1.

Question 1

Which of the following ratios use de-levered net income? (check all that apply)

Asset Turnover

Return on Equity

Return on Sales

Financial Leverage

Return on Assets

5.

Question 5

Dogwell decides to pay its suppliers more quickly to take advantage of discounts and thus acquire its raw materials for a lower price. Dogwell makes no other changes (e.g., it buys the same volume of raw material). Which of the following ratios would be affected by this decision? (check all that apply)

SG&A-to-sales

Gross margin

Effective tax rate

Days payable

Days receivable

9.

Question 9

Which of the following is needed to produce pro forma financial statements? (check all that apply)

Common size balance sheet

Common size cash flow statement

Common size income statement

Sales forecasts

Twenty years of historical data

10.

Question 10

McDognals has sales of $100 million this year and a gross margin of 30%. Next year, sales are forecasted to grow 10% and the gross margin is forecasted to remain at 30%. What is McDognals' forecasted Cost of Goods Sold for next year?

$70 million

$7 million

$33 million

$77 million

$30 million

$3 million

1.

Question 1

Which of the following are possible motives for managers to manipulate their earnings lower (I.e., make reported earnings less than unmanaged earnings)?(check all that apply)

Unmanaged earnings would fall below security analysts' forecasts of earnings

Government is investigating potential monopolistic practices by the company because of its high levels of profitability

Congress is planning a vote on extending tax credits to company's industry due to its poor recent performance

A potential competitor is deciding whether to introduce new products to compete with the company's product line and will do so only if it thinks the company is making huge profits

The company is close to violating a debt covenant on its public bond issue because of low earnings

2.

Question 2

Which of the following actions would be examples of "real earnings management"? (check all that apply)

Reduce advertising spending in the current period

Cut spending on employee training this period

Reduce the expected percentage of this period's sales that will be uncollectible

Capitalize a higher percentage of cash costs during this period (i.e., spend the same in cash costs, but capitalize more of them as an asset this period)

Delay a new R&D program to the next period

6.

Question 6

Which of the following actions would increase a company's earnings during the period? (check all that apply)

Decrease the amortization period for capitalized costs

Capitalize a smaller percentage of cash costs

Increase the amortization period for capitalized costs

Capitalize a greater percentage of cash costs

8.

Question 8

Dalmatian Inc. had $50 of Net Income this year. It capitalized $530 in software development costs and recognized Amortization Expense for those costs of $180 during the year. Dalmatian's tax rate is 40%. What would Dalmatian's Net Income have been this year if it had expensed all software development costs immediately?

($160)

$400

$278

($300)

$140

10.

Question 10

Which of the following assets are subject to write-downs under the "lower-of-cost-or-market" accounting principle? (check all that apply)

Accounts Receivable

Cash

Buildings

Goodwill

Inventory