Gleim CMA Review Updates to Part Edition, 1st Printing March 2015
|
|
- Della Lamb
- 6 years ago
- Views:
Transcription
1 Page 1 of 5 Gleim CMA Review Updates to Part Edition, 1st Printing March 2015 NOTE: Text that should be deleted is displayed with a line through it. New text is shown with a blue background. Study Unit 3 Profitability Analysis and Analytical Issues Page 67, Subunit 3.1, 1.a.: This update clarifies the definition of gross profit margin. 3.1 PROFITABILITY RATIOS 1. Income Statement Percentages a. Gross profit margin is what the percentage of gross revenues that remains with the firm after paying for merchandise. The key analysis with respect to the gross profit margin is whether it is keeping up remains stable with the any increase or decrease in sales. 1) For example, a 10% increase in sales should be accompanied by at least a 10% increase in the gross profit margin. Thus, the gross profit margin should remain relatively constant at different sales levels. Page 71, Subunit 3.2, 4.c.: This update adds information on sustainable equity growth to the outline material. 4. Other Measures a. The net profit margin on sales equals net income divided by sales. 1) The numerator may also be stated in terms of the net income available to common shareholders. 2) Another form of the ratio excludes nonrecurring items from the numerator, e.g., unusual or infrequent items, discontinued operations, extraordinary items, and effects of accounting changes. The result is sometimes called the net profit margin. This adjustment may be made for any ratio that includes net income. a) Still other numerator refinements are to exclude equity-based earnings and items in the other income and other expense categories. b. The ratio of net operating income to sales may also be defined as earnings before interest and taxes (EBIT) divided by net sales. 1) Use of EBIT emphasizes operating results and more nearly approximates cash flows than other income measures. c. The sustainable growth rate equals the return on equity times the difference of 1 and the dividend payout ratio. 1) This ratio measures the potential growth of a firm without borrowing additional funds. 2) The retention ratio, or the difference of 1 and the dividend payout ratio, is the portion of the income kept to grow the firm.
2 Page 2 of 5 Page 73, Subunit 3.4, 1.b.: This update makes the wording in the outline consistent. 3.4 EARNINGS PER SHARE AND DIVIDEND PAYOUT 1. Earnings per Share (EPS) a. EPS is probably the most heavily relied-upon performance measure used by investors. EPS states the amount of current-period earnings that can be associated with a single share of a corporation s common stock. 1) EPS is only calculated for common stock because common shareholders are the residual owners of a corporation. Since preferred shareholders have superior claim to the firm s earnings, amounts associated with preferred stock must be removed during the calculation of EPS. b. A corporation is said to have a simple capital structure if one of the following two conditions applies apply: 1) The firm has only common stock; i.e., there are no preferred shareholders with a superior claim to earnings in the form of dividends; or and 2) The firm has no dilutive potential common stock. a) Potential common stock (PCS) is a security or other contract that may entitle the holder to obtain common stock. Examples include convertible securities, stock options and warrants, and contingently issuable common stock. b) Potential common stock is said to be dilutive if its inclusion in the calculation of EPS results in a reduction of EPS. Page 93, Subunit 3.2, Question 6: This update corrects a transposition error. 6. Zoron Corporation experienced the following yearover-year changes. Net profit margin Increased 25% Total asset turnover Increased 40% Total assets Decreased 10% Total equity Increased 40% Using DuPont analysis, what is the year-over-year change in Zoron s return on equity (ROE)? A. Increased 95.0%. B. Increased 63.0%. C. Increased 12.5%. D. Increased 10.0%. Answer (C) is correct. REQUIRED: The calculation of return on equity using the DuPont method. DISCUSSION: The ROE using the DuPont analysis is calculated as follows: Net profit margin Total asset turnover Equity Multiplier (Total assets Total equity) The best way to solve this problem is to use actual numbers for the return on equity comparison of this year to last year. Assuming that last year Zoron had a net profit margin of.025, total asset turnover of 1.05, total assets of $500,000, and total equity of $200,000, last year s ROE is equal to 6.56% [ ($500,000 $200,000)]. By using the information given in the problem, Zoron s current-year amounts can be calculated, resulting in a net profit margin of (increased by 25%), total asset turnover of 1.47 (increased by 40%), total assets of $450,000 (decreased by 10%), and total equity of $280,000 (increased by 40%). Therefore, this year s ROE is equal to 7.38% [ (450, ,000)]. The increase in ROE from last year to this year can now be calculated as 12.5% [( ) 6.56]. Answer (A) is incorrect. The DuPont Model for ROE is as follows: Net profit margin Total asset turnover Equity multiplier (Total assets Total equity). The year-over-year change is not calculated by simply adding and subtracting the increases and decreases from last year to this year. The incorrect amount of 95% results from adding and subtracting the year-over-year changes (25% + 40% 10% + 40%). Answer (B) is incorrect. The year-over-year change is not calculated by simply dividing the increase in the net profit margin by the increase in the total asset turnover. Answer (D) is incorrect. This answer choice incorrectly multiples the year-over-year change for the net profit margin by the year-over-year change for the total asset turnover to get an increase in ROE of 10.0%.
