CHAPTER 2

What is the purpose of financial statements for firms?

• To evaluate performance and communicate information

• To hide financial information from competitors

• To prepare tax returns

• To create marketing strategies

What are the types of financial statements mentioned?

• Balance sheet, income statement, cash flow statement

• Profit and loss statement, cash flow statement

• Income statement, tax return, balance sheet

• Balance sheet, income statement, marketing report

What does the balance sheet list?

• Assets and liabilities

• Revenues and expenses

• Market value and book value

• Shareholder equity and dividends

What is the difference between current assets and current liabilities?

• Net working capital

• Total assets

• Total liabilities

• Shareholder equity

What is the market-to-book ratio?

• Comparison of market capitalization to book value

• Total assets divided by total liabilities

• Net income divided by total revenue

• Total equity divided by total assets

What does the income statement list?

• Revenues and expenses

• Assets and liabilities

• Market value and book value

• Shareholder equity and dividends

What is EBITDA?

• Earnings before interest, taxes, depreciation, and amortization

• Earnings before interest and taxes

• Earnings before taxes and dividends

• Earnings before depreciation and amortization

What is EBITDA?

• Earnings before interest, taxes, depreciation and amortization

• Earnings before interest and taxes

• Earnings before taxes and depreciation

• Earnings before interest and amortization

What does the statement of cash flows determine?

• How much cash the firm has generated

• The firm's net income

• The firm's total assets

• The firm's liabilities

What are the three sections of the statement of cash flows?

• Operating, Investment, Financing

• Income, Expense, Profit

• Assets, Liabilities, Equity

• Revenue, Cost, Profit