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1. The decisions that a financial manager makes de...




1. The decisions that a financial manager makes depends upon a. whether the organization is small or large b. whether the organization is a sole proprietorship or a corporation c. whether it would maximize the value of the owner or owners? stock d. whether it would maximize the profits of the organization 2. Working capital management involves decisions related to the following: a. Should an existing machine be replaced with a new model b. Negotiating credit terms with suppliers c. Signing a contract to build a new office building d. Recommending plans for a new manufacturing plant 3. Ethical behavior is important for business because a. many companies have a code of ethics b. without ethical behavior employees would not be promoted c. many government regulations require ethical behavior d. without ethical behavior markets would be inefficient 4. The primary goal of a well designed management compensation package is to: A. Ensure that management is satisfied B. Ensure management acts in the stockholders? best interest C. Reduce the costs of replacing management D. Eliminate management bonuses tied to stock price 5. Which of the following is the most appropriate goal for the firm? A) Profit maximization B) Revenue maximization C) Tax minimization D) Shareholder wealth maximization 6. The external auditor?s ultimate legal responsibility is to the: A. Client?s CEO B. Client?s audit committee C. Client?s CFO D. Client?s controller 7. All of the following are needed in calculating working capital except: a.) Notes payable b.) Accounts receivable c.) Depreciation d.) Accruals e.) All of the above f.) A, B, & C only 8. All of the following would be considered sources of cash except: a.) Sale of bonds to investors b.) An decrease in inventories c) An increase in accounts payable d.) An increase in accounts receivables e.) A & D only f.) A & C only 9. Doctor Foreman runs a junkyard with his granddaughter Susan. For the first year of business, the junkyard reported a net income of $75,240 on an EBITDA of $112,500. Interest expenses were $2,000 and the firm took a depreciation and amortization charge of $6,000. The tax rate paid by Doctor Foreman's business was: A) 25% B) 28% C) 31% D) 34% 10. Which of the following statements best reflects why companies prepare a balance sheet: A) It provides a snapshot of the profitability of a firm B) It provides a snapshot of the cash position of a firm C) It provides a snapshot of the financial position of a firm D) It is required by GAAP 11. Board Bagels, a small cafe in downtown Pittsburgh, had a net sales of $230,000 for the most recent fiscal year, 65% of which were eaten up by its costs. The firm had some baking equipment that cost $45,000 with a salvage value estimated at $5,000 and was being depreciated over 10 years using the straight-line method. Interest on accumulated loans amounted to $12,000 and the cafe had a net tax rate of 25%. What was it's net income? A. $48,375 B. $17,625 C. $48,000 D. $160,500 12. Old Company paid taxes of $ 20,000 and purchased equipment worth $ 25,000 during the year that ended June 30, 2008. The firm had net income of $400,000 during the year ended June 30, 2008. After paying out $25,000 in dividends, the balance went into retained earnings. If the firm?s total retained earnings were $875,000, what was the level of retained earnings on its balance sheet on July 1, 2007? a) $ 480,000 b) $ 520,000 c) $ 920,000 d) $ 500,000 13. Johnson Corporation has announced that its net income for the year ended June 30, 2008, is $1,000,000. The company had an EBITDA of $ 4,900,000, and its depreciation and amortization expense was equal to $1,500,000. The company?s tax rate is 34 percent. What is the amount of interest expense for the Corporation? a) $ 1,590,749 b) $ 1,884, 849 c) $ 880, 659 d) $ 1,489,500 14. A market value balance sheet can provide: a) management with a more exact statement of the firm?s net income b) investor?s with a better understanding of the cost of the firm?s assets c) misleading information on the earnings per share of most firms d) better information on the stockholder?s equity 15. Common-size financial statements include: I. balance sheets with contents divided by total assets II. income statements with contents divided by net sales or revenues III. cash flow statements with contents divided by depreciation and amortization A. I only B. II only C. I and II D. I, II, and III E. none of the choices are examples of common-size financial statements


Paper#11840 | Written in 18-Jul-2015

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