3 Page 3 of 5 Page 96, Subunit 3.3, Question 14: This update corrects answer choices and explanations. 14. Information concerning Hamilton s common stock is presented below for the fiscal year ended May 31, Year 2. Common stock outstanding 750,000 Stated value per share $15.00 Market price per share Year 1 dividends paid per share 4.50 Year 2 dividends paid per share 7.50 Basic earning per share Diluted earnings per share 9.00 The price-earnings ratio for Hamilton s common stock is Answer (C) is correct. REQUIRED: The price-earnings ratio for the common stock. DISCUSSION: The price-earnings ratio is calculated by dividing the current market price of the stock by the earnings per share. Diluted earnings per share is used if disclosed. Thus, Hamilton s price-earnings ratio is ($45 market price $9 $11.25 DBEPS). Answer (A) is incorrect. The figure of 3.0 is based on use of the stated value per share as the denominator. Answer (B) is incorrect. The figure of is based on erroneously using the basic diluted earnings per share as the denominator. Answer (D) is incorrect. The figure of 6.0 is derived by using Year 2 dividends per share as the denominator. A. 3.0 times. B times. C times. D. 6.0 times. Page 99, Subunit 3.6, Question 22: This update moves a question from Subunit 6 to Subunit In assessing the financial prospects for a firm, financial analysts use various techniques. An example of vertical, common-size analysis is A. An assessment of the relative stability of a firm s level of vertical integration. B. A comparison in financial ratio form between two or more firms in the same industry. C. Advertising expense is 2% greater compared with the previous year. D. Advertising expense for the current year is 2% of sales. Answer (D) is correct. REQUIRED: The example of vertical, common-size analysis. DISCUSSION: Vertical, common-size analysis compares the components within a set of financial statements. A base amount is assigned a value of 100%. For example, total assets on a common-size balance sheet and net sales on a common-size income statement are valued at 100%. Common-size statements permit evaluation of the efficiency of various aspects of operations. An analyst who states that advertising expense is 2% of sales is using vertical, common-size analysis. Answer (A) is incorrect. Vertical integration occurs when a corporation owns one or more of its suppliers or customers. Answer (B) is incorrect. Vertical, common-size analysis restates financial statements amounts as percentages. Answer (C) is incorrect. A statement that advertising expense is 2% greater than in the previous year results from horizontal analysis.
4 Page 4 of 5 Study Unit 8 CVP Analysis and Marginal Analysis Page 242, Subunit 8.3, 1.a.1) and 2.a.: This update clarifies the equations for target operating income and target net income. 8.3 CVP ANALYSIS -- TARGET INCOME CALCULATIONS 1. Target Operating Income a. An amount of operating income, either in dollars or as a percentage of sales, is frequently required. 1) By treating target income as an additional fixed cost, CVP analysis can be applied. Target income in units volume = Fixed costs + Target operating income UCM 2) EXAMPLE: The manufacturer from the previous example with the $0.40 contribution margin per unit wants to find out how many units must be sold to generate $25,000 of operating income. Target unit volume = (Fixed costs + Target operating income) UCM = ($10,000 + $25,000) $0.40 = $35,000 $0.40 = 87,500 units b. Other target income situations call for the application of the standard formula for operating income. Operating income = Sales Variable costs Fixed costs 1) EXAMPLE: If units are sold at $6.00 and variable costs are $2.00, how many units must be sold to realize operating income of 15% ($ = $.90 per unit) before taxes, given fixed costs of $37,500? 2. Target Net Income Operating income = Sales Variable costs Fixed costs $0.90 Q = ($6.00 Q) ($2.00 Q) $37,500 $3.10 Q = $37,500 Q = 12,097 units a) Selling 12,097 units results in $72,582 of revenues. Variable costs are $24,194, and operating income is $10,888 ($72,582 15%). The proof is that variable costs of $24,194, plus fixed costs of $37,500, plus operating income of $10,888, equals $72,582 of sales. a. A variation of this problem asks for net income (an after-tax amount) instead of operating income (a pretax amount). Target income in units volume = Fixed costs + [Target net income (1.0 tax rate)] UCM 1) EXAMPLE: The manufacturer wants to generate $30,000 of net income. The effective tax rate is 40%. Target unit volume = {Fixed costs + [Target net income (1.0.40)]} UCM = [$10,000 + ($30,000.60)] $.40 = 150,000 units
5 Page 5 of 5 Study Unit 10 Investment Decisions Page 309, Subunit 10.1, 6.a.Example: This update provides more information on the tax value and residual value of the old equipment in the example. EXAMPLE A company is determining the relevant cash flows for a potential capital project. The company has a 40% tax rate. 1) Net initial investment: a) The project will require an initial outlay of $500,000 for new equipment. b) The company expects to commit $12,000 of working capital for the duration of the project in the form of increased accounts receivable and inventories. c) Calculating the after-tax proceeds from disposal of the existing equipment is a two-step process. i) First, the tax gain or loss is determined. Disposal value $ 5,000 Less: Tax value (20,000) Tax-basis loss on disposal $(15,000) ii) The after-tax effect on cash can then be calculated. Disposal value $ 5,000 Add: Tax savings on loss ($15,000.40) 6,000 After-tax cash inflow from disposal $11,000 d) The cash outflow required for this project s net initial investment is therefore $(501,000) [$(500,000) + $(12,000) + $11,000]. 