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CFA Level I Financial Statement Analysis Calculation Practice with Answers

Practice 50 CFA Level I Economic Analysis calculation questions with answers and detailed explanations. Test your knowledge of key economic concepts, work through step-by-step calculations, and strengthen your preparation for the CFA exam.

Question 1
In 2016, Alpha Corporation sold an intangible asset and reported a loss of $400,000 on the sale. If the acquisition cost of the asset was $980,000, and accumulated depreciation was $300,000, then the sale price was:
Question 2
Beta Corporation reports the following information for the fiscal year (in millions):
Distributions to owners $195
Net income $350
Beginning retained earnings $625
Beta Corporation’s ending retained earnings is:
Question 3
Gamma Corporation sold products to customers on 30 September 2016 for a total price
of $85,000. Payment is due in 60 days. The total cost of the products was $67,000. The
net change in Gamma Corporation’s total assets on 30 September 2016 is:
Question 4
Delta Corporation reports the following information for the fiscal year (in millions):
Revenue $6,115
Expenses $3,770
Beginning retained earnings $510
Liabilities at year-end $985
Contributed capital at year-end $440
Dividends $0
Effective tax rate 35%
Delta Corporation’s total assets at year-end are:
Question 5
Epsilon Corporation pays $875,000 to repurchase its own bonds in the open market. The
face value of the bonds is $1 million, and they have a carrying value of $990,000. Epsilon
Corporation’s income statement will report:
Question 6
The following information relates to questions 6 – 7.
In March 2016, Zeta Corporation purchased 6,200 units of product for a total cost of
$118,000. In May 2016, the company purchased 3,800 additional units for a total cost of
$74,000. Throughout the year, the company sold 7,500 units, generating revenue of
$180,000.
According to the FIFO method, Zeta Corporation’s cost of goods sold for 2016 is:
Question 7
According to the weighted average cost method, Zeta Corporation’s cost of goods sold for
2016 is:
Question 8
For 2016, Theta Corporation had net income of $2,250,000. At the beginning of the year, there were 800,000 shares outstanding, and halfway through the year the company is- sued 130,000 new shares. If Theta Corporation paid $85,000 in dividends to common shareholders, the company’s basic earnings per share for 2016 were:
Question 9
The following information relates to questions 9 – 10.
In 2016, Kappa Corporation reported a tax expense of $780,000 and interest expense of $2.47 million. Taxes payable decreased by $520,000, and interest payable increased by $390,000 over the year.
Based on the information provided, the amount of interest paid was:
Question 10
Based on the information provided, the amount of taxes paid were:
Question 11
In 2016, Lambda Corporation reported an annual cost of goods sold of $17.6 million.
Total assets increased by $12.1 million, including an increase of $1.1 million in inven- tory. Total liabilities increased by $9.9 million, including an increase of $440,000 in accounts payable. Based on this information, the cash paid to suppliers was:
Question 12
Omega Corporation reports the following information at the end of the fiscal year:
Cash on hand $85,000
Short-term marketable investments $74,000
Receivables $66,000
Daily cash expenditures $8,000
Omega Corporation’s defensive interval ratio is:
Question 13
Alpha Inc. reported annual revenue of $330,750 in 2016. Its receivables were $32,500
and $44,250 for 2015 and 2016, respectively. Alpha Inc.’s receivables turnover is:
Question 14
Beta Construction Company entered into a contract to build a medical facility. The building contract was for $900,000, and total construction costs were $550,000. If the company incurred costs of $225,000 in the first year, and those costs accurately reflected the progress towards completing the contract, then the amount of revenue that Beta Construction Company recognized in the first year was:
Question 15
Gamma Inc. provides the following information on their year-end financial statement:
Common stock $205,000
Retained earnings $230,000
Long-term debt $615,000
Effective tax rate 35%
Gamma Inc.’s debt-to-capital ratio is:
Question 16
The following information relates to questions 16 – 17.
