Unit 9 Quizzes

An analyst is reviewing the financial statements of Penta Ltd. Over the period shown, Penta has sales of $5 million, net profit of $1.5 million, annual bond interest charges are $500,000, and total assets are $2 million. Penta's net profit margin is

30%

What is the balance sheet equation?

Assets = liabilities + shareholders' equity

Which of the following equations correctly shows the relationship between the items on a company's balance sheet?

Assets = liabilities + stockholders' equity.

When a member of the board of directors of a publicly traded company resigns due to a disagreement over an operational matter,

Form 8-K must be filed with the SEC within 4 business days of the event

Which of the following acts requires publicly traded corporations to issue annual reports?

Securities Exchange Act of 1934

Publicly-traded corporations are generally required to have an annual independent audit of their financial records. What is the highest opinion offered under GAAP?

Unqualified opinion

Those investors wishing to examine a document that would probably give them the most information about a corporation's current and planned operations would seek out

the annual report

One of the components of a cash flow statement is cash flow from investing activities. Included would be

transactions and events involving the purchase and sale of land, buildings, and equipment.

A fundamental analyst would be interested in funds available for use in the business. Doing which of the following would have the greatest impact on future cash flow?

Depreciation on assets used in the business

A client asks her investment adviser representative what footnotes to the financial statements are for. The best reply would be that footnotes

contain information that doesn't have a place in the main body of the financial statements.

Debts that will come due more than 1 year after the date on the balance sheet are known as

fixed (or long-term) liabilities

KPT, Inc., is preparing to report its net income for the past year. An increase in which of the following causes a decrease in the reported net income? iTax rate ii Cash dividend iii Interest charged on bank loans

i and iii

Current assets on a corporate balance sheet would include i accounts payable ii accrued wages iii cash iv inventory

iii and iv

If a client has 100 shares of XYZ publicly traded stock and it undergoes a split, afterward the client will have:

no effective change in the value of his ownership share

One of the best sources of financial information is found in the reports required to be filed with the SEC by publicly-traded companies. The easiest way to access this information is by

using EDGAR.

Which items would change if a company declared a cash dividend? i Working capital ii Total assets iii Total liabilities iv Shareholders' equity

i, iii, and iv

Which of the following statements about balance sheets are TRUE? i Balance sheets provide a snapshot of a company's financial position on a given date. ii Balance sheets represent the relationship between a company's assets, liabilities, and stockholders' equity. iii Balance sheets provide a record of a company's earnings over a given period.

i and ii

LMN Manufacturing Company, listed on the NYSE, is an SEC reporting company. Each of the following would require the filing of a Form 8-K EXCEPT

relocation of wholly owned subsidiary

Components of a company's net worth would include all of these EXCEPT

operating income

The owners' equity portion of a corporation's balance sheet would contain all of the following EXCEPT

net income