2) Annual net cash flows: a) The project is expected to generate $100,000 annually from ongoing operations. i) However, 40% of this will have to be paid out in the form of income taxes. Annual cash collections $100,000 Less: Income tax expense ($100,000 x.40) (40,000) After-tax cash inflow from operations $ 60,000 b) The project is slated to last 8 years. i) The new equipment is projected to have a salvage value of $50,000 and will generate $62,500 per year in depreciation charges ($500,000 8). NOTE: On the CMA exam, salvage value is never subtracted when calculating the depreciable base for tax purposes. ii) The old equipment has 4 years of service life remaining. iii) Unlike the income from operations, the higher depreciation charges will generate a tax savings. This is referred to as the depreciation tax shield. iv) Since the carrying value of the old equipment is $20,000 with no residual value, tthe tax savings generated by the higher depreciation for the first 4 years is $23,000 [($62,500 $5,000).40] and for the last 4 years is $25,000 [($62,500 $0).40]. c) The annual net cash inflow from the project is thus $83,000 ($60,000 + $23,000) for the first 4 years and $85,000 ($60,000 + $25,000) for the last 4 years. 3) Project termination cash flows: a) Proceeds of $50,000 are expected from disposal of the new equipment at the end of the project. i) First, the tax gain or loss is determined. Disposal value $50,000 Less: Tax basis 0 Tax-basis gain on disposal $50,000 ii) The after-tax effect on cash can then be calculated. Tax basis gain on disposal $50,000 Less: Tax liability on gain ($50,000.40) (20,000) After-tax cash inflow from disposal $30,000 b) Once the project is over, the company will recover the $12,000 of working capital it committed to the project. c) The net cash inflow upon project termination is therefore $42,000 ($30,000 + $12,000).
CMA 2010 Support Package
CMA 2010 Support Package Ratio Definitions CMA EXAM RATIO DEFINITIONS Abbreviations EBIT = Earnings before interest and taxes EBITDA = Earnings before interest, taxes, depreciation and amortization EBT
More informationUNDERSTANDING THE INCOME STATEMENTS
UNDERSTANDING THE INCOME STATEMENTS 1 IS = Income Statement R = Revenue E = Expenses FV = Fair Value SL = Straight-Line AFS = Available For Sale Securities I.S is sometimes referred to as statement of
More informationFAQ: Financial Statements
Question 1: What is the correct order in which financial reports must be created? Answer 1: The income statement is created first, then the owners' equity statement, and finally the balance sheet. This
More informationFinancial Statement Analysis
14-1 Chapter 14 Financial Statement Analysis 14-2 Learning Objectives After studying this chapter, you should be able to: 1. Discuss the need for comparative analysis. 2. Identify the tools of financial
More informationGleim CMA Review Updates to Part Edition, 1st Printing July 2018
Page 1 of 5 Gleim CMA Review Updates to Part 1 2018 Edition, 1st Printing July 2018 NOTE: Text that should be deleted is displayed with a line through it. New text is shown with a blue background. Study
More informationBasic Elements of Balance Sheet Assets Liabilities
FINANCIAL ANALYSIS COURSE OUT LINE Course Objectives: This course is an advance subject which uses the out put of accounting records/data. The outline of this course is basthink about the firm.ed on the
More informationAdvanced Valuation Methods. Analyzing Historical Performance. Financial Analysis
1 Advanced Valuation Methods Analyzing Historical Performance Financial Analysis Goal Assess performance of a firm in the context of shareholder value versus competitive advantage Productivity of employed
More informationGleim CPA Review Updates to Business 2011 Edition, 1st Printing March 10, 2011
Page 1 of 6 Gleim CPA Review Updates to Business 2011 Edition, 1st Printing March 10, 2011 NOTE: Text that should be deleted from the outline is displayed with a line through the text. New text is shown
More informationCFA-Level-I. Financial. Chartered Financial Analyst Level I (CFA Level I)
Financial CFA-Level-I Chartered Financial Analyst Level I (CFA Level I) Download Full Version : http://killexams.com/pass4sure/exam-detail/cfa-level-i QUESTION: 566 For which of the following ways of manipulating
More informationChapter 4 The Income Statement, Comprehensive Income, and the Statement of Cash Flows
Chapter 4 The Income Statement, Comprehensive Income, and the Statement of Cash Flows QUESTIONS FOR REVIEW OF KEY TOPICS Question 4 1 The income statement is a change statement that reports transactions
More informationA Manager's Guide to Financial Analysis
A Manager's Guide to Financial Analysis A Manager's Guide to Financial Analysis Fifth Edition Steven D. Grossman Contents About This Course How to Take This Course Introduction ix xi xiii 1 Financial
More informationChapter 17. Page 1. Company Analysis. Learning Objectives. INVESTMENTS: Analysis and Management Second Canadian Edition
INVESTMENTS: Analysis and Management Second Canadian Edition W. Sean Cleary Charles P. Jones Chapter 17 Company Analysis Learning Objectives Define fundamental analysis at the company level. Explain the
More informationDUKE UNIVERSITY, FUQUA SCHOOL OF BUSINESS ACCOUNTG 512F: FUNDAMENTALS OF FINANCIAL ANALYSIS. Note on Financial Statements and Financial Ratios
