PPE revaluation method is allowed under
A. GAAP
B. SEC
C. IFRS

A

C. IFRS

Not allowed under GAAP

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32
Q

PPE is a
A. Tangible Asset
B. Intangible Asset
C. Equity Instrument

A

A. Tangible Asset

33
Q 
PPE is reported at 
A. FMV
B. Historic cost
C. Historic cost less Dep
D. FMV less DEP
A

C. Historic cost less dep

34
Q

Depreciation means

A

systematic allocation of cost over the life of PPE

35
Q

Impairments are

A

Unanticipated declines in asset value

36
Q

X generally consists of an assets purchase price, its delivery cost and other costs incurred to make he asset usable

A

Historical cost

37
Q

Impairement occurs when

A

Recoverable value is less than its carrying value

38
Q

Impairment reversals are allowed under
A. GAAP
B. SEC
C. IFRS

A

C. IFRS. Not allowed under GAAP

39
Q

Intangible assets are
A. Nonmonetary without physical substance
B. Monetary have physical substance
C. Neither

A

A.

40
Q 
Intangible Assets can be
A. Goodwill
B.  Plants
C. Copyrights
D. Furniture
A

A. C.

41
Q

Intangible Assets have
A. Finite Life
B. Idefinite Life
C. Both

A

Both

42
Q

Intangible Assets with Finite Life
A. Amortize over useful life
B. Are tested for impairment each year
C. Are depreciated

A

A. Useful Life

43
Q

Intangible Assets with Indefinite Life
A. Amortize over useful life
B. Are tested for impairment each year
C. Are depreciated

A

B. impairment tested; they do not amortize

44
Q

Good will is an intangible asset
A. True
B. False

A

B. False. Not a separately identifiable asset. Arises when a company acquires another company for a price in excess of its fair market value

45
Q

Impairement rules for PPE and Intangibles is the same
A. True
B. Fales

A

A. True

46
Q

Impairment is a
A. Cash event
B. Credit event
C. Non Cash event

A

C. Non Cash event

47
Q

Goodwill accounting for acquisitions is
A. Accrued
B. Expensed
C. Capitalized

A

C. Capitalized

48
Q

Goodwill is
A. amortized over useful life
B. impairment tested each year
C. depreciated over useful life

A

B. Impairment tested each year

49
Q

Fair Value

A

price that would be received if asset was sold in the market

50
Q

Amortized Cost

A

the amount at which an asset was intially recognized minus any principal repayments, plus or minus any discount or premium, minus impairment

51
Q 
Current Liability Types
A. Trade payable
B. Note payable
C. Accrued expenses
D. Deffered Income
E. All
A

E. All

52
Q

Define Defered Income

A

also deferred revenue and unearned revenue. arises from receives payment in advance of delivery on goods or services

53
Q

The difference between taxes payable and income tax expense equals

A

deferred tax liability

54
Q

FCFE=

A

Net income + noncash charges - working capital - fixed capital investment + net new borrowing or minus net debt repayment

55
Q

Free Cash Flow Equity

A

cash flow after investment in working capital and fixed capital, available to equity holders ONLY

56
Q

Cash flow to Revenue

A

CFO / Net Revenue

Shows operating cash generated per dollar of revenue

57
Q

Cash return on assets

A

CFO / Avg total assets

Shows operating cash generated per dollar of asset

58
Q

Cash return on equity

A

CFO / Avg shareholder equity

Shows operating cash generated per dollar of owner investment

59
Q

Cash to income

A

CFO / Operating Income

Shows cash generation ability of operations

60
Q

Cash flow per share

A

(CFO - Preferred dividends) / # of common shares outstanding

Shows operating cash flow per share basis

61
Q

Debt Coverage Ratio

A

CFO / Total Debt

Financial risk and finacial leverage

62
Q

Interest Coverage Ratio

A

(CFO + Interest Exp Paid + Taxes) / Interest Exp Paid

Ability to meet interest obligations

63
Q

Reinvestment Ratio

A

CFO / Cash Paid for LT Assets

Ability to acquire assets with operating cash flows

64
Q

Debt Payment Ratio

A

CFO / Cash paid for LT debt

Ability to pay debts with operating cash flows

65
Q

Dividend Payment Ratio

A

CFO / Dividends Paid

Ability to pay dividends with operating cash flows

66
Q

Investing and Financing Ratio

A

CFO / Cash outflows fro investing and financing activities

67
Q

CashFlow Coverage Ratios =

A
  1. Debt Coverage
  2. Interest Coverage
  3. Reinvestment
  4. Debt Payment
  5. Dividend
  6. Investing/Financing
68
Q

CashFlow Performance Ratios =

A
  1. Cashflow to Rev
  2. Cash Return to Assets
  3. Cash return on equity
  4. Cash to income
  5. Cashflow per share
69
Q

Liquidity Ratio’s

A
  1. Current
  2. Quick (Acid Test)
  3. Cash
70
Q

Current Ratio / Working Capital Ratio

A

CA / CL (Working Capital)

71
Q

Quick (Acid) Ratio

A

(Cash + Market Sec + Recv) / CL

72
Q

Cash Ratio

A

(Cash + Mark Sec) / CL

73
Q

Balance Sheet Analysis

A
  1. Liquidity
  2. Solvency
  3. Ratio
74
Q

Solvency Ratios

A
  1. LT Debt to Equity
  2. Debt to Equity
  3. Total Debt
  4. Debt to Capital
  5. Financial Leverage
75
Q

LT Debt to Equity

A

Total LT Debt / Total Equity

76
Q

Debt to Equity

A

Total Debt / Total Equity

77
Q

Total Debt (Debt to Assets)

A

Total Debt / Total Assets

78
Q

Debt to Capital

A

Total Debt / (Total Debt + Total Equity)

79
Q

Financial Leverage

A

Total Assets / Total Equity

Financial Statement Analysis G. Bern ND (3 decks)

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