# 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