DUKE UNIVERSITY, FUQUA SCHOOL OF BUSINESS ACCOUNTG 512F: FUNDAMENTALS OF FINANCIAL ANALYSIS Note on Financial Statements and Financial Ratios I. Review of Financial Statements The Balance Sheet Financial
More informationCorporate Finance. Week 3 Financial Statement Analysis II
Corporate Finance 1-1 Week 3 Financial Statement Analysis II 1-1 Asset Efficiency or Turnover Measures 1-2 A first broad measure of efficiency is asset turnover: Sales Asset Turnover = Total Assets Fixed
More informationCIS March 2012 Exam Diet
CIS March 2012 Exam Diet Examination Paper 2.2: Corporate Finance Equity Valuation and Analysis Fixed Income Valuation and Analysis Level 2 Corporate Finance (1 13) 1. Which of the following statements
More informationCBF Exam Review. Income Statement. Disclosure of Items. Financial Statements Part 2. Tom Shimko, CCE
CBF Exam Review Financial Statements Part 2 Tom Shimko, CCE 1 Income Statement Represents estimates for revenues and costs using accrual accounting. Accrual and cash accounting differ Net income not equal
More informationSession 2, Sunday, April 2nd (1:30-5:00) v Association for Financial Professionals. All rights reserved. Session 3-1
Session 2, Sunday, April 2nd (1:30-5:00) v2.0 2014 Association for Financial Professionals. All rights reserved. Session 3-1 Chapters Covered Financial Accounting and Reporting: Part I, Domain B Chapter
More informationGleim Exam Questions and Explanations Updates to Financial Accounting 16-1 Edition, 1st Printing February 3, 2012
Page 1 of 5 Gleim Exam Questions and Explanations Updates to Financial Accounting 16-1 Edition, 1st Printing February 3, 2012 NOTE: Text that should be deleted from the outline is displayed with a line
More informationGleim CMA Review Updates to Part 2 15 th Edition, 1st Printing April 25, 2011
Page 1 of 22 Gleim CMA Review Updates to Part 2 15 th Edition, 1st Printing April 25, 2011 NOTE: Text that should be deleted from the outline is displayed with a line through the text. New text is shown
More informationAFP Financial Planning & Analysis Learning System Session 2, Sunday, April 2nd (1:30-5:00)
AFP Financial Planning & Analysis Learning System Session 2, Sunday, April 2nd (1:30-5:00) Chapters Covered Financial Accounting and Reporting: Part I, Domain B Chapter 7 Ratio Analysis: Part I, Domain
More informationLevel 2: Study Session 09: Equity Investments: Industry and Company Analysis 160 questions.
Level 2: Study Session 09: Equity Investments: Industry and Company Analysis 160 questions. Introduction by the Author : Hi there, CFA fellows, here you are. You see, it doesn't need to be an expensive
More informationChapter 4 Income Statement 4-1
Chapter 4 Income Statement 1. The concept of income 2. Why income measure is important 3. How income is measured 4. The format of an income statement 5. The components of an income statement 6. The comprehensive
More information2/2/2009. Financial statement EARNING POWER AND IRREGULAR ITEMS. EARNING POWER AND IRREGULAR ITEMS continued. Chapter 14
Chapter 14 Financial statement analysis PowerPoint presentation by Anne Abraham University of Wollongong 2009 John Wiley & Sons Australia, Ltd EARNING POWER AND IRREGULAR ITEMS Earning power refers to
More informationCost-Volume-Profit Analysis
Cost-Volume-Profit Analysis 1 Cost-Volume-Profit Assumptions and Terminology 1 Changes in the level of revenues and costs arise only because of changes in the number of product (or service) units produced
More informationPart 2: Financial Decision Making. Practice Questions
Part 2: Financial Decision Making Practice Questions CMA Exam Support Practice Questions Part II 1. A Statement of Financial Position prepared in accordance with U.S. GAAP allows investors to assess all
More informationExcellence in. Management
Excellence in Financial Management Course 1: Evaluating Financial Performance Prepared by: Matt H. Evans, CPA, CMA, CFM Chapter 1: Return on Equity Why use ratios? It has been said that you must measure
More informationGleim CPA Review Updates to Financial 2012 Edition, 1st Printing January 27, 2012
Page 1 of 10 Gleim CPA Review Updates to Financial 2012 Edition, 1st Printing January 27, 2012 NOTE: Text that should be deleted from the outline is displayed with a line through the text. New text is
More informationFinancial Statement Analysis L6: Analyzing Operating Activities
6-1 Financial Statement Analysis L6: Analyzing Operating Activities 6-2 Content 1. Income Measurement 2. Non-Recurring Items 3. Revenue Recognition 4. Deferred Charges 5. Employee Benefits 6. Interest
More informationCSCA Reading List. Copyright 2017 Institute of Certified Management Accountants 1. Updated 8/25/17
CSCA Reading List 1 CSCA Reading List Certified in Strategy and Competitive Analysis Strategy Textbooks referenced in the Resource Guide (listed in alphabetical order): Note: Any ONE of these strategic
More informationFinance and Accounting for Interviews
This document was developed and written by Ian Lee. All information is meant for public use and purposed for the free transfer of knowledge to interested parties. Send questions and comments to ianlee@uclalumni.net
More informationSTUDY UNIT TWO FINANCIAL PERFORMANCE METRICS FINANCIAL RATIOS
STUDY UNIT TWO FINANCIAL PERFORMANCE METRICS FINANCIAL RATIOS 1 2.1 Liquidity Ratios.......................................................... 2 2.2 Leverage and Solvency Ratios..............................................
