Cfa Examen

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Question 4 - #97935
Firebird Company reported the following financial information at the end of 2007:
| |in millions |
|Merchandise inventory |$240 |
|Minority interest |70 |
|Cash andequivalents |275 |
|Accounts receivable |1,150 |
|Accounts payable |225 |
|Property & equipment |2,160 |
|Accrued expenses|830 |
|Current portion of long-term debt |120 |
|Long-term debt |1,570 |
|Retained earnings |4,230 |


Calculate Firebird’s current assets and working capital.
| |Current assets|Working capital |


|A) |$1,665 million |
| |$420 million |
| | |
|B) |$1,735 million |
| |$490 million |
| | |
|C) |$1,665 million|
| |$490 million |
| | |


Your answer: A was incorrect. The correct answer was C)
|$1,665 million |$490 million |


Current assets are equal to $1,665 ($275 cash and equivalents + $1,150 accounts receivable + $240 inventory). Working capital (current assets minus currentliabilities) is equal to $490 ($1,665 current assets – $225 accounts payable – $830 accrued expenses – $120 current portion of long-term debt).
This question tested from Session 8, Reading 26, LOS d
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Question 7 - #97814
Which of the following statements about the earnings per share calculation are most accurate?
|A) |When calculating diluted EPS you must add the shares created from the conversionof the bonds to the denominator and |
| |the interest expense times the tax rate to the numerator. |
|B) |If the diluted EPS is less than the basic EPS, then the diluted EPS is said to be anti-dilutive. |
|C) |None of these choices are correct.|


Your answer: A was incorrect. The correct answer was C) None of these choices are correct.
Anti-dilutive is when dilutive EPS > basic EPS. When calculating diluted EPS, you must add the shares created from the conversion of the bonds to the denominator and the interest (1 – tax rate) to the numerator.
This question tested from Session 8, Reading 25, LOS h
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Question 11 -#98075
The Better Building Company has a contract to build a building for $100 million. The estimate of the cost of the project is $75 million. In the first year of the project, BB had costs of $30 million. The Better Building Company’s reported profit for the first year of the contract, using the percentage-of-completion method, is:
|A) |$0. |
|B) |$10 million. |
|C) |$20million. |


Your answer: A was incorrect. The correct answer was B) $10 million.
Reported profit (in millions) = ($30 / $75)($100 − 75) = $10.
This question tested from Session 8, Reading 25, LOS c
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Question 12 - #98060
Football Contractors, Inc., which reports under U.S. GAAP, has contracted to build a stadium for the City of Washburn. The contract price is $100 million and costs are...