Financial Statement Analysis & Valuation Test Bank | 2026 Edition | Comprehensive Exam Prep | 300+ Questions & Solutions

Test_BankFinancial_Reporting,Financial_Statement_Ana
lysis_and_Valuation
qO




MULTIPLE qOCHOICE



1. The qOtools qOfor qOstudying qOindustry qOeconomics qOdoes qOnot qOinclude:

a. Value qOchain qOanalysis

b. Classification qOusing qOPorter’s qOfive qOforces

c. Classification qOof qOcash qOflows

d. Economic qOattributes qOframework


ANS: C PTS: 1



2. Which qOof qOthe qOfollowing qOis qOa qOquestion qOan qOanalyst qOwould qOask qOwhen qOassessing qOthe qOquality qOof qOa
qOfirm’s qOfinancial qOstatements?



a. Are qOthe qOcompany’s qOproducts qOdesigned qOto qOmeet qOa qOspecific qOmarket qOsegment?

b. Has qOthe qOfirm qOintegrated qOforward qOinto qOretailing qOto qOfinal qOconsumers?

c. Is qOthe qOfirm qOdiversified qOacross qOseveral qOgeographical qOmarkets?

d. Do qOearnings qOinclude qOnonrecurring qOgains qOor qOlosses?


ANS: D PTS: 1



3. Which qOof qOthe qOfollowing qOeconomic qOcharacteristics qOis qOconsistent qOwith qOa qOgrocery qOstore qOchain?

a. Minimal qOcompetition

b. Extensive qOcompetition

c. High qOnet qOincome qOto qOsales

d. Differentiated qOproduct

, ANS: B PTS: 1



4. On qOa qOcommon qOsize qObasis, qOwhich qOof qOthe qOfollowing qOassets qOis qOnormally qOlargest qOfor qOan qOelectric qOutility?

a. Accounts qOreceivable

b. Inventory

c. Property, qOPlant qOand qOEquipment

d. Cash qOand qOMarketable qOSecurities


ANS: C PTS: 1



5. On qOa qOcommon qOsize qObasis, qOwhich qOof qOthe qOfollowing qOassets qOis qOnormally qOlargest qOfor qOa qOcommercial qObank?

a. Accounts qOand qONotes qOReceivable

b. Inventory

c. Property, qOPlant qOand qOEquipment

d. Cash qOand qOMarketable qOSecurities


ANS: A PTS: 1



6. Which qOof qOthe qOfollowing qOis qOnot qOone qOof qOPorter’s qOfive qOforces?

a. Buyer qOPower

b. Supplier qOPower

c. Threat qOof qORegulation

d. Threat qOof qOSubstitutes


ANS: C PTS: 1



7. When qOassessing qObuyer qOpower qOusing qOPorter’s qOfive qOforces, qOwhich qOof qOthe qOfollowing qOis qOnot
qOconsistent qOwith qOlow qObuyer qOpower?

, a. Brand qOloyalty

b. Control qOof qOdistribution qOchannel

c. Large qOnumber qOof qOsuppliers

d. Low qOprice


ANS: C PTS: 1



8. The qOsecond qOstep qOin qOfinancial qOstatement qOanalysis qOis qOto qOidentify qOthe qOcompany qOstrategy.
qOWhich qOof qOthe qOfollowing qOis qOa qOquestion qOan qOanalyst qOshould qOask qOwhen qOperforming qOa


qOstrategy qOanalysis?



a. Are qOindustry qOsales qOgrowing qOrapidly qOor qOslowly?

b. Do qOearnings qOinclude qOrevenues qOthat qOappear qOmismatched qOwith qOthe
qObusiness qOmodel qOemployed qOby qOthe qOfirm?



c. Does qOthe qOindustry qOinclude qOa qOlarge qOnumber qOof qOfirms qOselling qOsimilar qOproducts?

d. What qOis qOthe qOcompany’s qOdegree qOof qOgeographical qOdiversification?


ANS: D PTS: 1



9. The qOthird qOstep qOin qOfinancial qOstatement qOanalysis qOis qOto qOassess qOthe qOquality qOof qOthe qOfirm’s
qOfinancial qOstatements. qOWhich qOof qOthe qOfollowing qOis qOa qOquestion qOan qOanalyst qOshould qOask qOwhen


qOperforming qOthis qOstep?



a. Are qOindustry qOsales qOgrowing qOrapidly qOor qOslowly?

b. Do qOearnings qOinclude qOrevenues qOthat qOappear qOmismatched qOwith qOthe
qObusiness qOmodel qOemployed qOby qOthe qOfirm?



c. Does qOthe qOindustry qOinclude qOa qOlarge qOnumber qOof qOfirms qOselling qOsimilar qOproducts?

d. What qOis qOthe qOcompany’s qOdegree qOof qOgeographical qOdiversification?


ANS: B PTS: 1



10. An qOexample qOof qOan qOintangible qOasset qOis:

a. A qOpatent

, b. Land

c. Investment qOin qOanother qOcompany

d. Raw qOmaterial qOinventory


ANS: A PTS: 1



11. Which qOof qOthe qOfollowing qOwould qOnot qOappear qOas qOa qOliability qOon qOthe qObalance qOsheet?

a. A qOlabor qOcontract

b. A qOnote qOdue qOto qOa qObank

c. Salary qOdue qOemployees qOat qOyear-end

d. Accounts qOpayable


ANS: A PTS: 1



12. Which qOof qOthe qOfollowing qOassets qOwould qOappear qOon qOthe qObalance qOsheet qOat qOan qOamount qOgreatly
qObelow qOits qOfair qOmarket qOvalue?



a. Inventory

b. Marketable qOsecurities

c. Equipment

d. Brand qOname


ANS: D PTS: 1



13. The qOaccrual qObasis qOof qOaccounting qOrecognizes:

a. Revenue qOwhen qOcash qOis qOreceived qOfrom qOcustomers

b. Expenses qOwhen qOpaid

c. Revenue qOwhen qOall qOor qOa qOsubstantial qOportion qOis qOperformed

d. Revenue qOwhen qOcontracts qOare qOsigned