FRA

Question 1

What is a classified balance sheet?

Answer 1

Grouped by current/non

Question 2

Unreal gains/losses for trading assets?

Answer 2

P/L

Question 3

Unreal gains/losses for available for sale assets?

Answer 3

OCI

Question 4

Unreal gains/losses for held to maturity assets?

Answer 4

Not recognized. Only when realized.

Question 5

What is the quick ratio formula?

Answer 5

(Cash + Marketable securities + Receivables) / Liabilities

Question 6

What is the financial leverage ratio?

Answer 6

Total Assets / Total Equity

Question 7

What is the cash ratio formula?

Answer 7

(Cash and marketable securities) / Current liabilities

Question 8

How is interest expense classified on CF stmt in GAAP, IFRS?

Answer 8

IFRS: Either operating or financing
GAAP: Always operating

Question 9

How are dividends received/ paid treated under GAAP vs IFRS?

Answer 9

Div Rec: 
IFRS: Either op or inv. 
GAAP: Operating
Div Paid: 
IFRS: Op or fin 
GAAP: Financing

Question 10

How are cash flows from taxes on income disclosed on IFRS vs GAAP?

Answer 10

Both show as separate item

Question 11

How do you calculate Free CF to the Firm?

Answer 11

FCFF= OP CF + after-tax interest expense - Cap Exp.

Question 12

What is the Inventory turnover ratio?

Answer 12

COGS / Avg. Inventory

Question 13

How to calculate Days of Sales Outstanding? (DSO)

Answer 13

DSO = (A/R) / (Avg. Sales per day)

Question 14

How to calculate Return on Assets? (ROA) from Net profit margin?

Answer 14

ROA = Net profit margin X Total Asset turnover

Question 15

How to calculate Return on Equity? (ROE) from ROA?

Answer 15

ROE = ROA x Financial Leverage

Question 16

How to calculate the tax burden?

Answer 16

Tax burden = 1 - Tax Rate

Question 17

What is the LIFO Reserve?

Answer 17

FIFO Inventory - LIFO Inventory

Question 18

How do you adjust COGS for FIFO to LIFO

Answer 18

COGS (FIFO) = COGS (LIFO) - Increase in LIFO Reserve

Question 19

Does the residual value factor into the calc for units of production?

Answer 19

Yes

Question 20

How to calculate estimated remaining useful life?

Answer 20

Net PPE / Annual dep’n exp.

Question 21

For Assets: what does difference in tax base and CV result in?

Answer 21

CV > TB = Deferred Tax Liability

CV < TB = Deferred Tax Asset

Question 22

For Liabilities: what does difference in tax base and CV result in?

Answer 22

CV > TB = Deferred Tax Asset

CV < TB = Deferred Tax Liability

Question 23

What is a valuation allowance? What does a change mean?

Answer 23

Reserve that offsets deferred tax assets based on likelihood of deferred asset use

Decrease = higher likelihood of deferred asset use

Question 24

What should happen if a deferred tax liability is NOT expected to reverse?

Answer 24

Treat it as equity

Question 25

How to calculate income tax provision?

Answer 25

Provision = Current tax - Deferred Liability (or + deferred asset

Question 26

How to calculate effective tax rate?

Answer 26

Effective Tax = Provision / EBIT

Question 27

What are aggressive accounting choices?

Answer 27

Enhance performance by inflating revenue/CF

Question 28

What are conservative accounting choices?

Answer 28

Decrease performance in current period

Question 29

How to calc average asset age?

Answer 29

Avg. asset age = Accum Dep / Dep Expense

Question 30

How to calc avg dep life?

Answer 30

Avg. Dep’able life = Ending investment / Dep exp.