WorksheetsApplied Corporate Finance
Total questions: 20
Worksheet time: 3mins
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
Total assets equal:
Residual claim after all liabilities are repaid
Current assets + property plant equipment
Cash + accounts receivable
Current assets + non-current assets
Which of the following is a key characteristic of a public corporation?
Shareholders are also debtholders
Separate ownership and management of assets
Private company
Full government ownership
Which of the following equations represent the residual claim on a firm’s assets?
Assets - Equity
Assets - Liabilities
Assets - Liabilities - Equity
Equity + Liabilities
Which of the following is NOT included in the operating profit figure?
Selling, general and administrative expenses
Cost of goods sold
Net sales
Interest expense
Which of the following is equal to gross profit?
Operating profit + other income
Net sales - cost of goods sold
EBIT - interest
EBT - tax
Net income equals:
EBT - tax
Operating income
EBIT - interest
EBITDA
What does a current ratio above 1 suggest?
The company will likely face cash flow issues
The company is not managing its assets efficiently
The company should have enough cash to pay current liabilities in the next year
The company needs to borrow more to pay liabilities
How is liquidity defined in the context of the current ratio?
The amount of cash available for investment
Ability to pay off liabilities without borrowing
Ability to generate high profits in the next year
The level of inventory turnover
What is EBITDA?
Net income as a percentage of sales
Operating income after running and paying for business all cash and non cash expenses
Direct expenses associated with a product or service
Cash profit from operations of running the business
What does Return on Sales (ROS) indicate?
Operating income after running and paying for business operations
Cash profit from operations at running the business
Direct expenses associated with a product or service
Net income as a percentage of sales
