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

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