1. Which of the following parties consistently review the financial statements of a company (check all...
1. Which of the following parties consistently review the financial statements of a company (check all that apply)
A. Shareholders
B. Auditors
C. Board of Directors
D. Financial Analysts
E. Rating Agencies
True or False?
6. When cost of debt is very cheap you should borrow as much capital as you can.
7. The "health" of the Balance sheet is what credit markets are focusing on.
8. Revenues and Profits are reflected on the Income Statement and thus they are of interest to Equity Analysts.
9. Adding leverage (debt) on the balance sheet does not impact your cost of funding.
10. Bank Deposits are the cheapest assets a bank can hold.
Homework Answers
The different parties who reviews financial statements are auditors, financial analyst and rating agencies.
The statements 6,8,10 are true while 7&9 are false.
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1. Which of the following parties consistently review the
financial statements of a company (check all...
Ch 04, blueprint probs, analysis of financial statements. 4: Analysis of Financial Statements: Debt Management Ratios...
Ch 04, blueprint probs, analysis of financial statements. 4: Analysis of Financial Statements: Debt Management Ratios Debt management ratios measure the extent to which a firm uses financial leverage and the degree of safety afforded to (1)(creditors, analysts, shareholders)They include the: (1) Debt-to-capital ratio, (2) Times interest earned ratio (TIE), and (3) EBITDA coverage ratio. The first ratio analyzes debt by looking at the firm's (2)(cashflow statement, income statement, balance sheet), while the last two ratios analyze debt by looking...
24) Which of the statements below is TRUE regarding CAPITAL STRUCTURE? A) Capital structure deals with...
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Which of the following statements about the financial planning process is correct? The additional funds needed...
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1.Which of the following statements is TRUE: i) Internal audit’s role is to assess if financial...
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Which one of the following statements is NOT true? Select one: A. The need for funding does not end when a company goes public. B. Approval is obtained from the board of directors to issue securities. C. The lowest-cost source of external funds is often an open offer to the public. D. The investment bank decides how much money the company needs to raise and what type of security - such as debt, ordinary shares or preference shares - to...
Refer to the following financial statements and answer the questions: Answer the following questions: Determine which...
Refer to the following financial statements and answer the questions: Answer the following questions: Determine which items varied in constant proportion to sales between 20x6 and 20x7. Determine the rate of growth in sales that was achieved from year 20x6 to 20x7. What was the firm’s return on equity for 20x7? Can you calculate for 20x6? What was the firm’s external (additional) funding requirement determined to be for 20x? How was the funding obtained? (hint: compare the changes in debts...
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12.24 (LO 1, 2, 3) Comprehensive financial statement analysis Koester, Inc., states in its 2020 10-K...
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1. 2. 3. Which of the following statements is true about capital requirements? Regulators prefer higher...
1.
2.
3.
Which of the following statements is true about capital requirements? Regulators prefer higher capital requirements because it provides an additional cushion to absorb losses. O Bankers prefer higher capital because it is the least expensive source of financing. Higher capital requirements increase credit risk. Risk-based capital requirements allow banks ignore off-balance sheet commitments. Assume a bank has an ROA of 1.25%, plans to maintain a dividend ratio of 30%, plans to grow assets by 18%, and the...
24) Which of the statements below is TRUE regarding CAPITAL STRUCTURE? A) Capital structure deals with the liability-side of the balance sheet. B) According to the Static Theory of Capital Structure, the optimal capital structure is the one at which the company's weighted average cost of capital ("WACC") is at a maximum. C) Adding debt to the capital structure will always make shareholders worse off. D) Financial leverage is the degree to which a firm utilizes equity financing.
12.24 (LO 1, 2, 3) Comprehensive financial statement analysis Koester, Inc., states in its 2020 10-K filing with the SEC, “In October 2020, two major credit rating agencies changed Koester's long-term credit rating outlook to negative and one of the credit rating agencies reduced Koester's short-term credit rating." Koester's financial statements in $000) follow. Koester, Inc. Comparative Income Statement For the Year Ended December 31 2020 2019 2018 Sales revenue $5,179,016 $5,102,786 $4,960,100 Cost of goods sold 2,806,148 2,692,061 2,530,617...
12.24 (LO 1, 2, 3) Comprehensive financial statement analysis Koester, Inc., states in its 2020 10-K filing with the SEC, “In October 2020, two major credit rating agencies changed Koester's long-term credit rating outlook to negative and one of the credit rating agencies reduced Koester's short-term credit rating." Koester's financial statements (in $000) follow. Koester, Inc. Comparative Income Statement For the Year Ended December 31 2020 2019 Sales revenue $5,179,016 $5,102,786 Cost of goods sold 2,806,148 2,692,061 Gross profit 2,372,868...
1.
2.
3.
Which of the following statements is true about capital requirements? Regulators prefer higher capital requirements because it provides an additional cushion to absorb losses. O Bankers prefer higher capital because it is the least expensive source of financing. Higher capital requirements increase credit risk. Risk-based capital requirements allow banks ignore off-balance sheet commitments. Assume a bank has an ROA of 1.25%, plans to maintain a dividend ratio of 30%, plans to grow assets by 18%, and the...
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