44 Free Test Bank for Corporate Finance 3rd Edition Berk 

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Which of the following is NOT a reason why cash flow may not equal net income?

•  A) Amortization is added in when calculating net income.
•  B) Changes in inventory will change cash flows but not income.
•  C) Capital expenditures are not recorded on the income statement.
•  D) Depreciation is deducted when calculating net income.

Cash is a:

•  A) long-term asset.
•  B) current asset.
•  C) current liability.
•  D) long-term liability.

Which of the following statements regarding net income transferred to retained earnings is correct?

•  A) Net income = net income transferred to retained earnings - dividends
•  B) Net income transferred to retain earnings = net income + dividends
•  C) Net income = net income transferred to retain earnings + dividends
•  D) Net income transferred to retain earnings - net income = dividends

Which of the following is NOT an operating expense?

•  A) Interest expense
•  B) Depreciation and amortization
•  C) Selling, general and administrative expenses
•  D) Research and development

If in 2009 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share, then Luther's Market-to-book ratio would be closest to:

•  A) 0.39
•  B) 0.76
•  C) 1.29
•  D) 2.57

In November 2009, Perrigo Co. (PRGO) had a share price of $39.20. They had 91.33 million shares outstanding, a market-to-book ratio of 3.76. In addition, PRGO had $845.01 million in outstanding debt, $163.82 million in net income, and cash of $257.09 million. Perrigo's market debt to equity ratio is closest to:

•  A) 0.24
•  B) 0.50
•  C) 0.75
•  D) 0.89

On the balance sheet, short-term debt appears:

•  A) in the Stockholders' Equity section.
•  B) in the Operating Expenses section.
•  C) in the Current Assets section.
•  D) in the Current Liabilities section.

In November 2009, Perrigo Co. (PRGO) had a share price of $39.20. They had 91.33 million shares outstanding, a market-to-book ratio of 3.76. In addition, PRGO had $845.01 million in outstanding debt, $163.82 million in net income, and cash of $257.09 million. Perrigo's price-earnings ratio (P/E) is closest to:

•  A) 15.96
•  B) 21.85
•  C) 29.77
•  D) 35.64

U.S. public companies are required to file their annual financial statements with the U.S. Securities and Exchange Commission on which form?

•  A) 10-A
•  B) 10-K
•  C) 10-Q
•  D) 10-SEC

Perrigo's book value of equity is closest to:

•  A) $952.16 million
•  B) $3,580.14 million
•  C) $4,168.06 million
•  D) $4,425.15 million

If in 2009 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share, then what is Luther's Enterprise Value?

•  A) -$63.3 million
•  B) $353.1 million
•  C) $389.7 million
•  D) $516.9 million

Gross profit is calculated as:

•  A) Total sales - cost of sales - selling, general and administrative expenses - depreciation and amortization
•  B) Total sales - cost of sales - selling, general and administrative expenses
•  C) Total sales - cost of sales
•  D) None of the above

The Sarbanes-Oxley Act (SOX) overhauled incentives and the independence in the auditing process by:

•  A) requiring the CEO and CFO to return bonuses or profits from the sale of stock that are later shown to be due to misstated financial reports.
•  B) imposing large compliance costs on small companies.
•  C) requiring auditing firms to have long-standing relationships with their clients and receive lucrative auditing and consulting fees from them.
•  D) putting strict limits on the amount of non-audit fees (consulting or otherwise) that an accounting firm can earn from a firm that it audits.

The third party who checks annual financial statements to ensure that they are prepared according to GAAP and verifies that the information reported is reliable is the:

•  A) NYSE Enforcement Board.
•  B) Accounting Standards Board.
•  C) Securities and Exchange Commission (SEC).
•  D) auditor.

In November 2009, Perrigo Co. (PRGO) had a share price of $39.20. They had 91.33 million shares outstanding, a market-to-book ratio of 3.76. In addition, PRGO had $845.01 million in outstanding debt, $163.82 million in net income, and cash of $257.09 million. The statement of financial performance is also known as the:

•  A) balance sheet.
•  B) income statement.
•  C) statement of cash flows.
•  D) statement of stockholder's equity.

In November 2009, Perrigo Co. (PRGO) had a share price of $39.20. They had 91.33 million shares outstanding, a market-to-book ratio of 3.76. In addition, PRGO had $845.01 million in outstanding debt, $163.82 million in net income, and cash of $257.09 million. Perrigo's earnings per share (EPS) is closest to:

•  A) $0.19
•  B) $1.79
•  C) $2.81
•  D) $3.76

Which of the following is NOT a section on the cash flow statement?

•  A) Income generating activities
•  B) Investing activities
•  C) Operating activities
•  D) Financing activities

The statement of financial position is also known as the:

•  A) balance sheet.
•  B) income statement.
•  C) statement of cash flows.
•  D) statement of stockholder's equity.

Perrigo's enterprise value is closest to:

•  A) $952.16 million
•  B) $3,580.14 million
•  C) $4,168.06 million
•  D) $4,425.15 million

In addition to the balance sheet, income statement, and the statement of cash flows, a firm's complete financial statements will include all of the following EXCEPT:

•  A) Management discussion and analysis
•  B) Notes to the financial statements
•  C) Securities and Exchange Commission's (SEC) commentary
•  D) Statement of stockholders' equity

In November 2009, Perrigo Co. (PRGO) had a share price of $39.20. They had 91.33 million shares outstanding, a market-to-book ratio of 3.76. In addition, PRGO had $845.01 million in outstanding debt, $163.82 million in net income, and cash of $257.09 million. Perrigo's market capitalization is closest to:

•  A) $952.16 million
•  B) $3,580.14 million
•  C) $4,168.06 million
•  D) $4,425.15 million