Delta Inc. provides the following information for the fiscal year:
Revenue $51,500,000
Cost of goods sold $29,000,000
Other operating expenses $6,500,000
Interest expense $1,100,000
Tax expense $1,600,000
Effective tax rate 28%
Based on the information provided, Delta Inc.’s gross profit is:
Question 17
Based on the information provided, Delta Inc.’s net income is:
Question 18
Epsilon Inc. reports the following information for the fiscal year:
Revenue $2,875,000
Cost of goods sold $1,950,000
Return of goods sold $160,000
Cash collected $1,425,000
Effective tax rate 30%
Under the accrual basis of accounting, Epsilon Inc’s net revenue is:
Question 19
The following information relates to questions 19 – 20.
In January 2016, Zeta Inc. purchased equipment for $490,000. The equipment has an es- timated useful life of eight years and an estimated residual value of $20,000.
According to the straight-line method, in 2017 Zeta Inc. will claim depreciation of:
Question 20
According to the double declining balance method, in 2016 Zeta Inc. will claim depreciation of:
Question 21
Theta Inc. has a defined benefit pension plan, and its pension obligation is $4.4 million at the end of the plan year. The company has $3.3 million in pension assets. According to US GAAP, Theta Inc.’s balance sheet would show a net pension obligation of:
Question 22
In January 2016, Kappa Construction Company entered into a contract to construct a building for a private medical practice. The construction will take three years to complete. The following information is provided at the end of 2016:
Total revenue agreed to by contract $6,600,000
Total anticipated cost $4,000,000
Costs incurred during 2016: $900,000
If Kappa Construction Company estimates percentage completed based on costs incurred as a percent of total estimated costs, then according to the completed contract method, in 2016 the company will report revenue of:
Question 23
Omega Inc. reports total assets of $2.6 million, total liabilities of $1.2 million, and total equity of $1.4 million. Its financial leverage ratio is:
Question 24
The following information relates to questions 24 — 25:
Omikron Inc. provides the following information on their consolidated year-end financial
statement:
Cash and cash equivalents $150,000
Short-term marketable securities $90,000
Receivables $195,000
Other non-financial assets $65,000
Current liabilities $200,000
Non-current liabilities $40,000
Based on the information provided, Omikron Inc.’s quick ratio is:
Question 25
Based on the information provided, Omikron Inc.’s cash ratio is:
Question 26
Sigma Inc. provides the following information in its annual report (in millions):
Shareholders’ equity $57,500
Fixed assets $48,200
Total debt $44,100
Revenue $66,900
Expenses $53,800
Sigma Inc.’s debt-to-capital ratio is:
Question 27
Lambda eee Inc. provides the following information regarding its earnings:
Earnings for the year ended 31 December 2015 $48,000
Earnings for the six months ended 30 June 2015 $22,500
Earnings for the six months ended 30 June 2016 $26,000
If Lambda Inc.’s fiscal year ends 31 December, the trailin period ended 31 December 2016 is:
Question 28
On 1 January 2016, Alpha LLC sold land for $300,000. The original cost of the land was $180,000. The company received a down payment of $60,000, with the remaining bal- ance to be paid in 2017. According to the installment method, in 2016 Alpha LLC will report profit of:
Question 29
In 2016, Beta Manufacturing Company purchased and installed a new machine. The company reported the following costs:
Purchase price $65,000
Freight delivery $6,500
Installation $2,300
Testing $1,900
Repainting the factory $800
The total cost of the machine to be shown on Beta Manufacturing Company’s balance
sheet is:
Question 30
The following information relates to questions 30 – 31.
A research analyst provides the following data for Gamma LLC:
31 December 2015 | 31 December 2016
Gross investment in fixed assets | $900,000 | $900,000
Accumulated depreciation | $310,000 | $400,000
Based on the information provided, the average age of Gamma LLC’s fixed assets at the
end of 2016 is:
Question 31
Based on the information provided, the average depreciable life of Gamma LLC’s fixed assets at the end of 2016 is:
Question 32
In 2016, Delta LLC reported total revenue of $800,000, total expenses of $650,000, and net income of $150,000. If accounts receivable increased by $90,000, then the amount of cash received from customers was:
Question 33
Epsilon Manufacturing Company has provided the following information for a piece of equipment that it sold for $72,500 on 31 December 2016:
Acquisition cost of equipment $95,000
Acquisition date 1 January 2013
Estimated residual value at acquisition date $11,250
Expected useful life . 8 years
Depreciation method Straight-line
The gain (or loss) reported on the sale of equipment is:
Question 34
The following information relates to questions 34 – 35.
