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Exam 10: Understanding a Firm S Financial Statements

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Question 41

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What accounts would be included as operating activities and financing activities for an income statement?

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Operating activities would include sales...

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Question 42

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Accounts payable, accrued expenses, 2-year notes payable, and 90-day notes are all short-term liabilities.

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Question 43

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Net income is used to measure the return on the firm's total assets.

Natalya reports profits when cash is received and expenses when they are paid. She is using

For investment purposes, Wilma needs a snapshot of the firm's financial position at a specific point in time.  She should look at the

Eugenia's company bought a delivery truck to deliver merchandise to customers.  This truck should appear as ___________ on the balance sheet.

Walter knows the result of the equation "Sales-Expenses = Profits" can be found on the:

The income statement shows a firm's financial position on a specific date.

Jan's bank has asked her to show them how her firm's financial position has changed in the past year.  She should provide the company's balance sheet.

Martina invested her savings into her business when she started it.  Later she added more capital and she has kept some of her profits.  Together these are known as:

Warren needs to generate cash flow for his lawn mowing business. What three cash flow activities can he engage to bring in cash for his company?

In order to derive a cash flow statement, the owner must add back the _____ to the income statement.

To determine the debt ratio, the total debt is divided by the total income.

Liquidity represents the degree to which a firm can meet maturing short-term debt obligations with available working capital.

It is important for Heather to monitor her cash flow because:

Describe sources of current debt.

Depreciation is the cost of a firm's land and building allocated over its useful life.

The income statement answers which question?

Erin, the owner of Sweets To Eat Ice Cream Shoppe, wants to know how her company is operating from a financial perspective.  Her CPA has given her the following numbers:  Sales $325,000, Operating Profits $50,000, Current Assets $125,000, Current Liabilities $40,000, Total Assets $350,000. The ice cream retail industry norms include Operating Profit Margin 10%, Return on Assets 11% and Current Ratio 2.7. Determine the company's liquidity and compare the value to the industry ratios.

Horace is reviewing a document that shows the results of his firm's operations over a period of one year.  Horace is looking at the: