FIN Connect Questions

Which of the following is (are) true of financial ratios?

They are developed from a firm's financial information. They are used for comparison purposes.

True or false: Given the PV, FV, and life of the investment, you can determine the discount rate.

True

According to GAAP, when is revenue recognized on an income statement?

When the value of an exchange of goods or services is known or reliably determined When the earnings process is virtually completed

A balance sheet reflects a firm's:

accounting value on a specific date

In finance, the value of a firm depends on its ability to generate ______.

cash flows

The process of accumulating interest in an investment over time to earn more interest is called _________.

compounding

Public limited companies and joint stock companies are other names for __________.

corporations

In a present value equation, the __________ , rate (r) can be found using the PV, FV, and t. (Enter one word per blank.)

discounted

Calculating the present value of a future cash flow to determine its worth today is commonly called ___________ valuation.

discounted cash flow (DCF)

When a firm smooths earnings to please investors, it is called ________.

earnings management

Financial ratios are computed using only balance sheet information.

false

Common-size statements are best used for comparing:

firms with different sizes competitors year- to year of your firm

Given an internal growth rate of 3 percent, a firm can _____.

grow by 3 percent or less without any additional external financing

The information needed to compute the profit margin can be found on the ____.

income statement

Whenever ___________ information is available, it should be used instead of accounting data.

market

The price-earnings (PE) ratio is a ____ ratio.

market value

In a common-size income statement, each item is expressed as a percentage of total ____________

sale

With __________ , interest, the interest is not reinvested.

simple

________ financial statements enable one to compare firms that differ in size.

standardized

The DuPont identity breaks ROE into ________ parts

three

Which of the following create problems with financial statement analysis?

The firm and its competitors operate under different regulatory environments. The firm or its competitors are conglomerates The firm or its competitors are global companies.

What is the formula for computing the internal growth rate (IGR)?

(ROA x b)/(1 - ROA x b)

The ________________ payout ratio equals cash dividends divided by net income.

Dividend

Which of the following is NOT a component of cash flow from assets?

Financing expenses

A good financial decision will do which of the following?

Increase the value of the firm's existing stock Increase market value of shareholders' equity