Exam 1

Question 1

Sections of Cashflow Statement

Answer 1

Operating
Investing
Financing

Question 2

four building blocks of analysis

Answer 2

1. Liquidity/Efficiency
2. Solvency
3. Profitability
4. Market Prospect

Question 3

Horizontal analysis (tools of analysis)

Answer 3

Comparison of financial condition and performance across time

Question 4

Vertical analysis

Answer 4

Comparison of financial condition and performance to a base amount

Question 5

Ratio analysis

Answer 5

measurement of key relations between financial statement items

Question 6

Liquidity & Efficiency ratios

Answer 6

Current ratio
Acid-test ratio
Accounts receivable turnover
Inventory turnover
Days sales uncollected
Days’ sales in inventory
Total Asset Turnover

Question 7

Solvency Ratios

Answer 7

Debt Ratio
Equity Ratio
Debt-to-equity ratio
Times Interest Earned

Question 8

Current ratio

Answer 8

Current Assets / Current Liabilities

Question 9

Acid-Test ratio

Answer 9

(Cash + Short-Term Investments + Current Receivables) / Current Liabilities

Question 10

Accounts Receivable turnover

Answer 10

Net Sales / Avg. Accounts Receivable, net

Question 11

Inventory turnover

Answer 11

COGS / Avg. Inventory

Question 12

Days’ Sales Uncollected

Answer 12

(Accounts receivable, net / Net Sales) X 365

Question 13

Days’ sales in inventory

Answer 13

(Ending Inventory / COGS) X 365

Question 14

Total asset turnover

Answer 14

Net Sales / Avg. Total Assets

Question 15

Manufacturing cost (or Product costs)

Answer 15

Direct Material + Direct Labor + Factory Overhead

Question 16

Period Costs

Answer 16

Selling and General administrative expenses

Question 17

Prime Costs

Answer 17

Direct Materials & Direct Labor Costs

Question 18

Conversion Costs

Answer 18

Direct Labor & Factory Overhead

Question 19

Cost of Goods Manufactured (how to get)

Answer 19

Total Manufacturing Costs + Beg. WIP inv. - End WIP inv.

Question 20

COGS (how to get)

Answer 20

Finished Goods Inv., Beg. + COGM/P - Finished Goods Inv., End

Question 21

COGS Full formula

Answer 21

DM used
+DL
+FO
——–
=TMC
+Beg. WIP
-End WIP
——–
=COGM
+Beg. FG
-End FG
——–
COGS

Question 22

Debt Ratio

Answer 22

Total Liabilities / Total Assets

Question 23

Equity Ratio

Answer 23

Total Equity / Total Assets

Question 24

Debt-to-equity Ratio

Answer 24

Total Liabilities / Total Equity

Question 25

Times Interest Earned

Answer 25

Income before interest expense and income tax expense / Interest Expense