More informationCourse # Analysis of the Corporate Annual Report
Course # 171021 Analysis of the Corporate Annual Report based on the electronic.pdf file(s): Analysis of the Corporate Annual Report by: Dr. Jae K. Shim, Ph.D., 2014, 56 pages 5 CPE Credit Hours Accounting
More informationMARKET-BASED VALUATION: PRICE MULTIPLES
MARKET-BASED VALUATION: PRICE MULTIPLES Introduction Price multiples are ratios of a stock s market price to some measure of value per share. A price multiple summarizes in a single number a valuation
More informationModule 4. Analyzing and Interpreting Financial Statements
Module 4 Analyzing and Interpreting Financial Statements Analysis Structure Return on Equity Return on equity (ROE) is computed as: Operating Return (RNOA) The income statement reflects operating activities
More informationAnalyzing Operating Activities
Analyzing Operating Activities 6 CHAPTER McGraw-Hill/Irwin 2007, The McGraw-Hill Companies, All Rights Reserved Income Measurement Illustration Facts: Concepts Company with $100,000 in cash Buys condo
More information80 Solved MCQs of MGT201 Financial Management By
80 Solved MCQs of MGT201 Financial Management By http://vustudents.ning.com Question No: 1 ( Marks: 1 ) - Please choose one What is the long-run objective of financial management? Maximize earnings per
More informationFI3300: CORPORATE FINANCE. Problem Set 1 Chapters 1-5
FI3300: CORPORATE FINANCE Problem Set 1 Chapters 1-5 1. The goal of the firm is to. a. maximize profit b. minimize risk c. promote social good d. maximize shareholder wealth 2. Which of the following would
More informationChap002 Accrual Accounting and Net income determination
Chap002 Accrual Accounting and Net income determination True/False 1. Accrual accounting decouples measured earnings from operating cash inflows and outflows. Answer: True Learning Objective: 02-01 Topic:
More informationCFIN4 Chapter 2 Analysis of Financial Statements
1. The income statement measures the flow of funds into (i.e. revenue) and out of (i.e. expenses) the firm over a certain time period. It is always based on accounting data. Income statement 2. The balance
More informationC521 CHAPTER 13 & REVIEW FOR MIDTERM FINANCIAL ACCOUNTING EXAM
1 C521 CHAPTER 13 & REVIEW FOR MIDTERM FINANCIAL ACCOUNTING EXAM What have we done in the course? On a chapter by chapter basis, we primarily have examined specific transactions and the effect on financial
More informationReading & Understanding Financial Statements
Reading & Understanding Financial Statements A Guide to Financial Reporting Introduction Financial statements are an important management tool. When correctly prepared and properly interpreted, they contribute
More informationReading & Understanding Financial Statements. A Guide to Financial Reporting
Reading & Understanding Financial Statements A Guide to Financial Reporting Introduction Financial statements are an important management tool. When correctly prepared and properly interpreted, they contribute
More information4 Chapter 2 Chapter 2: Financial Statement and Cash Flow Analysis
4 Chapter 2 Chapter 2: Financial Statement and Cash Flow Analysis Answers to End of Chapter Questions 2-1. Financial statement analysis provides information about the company s financial health, and its
More informationHow Well Am I Doing? Financial Statement Analysis
How Well Am I Doing? Financial Statement Analysis Chapter 16 McGraw-Hill/Irwin Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Limitations of Financial Statement Analysis Differences
More informationUniversity of Palestine
Question 1: Multiple Choice: 1. A common measure of liquidity is a. Profit margin. b. Debt to equity. c. Return on assets. d. Accounts receivable turnover. 2. A high accounts receivable turnover ratio
More information2018 Edition CPA. Preparatory Program. Financial Accounting and Reporting. Sample Chapters: Earnings Per Share & State and Local Governments
2018 Edition CPA Preparatory Program Financial Accounting and Reporting Sample Chapters: Earnings Per Share & State and Local Governments Brian Hock, CMA, CIA and Lynn Roden, CMA HOCK international, LLC
More informationChapter 8: Fundamentals of Capital Budgeting
Chapter 8: Fundamentals of Capital Budgeting - 1 Chapter 8: Fundamentals of Capital Budgeting Note: Read the chapter then look at the following. Fundamental question: How do we determine the cash flows
More informationGraded Project. Financial Management
Graded Project Financial Management OBJECTIVE 1 PURPOSE 1 SCORING GUIDELINES 11 Contents iii Financial Management OBJECTIVE Demonstrate the ability to perform financial calculations and analysis related
More informationBAT 4M1 CPT Chapter 17 Notes
BAT 4M1 CPT Chapter 17 Notes Basics of Financial Statement Analysis Financial statement analysis involves evaluating a company s liquidity, solvency, and profitability Objective: to give capital providers
More informationCHAPTER 2 ANALYSIS OF FINANCIAL STATEMENTS
TRUE/FALSE CHAPTER 2 ANALYSIS OF FINANCIAL STATEMENTS 1. The income statement measures the flow of funds into (i.e. revenue) and out of (i.e. expenses) the firm over a certain time period. It is always
More informationRIGOS CMA REVIEW PART 1 CHAPTER 1 EXTERNAL FINANCIAL REPORTING DECISIONS
RIGOS CMA REVIEW PART 1 CHAPTER 1 EXTERNAL FINANCIAL REPORTING DECISIONS Course 5342 copyright 2019. The Rigos programs have educated over 100,000 professionals since 1980. 1-19 RIGOS CMA REVIEW PART
More informationaccounts receivable: dollar amount due from customers from sales made on open account.
