Financial Statement Analysis
Detailed breakdown of financial statements and key performance indicators.
Benjamin Fisher
Contributor
4.2
43
3 days ago
Preview (3 of 9)
Sign in to access the full document!
Financial Statement Analysis
Heading - Display All Questions
True-False Questions
[Q1] True False - 2 Points
Net Operating Assets (NOA) is determined by subtracting non-operating assets from total
assets.
[Q2] True False - 2 Points
Operating assets typically include cash, receivables, property, plant and equipment (PPE),
and capitalized lease assets.
[Q3] True False - 2 Points
Tax expense on the income statement reflects both operating and non-operating revenue
and expenses.
[Q4] True False - 2 Points
Operating assets exclude short-term and long-term investments in marketable securities.
[Q5] True False - 2 Points
All things equal, a
higher NOAT is preferable than a
lower one.
[Q6] True False - 2 Points
Net Operating Assets = Net Nonoperating Obligations + Stockholders' Equity
[Q7] True False - 2 Points
A limitation of Generally Accepted Accounting Principles (GAAP) is that financial statements
reflect what can be reliably measured, therefore, excluding some assets that cannot be
reliably measured.
[Q8] True False - 2 Points
The net assets of discontinued operations should be considered to be nonoperating,
however, their after-tax profit (loss) should be treated as operating.
[Q9] True False - 2 Points
Vertical analysis facilitates comparisons within a set of financial statements and
horizontal
analysis provides comparisons across time periods.
[Q10] True False - 2 Points
Ratios provide one way to compare companies in the same industry, regardless of their
size.
[Q11] True False - 2 Points
Highly leveraged firms have a higher RNOA than firms with lower leverage.
[Q12] True False - 2 Points
Heading - Display All Questions
True-False Questions
[Q1] True False - 2 Points
Net Operating Assets (NOA) is determined by subtracting non-operating assets from total
assets.
[Q2] True False - 2 Points
Operating assets typically include cash, receivables, property, plant and equipment (PPE),
and capitalized lease assets.
[Q3] True False - 2 Points
Tax expense on the income statement reflects both operating and non-operating revenue
and expenses.
[Q4] True False - 2 Points
Operating assets exclude short-term and long-term investments in marketable securities.
[Q5] True False - 2 Points
All things equal, a
higher NOAT is preferable than a
lower one.
[Q6] True False - 2 Points
Net Operating Assets = Net Nonoperating Obligations + Stockholders' Equity
[Q7] True False - 2 Points
A limitation of Generally Accepted Accounting Principles (GAAP) is that financial statements
reflect what can be reliably measured, therefore, excluding some assets that cannot be
reliably measured.
[Q8] True False - 2 Points
The net assets of discontinued operations should be considered to be nonoperating,
however, their after-tax profit (loss) should be treated as operating.
[Q9] True False - 2 Points
Vertical analysis facilitates comparisons within a set of financial statements and
horizontal
analysis provides comparisons across time periods.
[Q10] True False - 2 Points
Ratios provide one way to compare companies in the same industry, regardless of their
size.
[Q11] True False - 2 Points
Highly leveraged firms have a higher RNOA than firms with lower leverage.
[Q12] True False - 2 Points
Repurchasing shares of common stock near year end will increase a firm's return on equity
(ROE).
[Q13] True False - 2 Points
To determine tax on net operating profit, we begin with total tax expense and
deduct
taxes related to net nonoperating expenses.
[Q14] True False - 2 Points
NOPAT is equivalent to income
before tax from operating activities.
[Q15] True False - 2 Points
NOPAT is equivalent to income
after tax from operating activities.
[Q16] True False - 2 Points
Increasing a company's net operating asset turnover (NOAT) increases both RNOA and
ROE.
[Q17] True False - 2 Points
If company A has a higher net operating profit margin (NOPM) than Company B, then
Company A's RNOA will be higher.
[Q18] True False - 2 Points
Net operating asset turnover (NOAT) measures a company's profitabiltiy.
[Q19] True False - 2 Points
All else being equal, higher financial leverage will
decrease a company's debt rating and
increase the interest rate it must pay.
[Q20] True False - 2 Points
A current ratio greater than 1.0 is
generally desirable for a company.
[Q21] True False - 2 Points
Solvency ratios measure a company's ability to meet its debt obligations.
[Q22] True False - 2 Points
The DuPont analysis disaggregates return on equity into profitability, efficiency and
leverage components. Pg. 4-30
[Q23] True False - 2 Points
The times Interest Earned (T.I.E.) ratio is a financial metric used to assess a company's
solvency.
[Q24] True False - 2 Points
The quick ratio includes cash, accounts receivable and inventory assets in the numerator.
One benefit of
using ratio analysis
(ROE).
[Q13] True False - 2 Points
To determine tax on net operating profit, we begin with total tax expense and
deduct
taxes related to net nonoperating expenses.
[Q14] True False - 2 Points
NOPAT is equivalent to income
before tax from operating activities.
[Q15] True False - 2 Points
NOPAT is equivalent to income
after tax from operating activities.
[Q16] True False - 2 Points
Increasing a company's net operating asset turnover (NOAT) increases both RNOA and
ROE.
[Q17] True False - 2 Points
If company A has a higher net operating profit margin (NOPM) than Company B, then
Company A's RNOA will be higher.
[Q18] True False - 2 Points
Net operating asset turnover (NOAT) measures a company's profitabiltiy.
[Q19] True False - 2 Points
All else being equal, higher financial leverage will
decrease a company's debt rating and
increase the interest rate it must pay.
[Q20] True False - 2 Points
A current ratio greater than 1.0 is
generally desirable for a company.
[Q21] True False - 2 Points
Solvency ratios measure a company's ability to meet its debt obligations.
[Q22] True False - 2 Points
The DuPont analysis disaggregates return on equity into profitability, efficiency and
leverage components. Pg. 4-30
[Q23] True False - 2 Points
The times Interest Earned (T.I.E.) ratio is a financial metric used to assess a company's
solvency.
[Q24] True False - 2 Points
The quick ratio includes cash, accounts receivable and inventory assets in the numerator.
One benefit of
using ratio analysis
Preview Mode
Sign in to access the full document!
100%
Study Now!
XY-Copilot AI
Unlimited Access
Secure Payment
Instant Access
24/7 Support
Document Chat
Document Details
Subject
Finance