# MGMT S 2600 Midterm Exam Study Guide FINAL

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HARVARD UNIVERSITY EXTENSION SCHOOL
MGMT S-2600: FINANCIAL STATEMENT ANALYSIS
STUDY GUIDE FOR MIDTERM EXAM
1). On October 2, 2011, Starbucks Corporation reported, on its Form 10-K, the following (in millions): Total expenses
Operating income
Net earnings

2011
\$10,452.4
1,728.5
1,248.0

2010
\$9,759.1
1,419.4
948.3

What amount of revenues did Starbucks report for the year ending October 2, 2011?
A) \$10,452.4
B) \$ 8,723.9
C) \$11,700.4
D) \$12,180.9
E) None of the above
Answer: C
Rationale: Revenues – Total expenses = Net earnings. Revenues – \$10,452.4 = \$1,248.0.
Therefore, Revenues were \$11,700.4

2). On October 2, 2011, Starbucks Corporation reported, on its Form 10-K, the following (in millions): Operating income
Net earnings

2011
\$
…show more content…
What amount did the company report for cash from investing activities?
A) \$ 8,358 thousand cash inflow
B) \$106,194 thousand cash outflow
C) \$114,552 thousand cash outflow
D) \$114,552 thousand cash inflow
E) None of the above.
Answer: C
Rationale: Cash at end of year = Cash at start of year + Cash from operations + Cash from investing + Cash from financing. \$177,539 = \$283,733 + \$315,257 + Cash from investing +
\$(306,899). Cash from investing is an outflow of \$114,552.

HARVARD UNIVERSITY EXTENSION SCHOOL
MGMT S-2600: FINANCIAL STATEMENT ANALYSIS
STUDY GUIDE FOR MIDTERM EXAM
9). How would a sale of \$200 of inventory on credit affect the balance sheet if the cost of the inventory sold was \$80?
A) It would increase noncash assets by \$200 and increase equity by \$200
B) It would decrease noncash assets by \$80 and decrease equity by \$80
C) It would increase cash by \$200 and increase equity by \$200
D) Both A and B, above happen simultaneously
E) None of the above
Answer: D
Rationale: The sale on credit is an account receivable, a noncash asset that increases revenue and therefore increases equity (answer A). The sale also involves reducing inventory by \$80, a noncash asset, which is an expense and therefore a decrease to equity of \$80 (answer B).
Therefore both A and B are correct so the answer is D.

10).

Examine the financial