GLOSSARY 1 above-the-line: income items related to core operations. Typically assumed to have high predictive power for future earnings. accrual accounting: system of accounting that purports to measure
More informationEarnings Per Share and Retained Earnings
CHAPTER 17 O BJECTIVES After reading this chapter you will be able to: 1 Compute basic earnings per share (EPS). 2 Understand how to compute the weighted average common shares for EPS. 3 Identify the potential
More informationRole of Financial Manager. Assessing Financial Performance. Analysis of Financial Statements. To create value, the financial manager should:
Role of Financial Manager To create value, the financial manager should: 1. Make sound investment decisions. 2. Make sound financing decisions. Importance of Assessing Financial Performance Assessing Financial
More informationFinance and Accounting elective / SBWL Controlling Wintersemester 2012/ 2013 Exam Value-based Management Feb. 21, 2013 EXAM
TECHNISCHE UNIVERSITÄT MÜNCHEN Fakultät für Wirtschaftswissenschaften Lehrstuhl für Betriebswirtschaftslehre - Controlling Prof. Dr. Gunther Friedl Finance and Accounting elective / SBWL Controlling Wintersemester
More informationChapter 17. Financial Statement Analysis
Chapter 17 Financial Statement Analysis 17-2 Topics Covered Financial Ratios DuPont System Using Financial ratios Measuring Company Performance The Role of Financial Ratios 17-3 Financial Ratios Five types
More informationMANAGEMENT INFORMATION
CERTIFICATE LEVEL EXAMINATION SAMPLE PAPER 1 (90 MINUTES) MANAGEMENT INFORMATION This assessment consists of ONE scenario based question worth 20 marks and 32 short questions each worth 2.5 marks. At least
More informationfinancial Analysis Annual Report
financial Analysis Annual Report 217 87 DuPont Analysis Increase in sales volume by 16% coupled with increasing price trend during the year resulted in higher sales and profits due to which EBIT margin
More informationMGT201 Financial Management All Subjective and Objective Solved Midterm Papers for preparation of Midterm Exam2012 Question No: 1 ( Marks: 1 ) - Please choose one companies invest in projects with negative
More informationINTERMEDIATE ACCOUNTING
Chapter 16 Retained Earnings and Earnings Per Share INTERMEDIATE ACCOUNTING whole or in part. Objectives 1. Explain the accounting and reporting for different types of dividends. 2. Discuss the accounting
More informationUnderstanding Financial Management: A Practical Guide Problems and Answers
Understanding Financial Management: A Practical Guide Problems and Answers Chapter 3 Interpreting Financial Ratios 3.2 Liquidity Ratios 1. Ink Inc. has had a stable current ratio over the past three years
More informationFinance 303 Financial Management Review Notes for Final. Chapters 11&12
Finance 303 Financial Management Review Notes for Final Chapters 11&12 Capital budgeting Project classifications Capital budgeting techniques (5 approaches, concepts and calculations) Cash flow estimation
More informationFundamentals of Corporate Finance, 2e (Berk) Chapter 2 Introduction to Financial Statement Analysis. 2.1 Firms' Disclosure of Financial Information
Fundamentals of Corporate Finance, 2e (Berk) Chapter 2 Introduction to Financial Statement Analysis 2.1 Firms' Disclosure of Financial Information 1) In the United States, publicly traded companies can
More informationChapter 3: Accounting and Finance
FIN 301 Class Notes Chapter 3: Accounting and Finance INTRODUCTION Accounting Function: Gathering, processing, and reporting data. End result is a set of four financial statements 1- Balance sheet 2-Income
More informationFull file at
Chapter 03 1. Projected future financial statements are called: A. plug statements. B. pro forma statements. C. reconciled statements. D. aggregated statements. E. comparative statements. 2. The extended
More informationAccounting Building Business Skills. Learning Objectives: Learning Objectives: Paul D. Kimmel. Chapter Eleven: Financial Statement Analysis
Accounting Building Business Skills Paul D. Kimmel Chapter Eleven: Financial Statement Analysis PowerPoint presentation by Kate Wynn-Williams University of Otago, Dunedin 2003 John Wiley & Sons Australia,
More informationStudy Session 8 Sample Notes
2 Study Session 8 2. "Dilutive Securities and Earnings per Share" Learning Outcomes Your learning objectives for this lesson are to be able to: a) Differentiate between simple and complex capital structures
More informationGleim CPA Review Updates to Financial 2011 Edition, 1st Printing August 22, 2011
Page 1 of 8 Gleim CPA Review Updates to Financial 2011 Edition, 1st Printing August 22, 2011 NOTE: Text that should be deleted from the outline is displayed with a line through the text. New text is shown
More informationWEEK 10 Analysis of Financial Statements
WEEK 10 Analysis of Financial Statements Learning Objectives 1. Organize a systematic financial statements analysis using common-size financial statements and ratio analysis. 2. Recognize the potential
More informationCHAPTER 4. Income Statement and Related Information 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 32, 35 12, 13, 14, 23, 25 12, 14, 15, 16, 19, 20
CHAPTER 4 Income Statement and Related Information ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Income measurement concepts. 1,
More informationFinancial Concepts and Tools for Managers
Financial Concepts and Tools for Managers Course Description Finance involves obtaining, using, and managing funds to achieve the company s financial objectives (e.g., maximization of shareholder value).
