Business accounts are getting more and more creative in the way that they calculate earnings. Test your knowledge of the murky world of earnings reports with our OIBDA challenge.
OIBDA is an acronym for which of the following?
- The Organization of Independent Beef and Dairy Agriculture
- The Office of International Building and Development Analysis
- Operating Income Before Depreciation and Amortization
How often must publically traded companies issue an earnings report?
- Every month
- Every three months
- Every six months
What are the three most important pieces of information on an earnings report for stockholders and potential investors?
- Income, expenses and profit
- Credit, debt and growth potential
- Dividends, stock price and sales
What does the acronym GAAP stand for in the field of accounting?
- Good advice in April, please
- Generally accepted accounting practices
- Goods accrued after payroll
For investors, which of the following best represents a company's profitibility?
- Operating income
- Non-operating income
- Gross income
Which of the following is considered non-operating income?
- Investment returns
- Widgets sold
- Commission earned on sales
By ignoring depreciation and amortization, OIBDA leaves out which of the following expenses/losses from earnings reports?
- Raw material costs, energy costs and shipping fees
- Damaged equipment, injured employees and natural disasters
- Equipment purchases, "intangible expenses" and tax deductions
Is OIBDA approved under generally accepted accounting practices?
- It depends on the circumstances
Why might a CFO of a company argue that OIBDA is the best representation of a company's profitability?
- Because OIBDA states "pure" operating income without the distortions of long-term equipment investments, tax deductions and other "extraneous" expenses
- Because OIBDA takes everything into account, both operating and non-operating income and expenses
- Because OIBDA is the only GAAP method for calculating operating income
Are OIBDA numbers usually lower or higher than earnings calculated using GAAP methods?
What does the acronym EBITDA stand for?
- Earnings based on information technology, depreciation and amortization
- Earnings before interest, taxes, depreciation and amortization
- Earnings borrowed in time divided by assets
Is the use of non-GAAP figures in an earnings report a bad or good sign for investors?
- Depends on the reasons for using an alternative calculation method
Which of the following acronyms is NOT a method for calculating earnings?
Can the difference between OIBDA and standard earnings calculations be the difference between profit and loss?
True or false: "Good will" is a business expense that can be amortized.
Generally accepted accounting principles are set by which organization?
- The Federal Accounting Standards Advisory Board
- The International Association of Certified Public Accountants
- The Securities and Exchange Commission
What does the acronym EPS stand for on earnings reports?
- Earnings, profit and salaries
- Earnings per share
- Earnings from products and services
What exactly is the "interest" that is referred to in earnings before interest and taxes (EBIT)?
- Interest income on interest-bearing savings accounts
- Interest payments on interest-bearing loans
Which of the following business expenses would NOT qualify for depreciation?
- Factory equipment
- Delivery truck
- Registered trademark
Are companies that publish OIBDA earnings required by the SEC to explain the methodology of their calculations?