L2 Integration of FSA Techniques Practice Quiz

The primary goal of financial statement analysis is to:

Amy Green, an analyst at a private equity firm, is performing a DuPont analysis of Blackbrick Co. The following table contains data she has collected:

Which of the following is most likely a cause for the upward trend in Blackbrick’s ROE over the three years?

Based on the following information alone, Company XYZ is most likely overallocating capital to which one of its three segments?

During an inflationary period, which of the following method of inventory valuation will a firm seeking to lower current tax liability select?

Company ABC has recently reduced the average useful life of their depreciable assets. Assuming everything else remains constant, which of the following will most likely occur?

Company XYZ currently shows minimum expected operating lease payments over the next three years of USD5 million, USD4 million and USD3 million respectively. The rate implicit in the lease contract is 5%. Which of the following adjustments are necessary to modify the balance sheet to include this off-balance sheet financing?

Which of the following is not an adjustment for off-balance sheet items?

The financial leverage ratio for Company ABC is 1.5. Due to a change in accounting standards, company ABC must now consolidate its qualified special purpose entity (QSPE). After consolidation ABC’s financial leverage ratio will most likely:

Company XYZ reported a net income of USD5 million in 2010. In reviewing the annual report, an analyst notices that XYZ booked an expense of USD1 million for cost of relocating its main office. Assuming a tax rate of 30%, what would normalized earnings be for 2010?