FA Financial Reporting and Analysis 2

Question 1

What does EBITDA stand for?

Accepted Answer

Earnings Before Interest, Taxes, Depreciation, and Amortization

Answer

Earnings Before Income Tax, Depreciation, and Amortization

Answer

Equity Before Interest, Taxes, Depreciation, and Amortization

Answer

Earnings Before Investment, Taxes, Debt, and Amortization

Question 2

Which financial ratio indicates what percentage of each dollar of sales remains after all expenses are paid?

Accepted Answer

Net Profit Margin

Answer

Gross Profit Margin

Answer

Operating Margin

Answer

Return on Equity

Question 3

In horizontal analysis, what is being compared?

Accepted Answer

The same company's financial data across multiple periods

Answer

Different companies in the same industry

Answer

Line items as percentages of a base figure

Answer

Debt levels against equity

Question 4

Which section of the cash flow statement includes payments for property, plant, and equipment?

Accepted Answer

Investing Activities

Answer

Operating Activities

Answer

Financing Activities

Answer

Supplemental Disclosures

Question 5

A debt-to-equity ratio greater than 1 indicates that a company:

Accepted Answer

Has more debt than equity financing

Answer

Has more equity than debt financing

Answer

Is operating at a loss

Answer

Has no long-term liabilities

Question 6

Which accounting principle requires that revenues be recognized when earned, regardless of when cash is received?

Accepted Answer

Accrual Basis Principle

Answer

Matching Principle

Answer

Going Concern Principle

Answer

Conservatism Principle