The primary goal of financial statement analysis is to: A. document portfolio changes to comply with the Prudent Investor Rule. B. justify trading decisions to comply with the Code and Standards. C. facilitate an economic decision. 2.  Company XYZ currently shows minimum expected operating lease payments over the next three years of $5 million, $4… Read More

1. If the functional currency strengthens against the foreign currency, then which of the following transactions will incur a loss? A. Import purchase. B. Export sales. C. Both import purchase and export sales.   2. Analyst 1: Under the current rate method, the foreign currency translation gain or loss will appear on the parent firm’s income… Read More

1. Company ABC’s financial statements adhere to generally accepted accounting principles (GAAP). However, ABC understates earnings in periods when the company is performing well and overstates earnings in periods when the company is struggling. Based on this information ABC’s financial statements can be best categorized as: A. Non-GAAP compliant. B. GAAP compliant, but with earnings… Read More

1. Company A acquired 20% of the 1 million outstanding shares of company B on January 1. During the year, company B earned $2 per share and had a dividend payout ratio of 50%. As of December 31, company B shares were trading at a price of $10 per share. Under the equity method, the… Read More