sitemap_google
sitemap_baidu
CFA Forums
CFA学习工具:CFA在线词典、CFA知识库 免费学习,2014年CFA Level 1、2、3 视频课程
CFA学习考试交流H群 CFA学习考试交流H群 群号:289396175

 

美国大学资深教授、博导,留美金融硕士、博士团队,留美金融机构从业师资,为广大CFA考生提供课程
上一主题: Financial Reporting and Analysis【 Reading 26】Sample
下一主题: Financial Reporting and Analysis【 Reading 24】Sample
返回列表 发帖
民生多币种信用卡

Financial Reporting and Analysis【 Reading 25】Sample

Duster Corporation’s year-end income statement reported the following:

Operating income

$187,000


Results from discontinued operations:



Loss from segment operations



(net of $1,440 tax effect)

($2,160)



Gain on segment disposal



(net of $8,640 tax effect)

12,960

10,800


Gain on sale of equipment

3,400


Interest expense

12,400


Extraordinary loss



(net of $2,200 tax benefit)

3,300


Income tax expense

71,200


Calculate Duster’s income from continuing operations for the year.
A)
$103,500.
B)
$106,800.
C)
$114,300.



Income from continuing operations includes all revenues and expenses except discontinued operations and extraordinary items: $187,000 operating income + $3,400 gain on sale of equipment – $12,400 interest expense – $71,200 income tax expense = $106,800.

Galaxy Company recognized a restructuring charge in its year-end income statement. Similar restructuring charges have occurred in the past. In addition, Galaxy recognized an extraordinary loss. Galaxy uses the term “operational earnings” when discussing its financial results. According to Galaxy, “operational earnings” excludes special nonrecurring transactions such as restructuring charges, discontinued operations, and extraordinary items. Should the restructuring charge and extraordinary loss be included or excluded from “operational earnings” for analytical purposes?
A)
One is included.
B)
Both are included.
C)
Both are excluded.



The restructuring charge does not appear to be nonrecurring; thus, it should be included in “operational earnings.” By definition, an extraordinary loss is unusual in nature and infrequent in occurrence. Therefore, the extraordinary loss should be excluded from “operational earnings.”

TOP

Which of the following statements about financial disclosures are correct or incorrect?

Statement #1:

Transitory earnings are usually more important to investors than permanent earnings.

Statement #2:
Pro-forma earnings are usually prepared in accordance with generally accepted accounting principles.
A)
Both are incorrect.
B)
Only statement #1 is incorrect.
C)
Only statement #2 is incorrect.



Statement #1 is incorrect. Investors are usually more interested in permanent earnings. Statement #2 is incorrect. Pro-forma earnings are not prepared in accordance with generally accepted accounting principles because they may exclude certain transactions. This is why it is important for an analyst to understand the disclosures

TOP

As compared to an operating lease, which of the following best describes the impact of a finance lease on earnings before interest and taxes (EBIT) and operating cash flow (OCF) according to U.S. generally accepted accounting principles?
EBITOCF
A)
HigherHigher
B)
LowerHigher
C)
HigherLower



With an operating lease, rent expense is included in EBIT. In a finance lease, rent expense is replaced by depreciation expense and interest expense. Since EBIT is calculated before interest and taxes, EBIT is higher with a finance lease. In an operating lease, the rent payment is included in operating cash flow. With a finance lease, the rent payment is replaced by principal and interest. Since principal payments are considered financing activities, operating cash flow is higher with a finance lease.

TOP

Which of the following statements about operating income and operating cash flow are correct or incorrect?

Statement #1:

If operating income is growing faster than operating cash flow over the long-term, the firm may be recognizing revenue too soon or delaying the recognition of expense.

Statement #2:
Operating cash flow exceeding operating income is sustainable over the long-term.
A)
Only one is correct.
B)
Both are correct.
C)
Both are incorrect.



Statement #1 is correct. If operating income and operating cash flow are growing at different rates over the long-term, the firm may be engaging in earnings manipulation. Statement #2 is incorrect. Over the long-term, operating cash flow will eventually decline without the support of operating income.

TOP

Which of the following statements about operating income and operating cash flow is most accurate?
A)
Operating income is more reliable than operating cash flow because of the judgments and estimates involved with accrual accounting.
B)
Operating income is confirmed by operating cash flow when the growth rates of the two measures are relatively stable over time.
C)
Operating cash flow usually increases faster than operating income when the firm is growing.



When the growth rates of operating income and operating cash flow are stable over time, operating income is being confirmed by operating cash flow. Operating cash flow is more reliable than operating income. During growth, operating cash flow is usually lower than operating income as the firm uses cash to increase inventories and receivables.

TOP

Recently, Galaxy Corporation lowered its allowance for doubtful accounts by reducing bad debt expense from 2 percent of sales to 1 percent of sales. Ignoring taxes, what are the immediate effects on Galaxy’s operating income and operating cash flow?
Operating incomeOperating cash flow
A)
No effectNo effect
B)
HigherNo effect
C)
HigherLower



Lower bad debt expense will result in higher operating income. Operating cash flow is not affected until Galaxy actually collects the receivables.

TOP

What value is used in the balance sheet when reporting a derivative instrument used in a cash flow hedge and where are the unrealized gains and losses on the derivative instrument reported?
Balance sheetUnrealized gains and losses
A)
CostOther comprehensive income
B)
Fair valueIncome statement
C)
Fair valueOther comprehensive income



A derivative instrument used in a cash flow hedge is reported on the balance sheet at fair value and the unrealized gains and losses are recognized in the other comprehensive income

TOP

What value is used in the balance sheet when reporting a derivative instrument used in a cash flow hedge and where are the unrealized gains and losses on the derivative instrument reported?
Balance sheetUnrealized gains and losses
A)
CostOther comprehensive income
B)
Fair valueIncome statement
C)
Fair valueOther comprehensive income


A derivative instrument used in a cash flow hedge is reported on the balance sheet at fair value and the unrealized gains and losses are recognized in the other comprehensive income

TOP

Recently, Firebird Corporation purchased 1,000 shares of GTO Corporation for $50 per share. GTO is a non-dividend paying stock and Firebird expects to sell the investment in the near term. To hedge the investment, Firebird purchases put options and designates the options as a fair value hedge. Ignoring the premium paid for the options, what is the net effect on Firebird’s total assets and net income if GTO declines $5 per share at year-end?
Total assetsNet income
A)
No net effectNo net effect
B)
DecreaseNo net effect
C)
No net effectDecrease



Total assets do not change. The decrease in the value of the investment is exactly offset by the increase in value of the options. Net income is also unaffected. The unrealized loss on the investment is offset by the unrealized gain on the options.

TOP

返回列表
上一主题: Financial Reporting and Analysis【 Reading 26】Sample
下一主题: Financial Reporting and Analysis【 Reading 24】Sample