More informationThe CVP graph shows the relationship between total revenues and total costs
Chapter 3: Cost - Volume - Profit (CVP) Analysis Q1: What is cost-volume-profit analysis, and how is it used for decision making? CVP Analysis CVP analysis looks at the relationship between selling prices,
More informationn Financial Statement Analysis n Dollar and Percentage Changes n Common Sized Statements n Ratio Analysis McGraw-Hill /Irwin McGraw-Hill /Irwin
14-1 Today s Agenda Management Accounting Lecture 3 (Chapter 14) Financial Statement Analysis Bangor University Transfer Abroad Programme n Financial Statement Analysis n Dollar and Percentage Changes
More informationAppendix: Financial Definitions. Basic Accounting Reports
Appendix: Financial Definitions Several standardized methods have been created to analyze business financial data. These numbers are easily computed from the standard reported accounting data. The various
More informationIslamic University of Gaza Advanced Financial Management Dr. Fares Abu Mouamer Final Exam Sat.30/1/ pm
Islamic University of Gaza Advanced Financial Management Dr. Fares Abu Mouamer Final Exam Sat.30/1/2008 3 pm 1. Which of the following statements is most correct? a. A risk averse investor will seek to
More informationCambridge International Advanced Subsidiary Level and Advanced Level 9706 Accounting June 2014 Principal Examiner Report for Teachers
Cambridge International Advanced Subsidiary Level and Advanced Level ACCOUNTING Paper 9706/11 Multiple Choice Question Number Key Question Number Key 1 C 16 B 2 B 17 D 3 C 18 C 4 C 19 A 5 B 20 A 6 C 21
More informationAICPA BEC. CPA Business Environment and Concepts. Download Full version :
AICPA BEC CPA Business Environment and Concepts Download Full version : http://killexams.com/pass4sure/exam-detail/bec QUESTION: 245 The imputed interest rate used in the residual income approach to performance
More informationSecurity Analysis. macroeconomic factors and industry level analysis
Security Analysis (Text reference: Chapter 14) discounted cash flow techniques price-earnings ratios other multiples example #1: U.S. retail stores more on price to book value multiples more on price to
More informationFraud in Financial Statements
Fraud in Financial Statements Course Instructions and Final Examination Fraud in Financial Statements Gerard M. Zack CPE Edition Distributed by The CPE Store www.cpestore.com 1-800-910-2755 The CPE Store
More informationPREVIEW OF CHAPTER Slide 4-2
4-1 PREVIEW OF CHAPTER 4 4-2 Intermediate Accounting IFRS 2nd Edition Kieso, Weygandt, and Warfield 4 Related Information Income Statement and LEARNING OBJECTIVES After studying this chapter, you should
More informationCAPITAL BUDGETING AND THE INVESTMENT DECISION
C H A P T E R 1 2 CAPITAL BUDGETING AND THE INVESTMENT DECISION I N T R O D U C T I O N This chapter begins by discussing some of the problems associated with capital asset decisions, such as the long
More informationHalf-Year Financial Report 2018 Half-year ending June 30, 2018
Half-Year Financial Report 2018 Half-year ending June 30, 2018 Europcar Mobility Group S.A. A French public limited company (société anonyme) with share capital of 161,030,883 Headquarters: 13 ter boulevard
More informationMANAGEMENT INFORMATION
CERTIFICATE LEVEL EXAMINATION SAMPLE PAPER 3 (90 MINUTES) MANAGEMENT INFORMATION This assessment consists of ONE scenario based question worth 20 marks and 32 short questions each worth 2.5 marks. At least
More informationFinacial Statement Fraud. Peter N Munachewa, CFE Risk Management Consultant
Finacial Statement Fraud Peter N Munachewa, CFE Risk Management Consultant What is FSF Falsification, alteration, or manipulation of material financial records, supporting documents, or business transactions
More informationBusiness Assignment 2 Solutions. 1. Consider the balance sheets and income statements for Sunrise, Inc. depicted in Table 1 and Table 2.
