Accounting 318 Final || Solved Correctly.
Steps for analysis valuation correct answers Understanding the Business Environment and
Accounting Information, Adjusting and assessing financial information and accounting
information, Forecasting financial information, Using information for valuation
Who uses financial accounting information correct answers Managers/employees, analysts,
creditors and suppliers, shareholders/directors, customers, partners, regulators, tax agencies,
voters
Primary business activities correct answers Inbound Logistics (quality control, raw materials),
Operations (manufacturing, packaging), Outbound Logistics(dispatch, delivery), Marketing and
sales, Servicing (warranty, maintenance)
Support activities correct answers Firm infrastructure (legal, accounting), Human resource
management (recruitment, training), Technology/product development (R&D), Procurement
(supplier management, subcontracting)
Return on Assets disaggregation correct answers Net income/average assets = profit margin (net
income/sales) X Asset turnover (sales/average assets)
Return on Equity correct answers Net income/average stockholders equity, operating return +
non operating return
DuPont Model correct answers ROE=Net income/Stockholders equity= Profit Margin (Net
income/sales) X Asset Turnover (Sales/average total assets) X Financial Leverage (Average total
Assets/Average Stockholders equity)
Coverage Ratios correct answers Times interest earned (earnings before tax + interest expense/
interest expense), EBITDA coverage ratio (times interest earned + Depreciation + amortization
on top), Cash from operations to total debt (cash from operations/short-term debt +long term
debt), free operating cash flow to total debt (cash from operations - cap ex)
Steps for analysis valuation correct answers Understanding the Business Environment and
Accounting Information, Adjusting and assessing financial information and accounting
information, Forecasting financial information, Using information for valuation
Who uses financial accounting information correct answers Managers/employees, analysts,
creditors and suppliers, shareholders/directors, customers, partners, regulators, tax agencies,
voters
Primary business activities correct answers Inbound Logistics (quality control, raw materials),
Operations (manufacturing, packaging), Outbound Logistics(dispatch, delivery), Marketing and
sales, Servicing (warranty, maintenance)
Support activities correct answers Firm infrastructure (legal, accounting), Human resource
management (recruitment, training), Technology/product development (R&D), Procurement
(supplier management, subcontracting)
Return on Assets disaggregation correct answers Net income/average assets = profit margin (net
income/sales) X Asset turnover (sales/average assets)
Return on Equity correct answers Net income/average stockholders equity, operating return +
non operating return
DuPont Model correct answers ROE=Net income/Stockholders equity= Profit Margin (Net
income/sales) X Asset Turnover (Sales/average total assets) X Financial Leverage (Average total
Assets/Average Stockholders equity)
Coverage Ratios correct answers Times interest earned (earnings before tax + interest expense/
interest expense), EBITDA coverage ratio (times interest earned + Depreciation + amortization
on top), Cash from operations to total debt (cash from operations/short-term debt +long term
debt), free operating cash flow to total debt (cash from operations - cap ex)
