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# MGMT S 2600 Midterm Exam Study Guide FINAL

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• Published : July 26, 2015

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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
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
\$ 1,728.5
\$ 1,248.0

2010
\$1,419.4
\$ 948.3

Calculate year-over-year increase in Net earnings, in percentage terms. A) 22%
B) 32%
C) 72%
D) 67%
E) None of the above
Rationale: During the year, Net earnings increased compared to the prior year. This increase is calculated as (\$1,248.0 – \$948.3) / \$948.3 = 32%.

HARVARD UNIVERSITY EXTENSION SCHOOL
MGMT S-2600: FINANCIAL STATEMENT ANALYSIS
STUDY GUIDE FOR MIDTERM EXAM
3). The Goodyear Tire & Rubber Company’s December 31, 2011, financial statements reported the following (in millions).
Cash December 31, 2011
Cash from operating activities
Cash from investing activities
Cash from financing activities

\$ 2,772
773
(902)
896

What did Goodyear report for Cash on its December 31, 2010 balance sheet? A) \$2,772 million
B) \$3,539 million
C) \$767 million
D) \$2,005 million
E) None of the above
Rationale: Cash, beginning of year + Cash from operating activities + Cash from investing activities + Cash from financing activities = Cash at end of year Cash, beginning of year + \$773 – \$902 + \$896 = \$2,772. Cash, beginning of year = \$2,005

4). Sales for the year = \$108,229, Net Income for the year= \$13,144, Income from equity investments = \$3,309, and average Equity during the year = \$47,556. Return on equity (ROE) for the year is: A) 12.1%

B) 27.6%
C) 43.9%
D) 227.6%
E) There is not enough information to answer the question.
Rationale: Return on equity = Net income / Average Equity = \$13,144 / \$47,556 = 27.6%.

5). Sales for the year = \$82,229, Net Income for the year= 8,186, and average Assets during the year = \$52,445. Return on Assets (ROA) for the year is:
A) 63.8%
B) 10.0%
C) 15.6%
D) There is not enough information to calculate ROA.
E) None of the above
Rationale: ROA = Net Income /Average assets. Therefore ROA equals \$8,186 / \$52,445 = 15.6%.

HARVARD UNIVERSITY EXTENSION SCHOOL
MGMT S-2600: FINANCIAL STATEMENT ANALYSIS
STUDY GUIDE FOR MIDTERM EXAM
6). During 2010, Skechers U.S.A., Inc. had Sales of \$2,006.9 million, Gross profit of \$911.9 million and Selling, general, and administrative expenses of \$719.7 million. What was Skechers’ Cost of sales for 2010?

A) \$ 375.3 million
B) \$1,095.0 million
C) \$ 192.2 million
D) \$2,918.8 million
E) There is not enough information to calculate the amount.