Which of the following might an analyst not want to eliminate from past earnings when using past earnings to forecast future earnings? Another term for earnings power is Adjustments for dilutive securities and the adjustment to weighted average number of shares outstanding presumes that the dilutive securities are converted to common shares Given the definition of basic EPS vs

1. Which of the following might an analyst not want to eliminate from past earnings when using past earnings to forecast future earnings?

revenue from the sale of inventory

2. Another term for earnings power is

sustainable earnings

3. Adjustments for dilutive securities and the adjustment to weighted average number of shares outstanding presumes that the dilutive securities are converted to common shares

at the beginning of the year.

4. Given the definition of basic EPS vs. diluted EPS, you would always expect that:

Diluted EPS will be lower only if there are other securities in the capital structure that can be converted into common stock.

5. The following summarizes days sales in receivables for four companies who are all in the same industry with identical annual sales levels. Company A = 80 days; Company B = 60 days; Company C = 40 days; Company D = 20 days. Which company is doing the WORST job of managing its receivables?

Company A

6. The profit margin for ROA indicates the ability of a firm to generate earnings for a particular level of

sales

7. Which of the following are better indicated by percentage change statements than common-size statements?

growth and decline

8. Adjusted ROA formula

(NI + Noncontrolling Interest + Int Exp*(1-T))/avg. TA

9. ROCE formula

Profit Margin for ROCE x Asset Turnover x Capital Structure Leverage

10. COGS/Sales can change because of

1. changes in raw material prices
2. changes in production efficacy
3. changes in final product price
4. shift from lower to higher margin products/markets or vice versa