Finance Exam 1-2

A summary of the firms activities and the resulting changes in its cash position over an accounting period due to these activitiesis an example of what type of financial statement? Statement of cash flows
A snapshot of a firms financial position, including it’s financial mix, at a specific point in time would be what type of financial statement? Balance Sheet
A report that shows changes in the value of owner’s equity, specifically by showing how much a firms earnings are distributed to stockholders as opposed to being retained for future investment would be found on what financial statement? Statement of retained earnings
A summary of a firms revenues, expenses, and resulting profits or losses over an accounting period is found in what type of financial statement? Income Statement
If a firm generates a lot of net or operating cash flow, does that mean the firms balance sheet cash account must be high? No
What type of activity involves the purchase and sale of fixed assets? Investing activities
What type of activity involves security transactions and dividend payments? Financial Activities
What type of activity involves the firms net income, depreciation, and changes in the net working capital other than cash and short term debt? Operating Activities
Does ratio analysis work better for large, multifaceted firms or small, narrow focused firms? Small, narrowly focused firms
A firms financial ratios are often compared to the industry average. Does that mean that a firm should strive to achieve the industry average ratios? No
Which financial statement determines if a firm generates enough cash to repay its debt or invest in new products? Statement of Cash Flow
Which financial statement determines if a firm generates enough internal funds to support investment, or does new stock need to be used? Statement of Cash Flow
Which financial statement determines if a firm is financed with too much debt? Balance Sheet
Which financial statement determines how profitable a firm has been? Income Statement
Which financial statement determines if a firm can meet all of its short term obligations? Balance Sheet
Which financial statement determines how much the value of owners equity changed due to the firms decision to distribute earnings to stockholders or reinvest them in the company? Statement of Retained Earnings
List two liability accounts that are “spontaneous” liabilities? Accounts payable, and Accruals
What period of time usually defines whether an asset or liability is a current or long-term account? One Year
Suppose you are evaluating a firm that generated negative cash flow last year, but its cash on the balance sheet increased. What event could help explain this increase in cash? The firm issued new common stock
Which current asset is considered to be least liquid? Inventory
Which group of lenders is more likely to care about a firm’s liquidity ratios, short-term or long-term lenders? Short-term lenders

Leave a Reply

Your email address will not be published. Required fields are marked *