Applied Corporate Finance

What is the purpose of financial statement analysis?

• To create standardized formats for financial reporting

• To understand the story that financial statements can tell about an organization

• To confuse investors and others

• To complicate the understanding of an organization's financial status

Which of the following is a current asset?

• Property, plant & equipment

• Inventory

• Long-term financial investments

• Intangibles

Goodwill is a(n)

• Current asset

• Tangible asset

• Intangible asset

• Liability

Which of the following is a current liability?

• Pension liabilities

• Deferred income taxes

• Long-term debts

• Accounts payable

Long-term liabilities can be paid (excluding current component):

• Within a week

• Within one year

• In more than one year

• Within one month

Which of the following is true?

• Equity = Assets + Liabilities

• Assets = Liabilities  - Equity

• Liabilities = Assets + Equity

• Assets = Liabilities + Equity

The ‘top line’ in a profit and loss statement is:

• Net income/earnings

• Sale revenue

• Income tax

• Operating income

Which of the following is NOT included in operating income?

• Selling expenses

• Income tax

• Net sales

• Cost of goods sold

Which of the following must be disclosed in the notes to the profit and loss statement?

• Disposals of property, plant and equipment or investments

• Sales revenue

• Selling expenses

• Income tax

The asset section of the balance sheet summarizes:

• What the company owns

• Revenues and expenses

• Cash transactions

• What the company owes