In 2007, the CFA Institute Centre for Financial Market Integrity

question 36

Multiple Choice

In 2007, the CFA Institute Centre for Financial Market Integrity proposed a new financial model to replace the traditional earnings number.Which of the following characteristics does the proposed statement of changes in net assets available to stockholders exclude?

• A)It recognizes all transactions and events that change net assets.
• B)Line items would be reported by the nature of the item.
• C)Line items would be reported by the function for which the resource is consumed.
• D)It includes the effects of all investing and financing activities.

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Definitions:

Days' Sales in Inventory

A financial metric that shows the average duration it takes for a company to turn its inventory into sales.

Car Dealerships

Businesses specialized in selling new or used cars, often also offering maintenance services and financing options.

Grocery Stores

Retail stores specializing in the sale of food and household items.

Enterprise Value

A measure of a company's total value, calculated as market capitalization plus debt, minority interest, and preferred shares, minus total cash and cash equivalents.