Deck 6: Financial Analysis of a Hospitality and Tourism Organization

Question 1

What is financial statement analysis?

A) An analysis of the internal environment
B) An evaluation of the firms' sales performance
C) The process of evaluating a company's financial statements for financial and strategic decision-making purposes
D) A process of evaluating a company's accounting department strategies

Answer 1

C

Question 2

What are, the basic component(s) of financial analysis and financial assets that strategic leaders must be able to understand or identify?

A) Owners' Equity
B) Liabilities
C) Strengths and weaknesses
D) Statement of cash flows
E) All true/All of the above

Answer 2

E

Question 3

Identify the component(s) of the cash flow statement

A) Operating, Financing, and Investing activities
B) Input and output of goods
C) Fines, lawsuits, and invoices
D) Owners' Equity, Assets, and Liabilities

Answer 3

A

Question 4

What does the balance sheet consist of?

A) Input and output of goods
B) Fines, lawsuits, and invoices
C) Owners' Equity, Assets, and Liabilities
D) Operating, Financing, and Investing activities

Question 5

Select the formula that you would use to calculate Total Liabilities and Owners' Equity.

A) Current Assets + Fixed Assets = Total liabilities and Owners' Equity
B) Current Liabilities + Long term Liabilities = Total Liabilities and Owners' Equity
C) Owners' Equity + Long term Liabilities = Total Liabilities and Owners' Equity
D) Current Liabilities + Long Term Liabilities + Owners' Equity = Total Liabilities and Owners' Equity

Question 6

What is the minimal time period for an asset to be considered long-term asset?

A) Three years
B) One year
C) Five years
D) Six Months

Question 7

What is the report on operating results?

A) Balance sheet
B) Income statement
C) Statement of cash flows
D) Notes to financial statements

Question 8

What is a revenue?

A) The cost of producing goods or services
B) The inflow of assets or reduction of liabilities
C) An increase in assets or a decrease in liabilities

Question 9

What is an expense?

A) The cost of producing goods or services
B) The inflow of assets or reduction of liabilities
C) Earnings before Interest and Taxes
D) An increase in assets or a decrease in liabilities

Question 10

Select the equation for calculating operating income.

A) Current Liabilities + Long term Liabilities = Operating Income
B) Current Assets + Fixed Assets = Operating Income
C) Gross Profit - Total Operating Expenses = Operating Income
D) Assets + Liabilities = Operating Income

Question 11

Select the equation for ROE.

A) Net Profit / Total Assets
B) Net Profit / Invested Capital
C) Net Profit / Current Liabilities
D) Net Profit / Shareholders Equity

Question 12

If a company has an ACP of 14 how would this be calculated?

A) 360 / Account receivable turnover
B) 365/ Account receivable turnover
C) 180/ Account receivable turnover
D) 90/ Account receivable turnover

Question 13

Interest Coverage Ratio is considered a _______.

A) Leverage ratio
B) Activity ratio
C) Profitability ratio
D) Liquidity ratio

Question 14

What is an income from discontinued operations?

A) Operating income
B) Expenses
C) Revenues
D) Below the line Item

Question 15

Owners' equity consists of:

A) Retained Earnings and Owners Investments
B) Accounts Payable and Income Taxes
C) PP&E and Intangible assets
D) Accounts receivable and Inventory

Question 16

What financial statement does a company mainly use to understand the health of the firm?

A) Income Statement
B) Balance Sheet
C) Statement of Cash Flows
D) Statement of Changes in Equity

Question 17

The acid test ratio is used to identify:

A) The liquidity level of the firm to pay off claims of short-term creditors without selling its inventories.
B) It shows the solvency of the firm.
C) Measures how many dollars of profit the firm generates with each dollar of shareholders equity.
D) The portion of the firm's assets that are financed by debt.

Question 18

Long term debt is:

A) Deferred assets
B) Long term liability
C) Residual interest
D) Marketable Security

Question 19

The internal environment of a firm relates to their ______.

A) Resources and Capabilities
B) Competition within the market
C) General environment that they engage in
D) Policies and laws by governments

Question 20

Senior executives do not need to understand the balance sheet and the income statement, only financial and accounting departments need to have this understanding.

Question 21

The balance sheet is referred to as the statement of financial position and is prepared at the beginning of an accounting period.

Question 22

An asset is something of value the firm owns, and consists of current assets, fixed assets, and deferred assets.

Question 23

Land, machinery, equipment, and intellectual property are current assets.

Question 24

When revenues are greater than expenses for a fiscal period a profit incurs.

Question 25

The liquidity level of a firm to pay claims of short-term creditors without relying on selling its inventories can be identified using the ROIC ratio.

Question 26

Locate a 10-K financial statement from a H&T company. Review their "selected financial data" for three years. Identify attributes from the company's internal and external environment that may have impacted their revenues either positively or negatively. Explain your reasoning/logic for the for your analysis of the firms' environment.

Question 27

If the cost of goods sold is $1500 and their inventory of the product is 15. What is their inventory turn-days ratio? What does this answer mean and what type of firm would have inventory for this time-period?

Question 28

If a firms' debt to income ratio is 4 and their total debt is $250,000. What is their total equity? What does this ratio mean for the company? Is this a high or low risk company? Explain your reasoning.