CFIN MBA Prep Questions with All Correct Answers
The flexibility step in a FRICTO analysis allows managers to consider financing alternative - Answer- in terms of predicted funding needs that would be required in rare, firm threatening situations
Breakeven EBIT calculations enable managers...
The flexibility step in a FRICTO analysis allows managers to consider financing
alternative - Answer- in terms of predicted funding needs that would be required in rare,
firm threatening situations
Breakeven EBIT calculations enable managers to assess - Answer- the point at which
EPS dilution is equal for two financing alternatives
A crucial step in income analysis is the determination of a financing decision's impact on
the dilution of the company's earnings - Answer- True
The income step should be more important than the flexibility step in influencing
managers' funding choices - Answer- False
A breakeven P/E calculation - Answer- requires an estimation of the market's reaction to
funding choices, is only relevant when a comparison can be made to the firm's historical
P/Es, requires prior EBIT analysis
Coverage Ratios - Answer- Represent an important method of quantifying the riskiness
of financing alternatives, can be calculated in terms of cash of earnings
A debt issue alleviates a managers' concern for the impact of a new financing decision
on control - Answer- True
Timing issues involve - Answer- Current and future financial needs, status of capital
markets at the time funding is needed
Unstable markets can cause managers to weigh one element of a FRICTO analysis
more heavily than another - Answer- True
Net income is a part of - Answer- cash flow from operating expenses
Investments by and distribution to owners for the period is reflected on the - Answer-
statement of retained earnigns
Depreciation is a part of - Answer- cash flow from operating acitivities
, Although the cash flow statement using the indirect method is useful, it does not show
net income for the period - Answer- False
The statement which records a firm's fin. position on a single day is called the income
statement - Answer- False
Matching refers to including all expenses incurred to realize the revenues reported -
Answer- True
The statement that shows all investments in the company and all the distributions during
a reporting period is called - Answer- statement of OE
Which of the following ratios is not used in the duPont formula? - Answer- Debt/Equity
Which of the following measures a firm's profitability and asset usage skill? - Answer-
Operating performance ratios
Depreciation is a noncash expense - Answer- true
Qualitative analysis is the first step in the development of pro forma statements -
Answer- True
Which of the following is a qualitative factor of the company - Answer- fixed costs,
product users, marketing strategies
Vertical analysis is useful in projecting financial statements because it allows you to
project items relative to a benchmark - Answer- True
Which of the following is a qualitative factor of the industry? - Answer- General eco
conditions, fixed costs, variable costs
In projecting statements, the analyst makes judgments about the firm's... - Answer-
working capital policies, cash reserves, capital expenditures
The single most significant item in a financial projection is - Answer- sales
One of the qualitative factors that impacts the industry is an industry maturity and profit
trends - Answer- True
Some of the qualitative factors that are company specific include - Answer- current
management and age of facilities
Which of the accounts listed below varies with sales - Answer- accounts receiv, cost of
goods sold
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