Business 2019 Assignment 2 Solutions 1. Consider the balance sheets and income statements for Sunrise, Inc. depicted in Table 1 and Table 2. (a) For year 2000, calculate Sunrise s cash flow from assets,
More informationProblem Set One. Name
MK602 Problem Set One Name The first part of the case, presented in Chapter 3 (pages 123-125), discussed the situation that Computron Industries was in after an expansion program. Thus far, sales have
More informationTHE CATHOLIC UNIVERSITY OF EASTERN AFRICA A. M. E. C. E. A
THE CATHOLIC UNIVERSITY OF EASTERN AFRICA A. M. E. C. E. A MAIN EXAMINATION P.O. Box 62157 00200 Nairobi - KENYA Telephone: 891601-6 Fax: 254-20-891084 E-mail:academics@cuea.edu JANUARY APRIL 2014 TRIMESTER
More informationLecture 4. Interpreting and using financial statements for valuation II. Financial ratio analysis
Lecture 4 Interpreting and using financial statements for valuation II Financial ratio analysis Agenda Use of financial ratios ROE decomposition Growth, risk, and, cash flow 2 What are financial ratios
More informationProf Albrecht s Notes Income Statement Intermediate Accounting 1
Prof Albrecht s Notes Intermediate Accounting 1 The income statement has been the most important of the required financial statements in the United States. This importance is revealed in several ways:
More informationChapter 2. Introduction to Financial Statement Analysis
Chapter 2 Introduction to Financial Statement Analysis 2-1. In a firm s annual report, five financial statements can be found: the balance sheet, the income statement, the statement of cash flows, the
More informationCHAPTER 2. Capital Structure and Debt Capacity. Balancing Operating / Business Risk and Financial Risk
CHAPTER 2 Capital Structure and Debt Capacity Balancing Operating / Business Risk and Financial Risk A company s capital structure is comprised of a combination of debt and equity that is used to fund
More informationFINANCIAL ANALYSIS TOOLS: DESCRIPTION CHAPTER 7 FINANCIAL ANALYSIS TECHNIQUES GRAPHICS: EXAMPLE GRAPHICS: EXAMPLE
Presenter s name Presenter s title dd Month yyyy CHAPTER 7 FINANCIAL ANALYSIS TECHNIQUES FINANCIAL ANALYSIS TOOLS: DESCRIPTION Graphics Regression Common-Size Analysis Financial Ratio Analysis Copyright
More informationHANDOUT FOR WEEK 3 UNDERSTANDING THE INCOME STATEMENT. (Profit and loss statement)
HANDOUT FOR WEEK 3 UNDERSTANDING THE INCOME STATEMENT Introduction (Profit and loss statement) The financial account system generates and important report that captures the financial performance of the
More informationUNIT 6 FINANCIAL STATEMENTS: ANALYSIS AND INTERPRETATION MODULE - 2
UNIT 6 FINANCIAL STATEMENTS: ANALYSIS AND INTERPRETATION MODULE - 2 UNIT 6 FINANCIAL STATEMENTS: ANALYSIS AND INTERPRETATION Financial Statements: Structure 6.0 Introduction 6.1 Unit Objectives 6.2 Relationship
More informationACC501 First Quiz of spring 2012 before midterm solved by Masood khan
ACC501 First Quiz of spring 2012 before midterm solved by Masood khan In 3 years you are to receive Rs. 5,000. If the interest rate were to suddenly decrease, the present value of that future amount to
More informationCHAPTER 19: FINANCIAL STATEMENT ANALYSIS
CHAPTER 19: FINANCIAL STATEMENT ANALYSIS 1. ROE Net profits/equity Net profits/sales Sales/Assets Assets/Equity Net profit margin Asset turnover Leverage ratio 5.5% 2.0 2.2 24.2% 2. ROA ROS ATO The only
More informationA. Huang Date of Exam December 20, 2011 Duration of Exam. Instructor. 2.5 hours Exam Type. Special Materials Additional Materials Allowed
Instructor A. Huang Date of Exam December 20, 2011 Duration of Exam 2.5 hours Exam Type Special Materials Additional Materials Allowed Calculator Marking Scheme: Question Score Question Score 1 /20 5 /9
More informationMaintaining Consistency in Multistage Valuation Models
Maintaining Consistency in Multistage Valuation Models by Larry C. Holland, PhD CFA University of Arkansas at Little Rock Little Rock, AR 72204-1099 Email: lcholland@ualr.edu Telephone: (501) 569-3042
More informationCHAPTER 13 RISK, COST OF CAPITAL, AND CAPITAL BUDGETING
CHAPTER 13 RISK, COST OF CAPITAL, AND CAPITAL BUDGETING Answers to Concepts Review and Critical Thinking Questions 1. No. The cost of capital depends on the risk of the project, not the source of the money.
More informationChapter 17 Financial Planning and Forecasting
Chapter 17 Financial Planning and Forecasting Companies base their operating plans on forecasted financial statements. The company must first forecast sales for the next few years. Then determine the assets
More information