1. Which of the following statements is incorrect?

A.Common-size financial statements allow analysts to compare different sized companies.

B.Common-size financial statements allow analysts to identify changes within a company over time.

C.Common-size income statements have all items expressed as a percentage of net income.

D.Common-size balance sheets have all items expressed as a percentage of total assets.

2. When delivering a analytical presentation, which of the following is least important?

A.Making certain that the balance sheet balances and the financials are properly articulated.

B.Having quality assumptions and being able to support those assumptions.

C.Making certain that all numbers are accurate to the nth degree.

D.Spell checking and proofing your work to ensure a professional presentation.

3. Which of the following in NOT an accurate statement?

A.Enterprise Value is the value of the operating business.

B.Enterprise Value equals operating assets minus operating liabilities.

C.Operating assets are usually all assets except for cash and investments.

D.Operating liabilities are usually all liabilities except for debt & debt-like liabilities.

E.Cash is always treated as an operating asset and is added to debt to get a net debt amount.

4. Let's say that we're creating projections for a company, and in its historical filings Depreciation & Amortization and Stock-Based Compensation are NOT listed as separate items on its income statement. Which income statement line items might INCLUDE these figures, and how should we project these items in future years?

A.They may show up in either operating expenses or COGS, or in both; it's better to break them out as separate line items by modifying the historical statements and then project them separately going forward.

B.They always show up exclusively in operating expenses; you only need them for the cash flow statement so you don't need to break them out separately in income statement projections.

C.They almost always show up exclusively in COGS; you should break them out as separate line items and project them separately going forward.

D.If they're not listed on the income statement, the company does not have significant expenses in either category so we don't need to doanything.

5. Which of the following ratios is not generally considered to be helpful in assessing short-term liquidity?

A.Cash ratio

B.Times interest earned

C.Current ratio

D.Acid test ratio

6. Market beta is a statistical coefficient that reflects a company's historical stock price volatility relative to:

A.All securities in the market.

B.All firms of comparable market value.

C.All industry competitors in the world.

D.Risk-free government bonds.

7. What part of an income statement is the firm's profit from core businesses?

A.Income after interest but before taxes

B.Gross profit

C.Net income

D.Operating profit

8. A common size income statement would typically be prepared by dividing:

A.all items on income statement in Year t by net income in Year t-1.

B.all items on income statement in Year t by their corresponding value in Year t-1.

C.all items on income statement in Year t by sales in Year t.

D.all items on income statement in Year t by their corresponding balance sheet accounts in Year t.