A firm's financial statements reveal the following data:
operating profit margin 41% interest expense ratio 4.2% debt-to-equity ratio 0.45 total asset turnover 1.6 tax rate 45%
The firm's ROE equals ________.
A. 28.91%
B. 48.97%
C. 19.68%
D. 33.23%
Which of the following methods is the best way of conducting a comparative financial statement analysis?
A. Comparing of a company's balance sheet to its income statement.
B. All of these methods are equally good.
C. Break-even analysis.
D. An index-number trend series analysis.
E. A cash flow forecast.
Regarding financial accounting for public companies, the role of the SEC as currently practiced is to
A. make rules and regulations regarding filings with the SEC but not to regulate annual or quarterly reports to shareholders.
B. develop and promulgate most generally accepted accounting principles.
C. make rules and regulations pertaining more to disclosure of financial information than to the establishment of accounting recognition and measurement principles.
D. none of these answers.
E. regulate financial disclosures for corporate, state, and municipal reporting.
Which of the following is/are true about pension plans?
I. In a defined benefit plan, the investment risks are borne by the employer.
II. In a defined contribution plan, the investment risks are borne by the employee.
III.
The employee has investment flexibility with defined contribution plan.
A.
I and II
B.
II only
C.
I, II and III
D.
I and III
On Jan 1, a firm had 700 stocks outstanding. On May 1, it issued 300 more shares. On October 1, it repurchased 100 shares. If the firm's net income was 12,000 and it paid a preferred dividend of 1,400, its reported EPS is ________.
A. 12
B. 10.6
C. 11.77
D. 12.1
Tasty Food, Inc.'s statements have overstated accounts payable by 400 and understated the accounts receivables by 225. Then, which of the following is/are true?
I. Its income is correctly stated.
II. Its income is overstated by 175.
III. Its current assets are overstated by 225.
IV.
Its operating cash flows are overstated by 175.
A.
II, III and IV
B.
I and III
C.
I and IV
D.
II and IV
A firm uses LIFO for inventory costing. The beginning inventory balance of the firm was 700. During the
period, it purchased inventory worth 320 and sold goods worth 270. The market value of the inventory at
the end of the period was 650.
The total inventory expense during this period was ________.
A. 370
B. 270
C. 320
D. 340
At the end of a fiscal period, any revenue that has been earned but not received should be credited to an appropriate:
A. expense account
B. revenue account
C. liability account
D. asset account
Which of the following are considered when applying generally accepted accounting principles.
A. When income is recognized as earned.
B. How assets are measured.
C. All of these answers are correct.
D. When expenses and losses accrue.
E. When liabilities are incurred.
A common size balance sheet shows all quantities as a percentage of ________ while an income statement uses ___________ as the base amount.
A. sales, assets
B. assets, sales
C. equity, sales
D. assets, equity
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