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Profit is generally adequate to finance significant growth




The quiz is accessible once and is available for the duration of 1.5-hours. Please do not exit from the quiz unless it has been completed, as it will not be accessible again.;Question 1 of 25;4.0 Points;A lower price for the firm's product will reduce the firm's breakeven point.;A. True;B. False;uestion 2 of 25;4.0 Points;(point) Profit is generally adequate to finance significant growth.;A. True;B. False;Question 5 of 25;4.0 Points;The degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.;A. True;B. False;Question 6 of 25;4.0 Points;If fixed costs rise while other variables stay constant;A.the breakeven point rises.; of operating leverage increases.; profit declines.;D.all of these;Question 7 of 25;4.0 Points;Operating leverage emphasizes the impact of using fixed assets in the business.;A. True;B. False;Question 8 of 25;4.0 Points;(point) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced; higher.; lower.; the same.;D.can be either higher or lower.;Question 9 of 25;4.0 Points;The contribution margin is equal to price per unit minus total costs per unit.;A. True;B. False;Question 10 of 25;4.0 Points;(point) Which of the following is most likely to increase the final number for notes payable in the pro forma balance sheet?;A.decrease in inventory.;B.increase in retained earnings.;C.decrease in accounts payable.;D.decrease in accounts receivable.;estion 11 of 25;4.0 Points;An increase in sales and profits generates the necessary cash required for economic growth.;A. True;B. False;Question 12 of 25;4.0 Points;The percent-of-sales forecast is likely to be most accurate when used with cyclical companies.;A. True;B. False;Question 13 of 25;4.0 Points;Pro forma financial statements are;A.the most comprehensive means of financial forecasting.;B.often required by prospective creditors.;C.projections of financial statements for a future period.;D.all of these.;Question 14 of 25;4.0 Points;(point) When the cost of raw materials is increasing, FIFO accounting;A.yields higher ending inventory values than LIFO.;B.produces higher unit sales than using LIFO.;C.yields higher cost of goods sold than LIFO.;D.All of these.;Question 15 of 25;4.0 Points;(point) If sales volume exceeds the break-even point, the firm will experience; operating loss.; operating profit.; increase in plant and equipment.; increase in stock price.;Question 16 of 25;4.0 Points;The value of ending inventory should be equal to beginning inventory plus total production costs minus cost of goods sold.;A. True;B. False;Question 17 of 25;4.0 Points;(point) Leverage works best when volume is increasing.;A. True;B. False;Question 18 of 25;4.0 Points;(point) The percent-of-sales method would be more accurate under a steady sales assumption than cyclical sales.;A. True;B. False;Question 19 of 25;4.0 Points;If the price per unit decreases because of competition but the cost structure remains the same;A.the breakeven point rises.;B.the degree of combined leverage declines.;C.the degree of financial leverage declines.;D.All of these;Question 20 of 25;4.0 Points;Sales (100,000 units);$ 1,000,000;Variable costs;300,000;Contribution margin;700,000;Fixed manufacturing costs;200,000;Operating income;500,000;Interest;75,000;Earnings before taxes;425,000;Taxes (30%);127,500;Net Income;$ 297,500;Refer to the figure above. The Degree of Operating Leverage is;A.1.40x;B.1.56x;C.3.33x;D.2.22x;Question 21 of 25;4.0 Points;(point) The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales.;A. True;B. False;Question 22 of 25;4.0 Points;(point) As the contribution margin rises, the breakeven point goes down.;A. True;B. False;Question 23 of 25;4.0 Points;(point) In the percent-of-sales method, an increase in dividends;A.will increase required new funds.;B.will decrease required new funds.;C.has no effect on required new funds.;D.more information is needed.;uestion 24 of 25;4.0 Points;Which of the following is not true about leverage?;A.operating leverage influences the top half of the income statement, determining EBIT.; leverage deals with the bottom half of the income statement, determining EPS;C.combined leverage utilizes the entire income statement, showing the impact of change in volume on EBIT.;D.none of these;Question 25 of 25;4.0 Points;The finance department should work independently without the input of other departments because there may be significant biases when creating proformas.


Paper#29925 | Written in 18-Jul-2015

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