26.. 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. 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 do anything.

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

C. 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.

D. 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.

28.. Which of the following statements is incorrect?

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

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

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

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

29.. Which is not true when preparing the Statement of Cash Flows section of the forecasted model?

A. Purchases of investments and intangible assets will be reported as cash outflows from investing activities.

B. Dividend payments will be reported as cash outflows for financing activities.

C. Share buybacks will be reported as cash outflows for investing activities.

D. Issuance of stock and debt will be reported as cash inflows from financing activities.

43.. To calculate interest expense in the future, you should do which of the following?

A. Apply a current interest rate times the average debt balance over the course of the year.

B. Apply a weighted average interest rate times the beginning debt balance.

C. None of the answers listed are correct.

D. Apply a weighted average interest rate times the average debt balances for the year.

46.. What is the typical effect of a stock buyback and dividend declaration on shareholders' equity?

A. Total shareholders' equity will increase.

B. Shares outstanding and retained earnings will decrease.

C. The increase in shares outstanding will offset the decrease in retained earnings.

D. Shares outstanding and retained earnings will increase.