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

Chap 5 Flashcards

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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
Reversal of write-downs on Inventory are allowed under A. GAAP B. IFRS C. Both
B. IFRS | GAAP does not allow reversals of write downs
26
Inventories are measured at Lower Cost or Market under A. GAAP B. IFRS C. Neither
A GAAP
27
Inventories are measured at Lower Cost or Net Realizable Vlaue under A. GAAP B. IFRS C. Neither
B. IFRS
28
If inventory falls below its XXX it must take a write down in value A. Historic value B. Market value C. Carrying value
C. Carrying value
29
``` Costs of Goods Sold; Inventory Methods allowed under GAAP A. FIFO B. LIFO C. WAVG D. SPID E. All ```
E. All
30
``` Costs of Goods Sold; Inventory Methods allowed under IFRS A. FIFO B. LIFO C. WAVG D. SPID E. All ```
A. C. D. LIFO is not allowed under IFRS
31
PPE revaluation method is allowed under A. GAAP B. SEC C. IFRS
C. IFRS | Not allowed under GAAP
32
PPE is a A. Tangible Asset B. Intangible Asset C. Equity Instrument
A. Tangible Asset
33
``` PPE is reported at A. FMV B. Historic cost C. Historic cost less Dep D. FMV less DEP ```
C. Historic cost less dep
34
Depreciation means
systematic allocation of cost over the life of PPE
35
Impairments are
Unanticipated declines in asset value
36
X generally consists of an assets purchase price, its delivery cost and other costs incurred to make he asset usable
Historical cost
37
Impairement occurs when
Recoverable value is less than its carrying value
38
Impairment reversals are allowed under A. GAAP B. SEC C. IFRS
C. IFRS. Not allowed under GAAP
39
Intangible assets are A. Nonmonetary without physical substance B. Monetary have physical substance C. Neither
A.
40
``` Intangible Assets can be A. Goodwill B. Plants C. Copyrights D. Furniture ```
A. C.
41
Intangible Assets have A. Finite Life B. Idefinite Life C. Both
Both
42
Intangible Assets with Finite Life A. Amortize over useful life B. Are tested for impairment each year C. Are depreciated
A. Useful Life
43
Intangible Assets with Indefinite Life A. Amortize over useful life B. Are tested for impairment each year C. Are depreciated
B. impairment tested; they do not amortize
44
Good will is an intangible asset A. True B. False
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
Impairement rules for PPE and Intangibles is the same A. True B. Fales
A. True
46
Impairment is a A. Cash event B. Credit event C. Non Cash event
C. Non Cash event
47
Goodwill accounting for acquisitions is A. Accrued B. Expensed C. Capitalized
C. Capitalized
48
Goodwill is A. amortized over useful life B. impairment tested each year C. depreciated over useful life
B. Impairment tested each year
49
Fair Value
price that would be received if asset was sold in the market
50
Amortized Cost
the amount at which an asset was intially recognized minus any principal repayments, plus or minus any discount or premium, minus impairment
51
``` Current Liability Types A. Trade payable B. Note payable C. Accrued expenses D. Deffered Income E. All ```
E. All
52
Define Defered Income
also deferred revenue and unearned revenue. arises from receives payment in advance of delivery on goods or services
53
The difference between taxes payable and income tax expense equals
deferred tax liability
54
FCFE=
Net income + noncash charges - working capital - fixed capital investment + net new borrowing or minus net debt repayment
55
Free Cash Flow Equity
cash flow after investment in working capital and fixed capital, available to equity holders ONLY
56
Cash flow to Revenue
CFO / Net Revenue | Shows operating cash generated per dollar of revenue
57
Cash return on assets
CFO / Avg total assets | Shows operating cash generated per dollar of asset
58
Cash return on equity
CFO / Avg shareholder equity | Shows operating cash generated per dollar of owner investment
59
Cash to income
CFO / Operating Income | Shows cash generation ability of operations
60
Cash flow per share
(CFO - Preferred dividends) / # of common shares outstanding | Shows operating cash flow per share basis
61
Debt Coverage Ratio
CFO / Total Debt | Financial risk and finacial leverage
62
Interest Coverage Ratio
(CFO + Interest Exp Paid + Taxes) / Interest Exp Paid | Ability to meet interest obligations
63
Reinvestment Ratio
CFO / Cash Paid for LT Assets | Ability to acquire assets with operating cash flows
64
Debt Payment Ratio
CFO / Cash paid for LT debt | Ability to pay debts with operating cash flows
65
Dividend Payment Ratio
CFO / Dividends Paid | Ability to pay dividends with operating cash flows
66
Investing and Financing Ratio
CFO / Cash outflows fro investing and financing activities
67
CashFlow Coverage Ratios =
1. Debt Coverage 2. Interest Coverage 3. Reinvestment 4. Debt Payment 5. Dividend 6. Investing/Financing
68
CashFlow Performance Ratios =
1. Cashflow to Rev 2. Cash Return to Assets 3. Cash return on equity 4. Cash to income 5. Cashflow per share
69
Liquidity Ratio's
1. Current 2. Quick (Acid Test) 3. Cash
70
Current Ratio / Working Capital Ratio
CA / CL (Working Capital)
71
Quick (Acid) Ratio
(Cash + Market Sec + Recv) / CL
72
Cash Ratio
(Cash + Mark Sec) / CL
73
Balance Sheet Analysis
1. Liquidity 2. Solvency 3. Ratio
74
Solvency Ratios
1. LT Debt to Equity 2. Debt to Equity 3. Total Debt 4. Debt to Capital 5. Financial Leverage
75
LT Debt to Equity
Total LT Debt / Total Equity
76
Debt to Equity
Total Debt / Total Equity
77
Total Debt (Debt to Assets)
Total Debt / Total Assets
78
Debt to Capital
Total Debt / (Total Debt + Total Equity)
79
Financial Leverage
Total Assets / Total Equity

Financial Statement Analysis G. Bern ND (3 decks)

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