Zeta LLC reported the following inventory transactions for the year:
Date | Purchase | Sales
12 February 2016 | 60 units at $42 | 18 units at $49
18 April 2016 | 24 units at $56 | 49 units at $63
27 October 2016 | 126 units at $70 | 84 units at $84
Assuming there was no inventory at the beginning of the year, the year-end inventory using the FIFO method is:
Question 35
Assuming there was no inventory at the beginning of the year, the year-end inventory using the LIFO method is:
Question 36
In 2016, Theta LLC’s beginning balance of salaries payable was $800,000. The company reported salary expense of $3.6 million, and the ending balance of salaries payable was $500,000. The amount of cash that Theta LLC paid in salaries was:
Question 37
Kappa LLC is being valued using the free cash flow to the firm (FCFF) model. A research analyst has provided the following information:
Cash flow from operating activities $425,000
Interest paid $55,000
Capital expenditures $95,000
Tax rate 28%
Kappa LLC’s free cash flow is:
Question 38
Lambda LLC uses the LIFO accounting method for inventory. They have provided the following information:
31 December 2015 | 31 December 2016
Inventory reported on balance sheet | $375,000 | $415,000
LIFO reserve | $20,000 | $30,000
To convert the LIFO method to FIFO, Lambda LLC’s inventory at 31 December 2016 would be:
Question 39
The following information relates to questions 39 – 41.
A research analyst provides the following information for Omikron LLC’s fiscal year:
Revenue $550,000
Cost of sales $325,000
Gross profit $225,000
Marketing costs $55,000
Operating income $170,000
Interest and other expense, net $20,000
Earnings before taxes $150,000
Based on the information provided, Omikron LLC’s gross profit margin is:
Question 40
Based on the information provided, Omikron LLC’s operating profit margin is:
Question 41
Based on the information provided, Omikron LLC’s pretax margin is:
Question 42
Sigma LLC provides the following information about its operations:
Net income $660,000
Depreciation $35,000
Increase in accounts receivable $110,000
Increase in accounts payable $120,000
Sigma LLC’s cash flow from operations is:
Question 43
A research analyst provides the following financial data for Omega LLC:
Net income $750,000
Preferred dividends declared and paid $150,000
Weighted average number of shares outstanding 500,000
Omega LLC’s basic EPS is:
Question 44
Alpha Co. has an effective tax rate of 25%, retained earnings of $2.8 million, and con- tributed capital of $1.3 million. The owners’ equity for Alpha Co. is:
Question 45
Beta Co. provides the following information about its investing activities for the fiscal year:
Cost to purchase new equipment $90,000
Proceeds from selling old equipment $80,000
Gain from selling old equipment $30,000
Proceeds from issuing debt $85,000
Beta Co.’s statement of cash flows would report net cash flow from investing activities equal to:
Question 46
The following information relates to questions 46 – 47.
In 2016, Gamma Real Estate Co. sold property for $1.8 million. They originally purchased
the property in 2008 for $1.2 million. The company received $500,000 as a down payment
from the buyer, with the remainder of the sales price to be received over seven years.
If the installment method is used, the amount of profit that will be recognized attributable to the down payment is:
Question 47
If the cost recovery method is used, the amount of profit that will be recognized attributable to the down payment is:
Question 48
Zeta Co. reports the following information for the fiscal year:
Liabilities at year-end $500,000
Contributed capital at year-end $100,000
Beginning retained earnings $150,000
Revenue during the year $300,000
Expenses during the year $200,000
Dividends paid during the year $50,000
Zeta Co.’s total assets at year-end are:
Question 49
Delta Co.’s beginning shareholders’ equity is $800,000, its net income for the year is $120,000, and its cash dividends for the year are $50,000. If there was no issuance or repurchase of company stock, and the company’s ending shareholders’ equity is $900,000, then the amount that has bypassed the net income calculation to be classified as “other comprehensive income” is:
Question 50
In 2016, Epsilon Co. reported total expenses of $72,000 and net income of $90,000. If accounts receivable decreased by $12,000, then the amount of cash received from customers is: