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Question;13. Clayton;Industries is planning its operations for next year, and the CEO wants you to forecast the firm's;additional funds needed (AFN). Data for;use in your forecast are shown below.;Based on the AFN equation, what is the AFN for the coming year? Dollars are in millions.;Last;year?s sales = S0 $350 Last year?s accounts payable $40;Sales;growth rate = g 30% Last year?s notes payable $50;Last;year?s total assets = A*0 $500 Last year?s accruals $30;Last;year?s profit margin = M 5% Target payout ratio 60%;a. $102.8;b. $108.2;c. $113.9;d. $119.9;e. $125.9;14. Which of the following would, generally, indicate an improvement;in a company?s financial position, holding other things constant?;a. The TIE declines.;b. The DSO increases.;c. The quick ratio;increases.;d. The current;ratio declines.;e. The total assets;turnover decreases.;15. Casey Communications recently issued;new common stock and used the proceeds to pay off some of its short-term notes;payable. This action had no effect on;the company?s total assets or operating income.;Which of the following effects would occur as a result of this action?;a. The company?s current ratio increased.;b. The company?s times interest earned ratio decreased.;c. The company?s basic earning power ratio increased.;d. The company?s equity multiplier increased.;e. The company?s debt ratio increased.;16. Ajax Corp's sales last year were;$435,000, its operating costs were $362,500, and its interest charges were;$12,500. What was the firm's;times-interest-earned (TIE) ratio?;a. 4.72;b. 4.97;c. 5.23;d. 5.51;e. 5.80;17. Last year Harrington Inc. had sales;of $325,000 and a net income of $19,000, and its year-end assets were;$250,000. The firm's;total-debt-to-total-assets ratio was 45.0%.;Based on the DuPont equation, what was the ROE?;a. 13.82%;b. 14.51%;c. 15.23%;d. 16.00%;e. 16.80%;18. Wie Corp's sales last year were;$315,000, and its year-end total assets were $355,000. The average firm in the industry has a total;assets turnover ratio (TAT) of 2.4. The;firm's new CFO believes the firm has excess assets that can be sold so as to;bring the TAT down to the industry average without affecting sales. By how much must the assets be reduced to;bring the TAT to the industry average, holding sales constant?;a. $201,934;b. $212,563;c. $223,750;d. $234,938;e. $246,684;19. Towson, Inc. currently has $1,600,000;in accounts receivables and its days sales outstanding (DSO) is 20 days. If;accounts receivable comprise 50% of the company?s current assets and Towson has;$4,800,000 in net fixed assets, what is its total asset turnover ratio?;a. 2.651x;b. 3.650x;c. 3.520x;d. 2.921x;e. 3.920x;20. Which of the following is a primary;market transaction?;a. You sell 200 shares of IBM stock on the NYSE through your broker.;b. You buy 200 shares of IBM stock from your brother. The trade is not made through a broker--you;just give him cash and he gives you the stock.;c. IBM issues 2,000,000 shares of new stock and sells them to the;public through an investment banker.;d. One financial institution buys 200,000 shares of IBM stock from another;institution. An investment banker;arranges the transaction.;e. IBM sells 2,000,000 shares of treasury stock to its employees when they exercise;options that were granted in prior years.;21. What;is the opportunity cost of Project A if it is expected to yield 10%, while the yields;from other projects range from 6.5% to 11.5% with the mean 9% and 5% standard;deviation?;a. 10%;b. 6.5%;c. 11.5%;d. 9%;e. 9.3%;22. You;recently sold 200 shares of Disney stock, and the transfer was made through a;broker. This is an example of;a. A money market transaction.;b. A primary market transaction.;c. A secondary market transaction.;d. A futures market transaction.;e. An over-the-counter market transaction.;23. Which;of the following statements is CORRECT?;a. Hedge funds are legal in Europe and Asia, but they are not;permitted to operate in the United States.;b. Hedge funds are legal in the United States;but they are not permitted to operate in Europe or Asia.;c. Hedge funds have more in common with investment;banks than with any other type of financial institution.;d. Hedge funds have more in common with;commercial banks than with any other type of financial institution.;e. Hedge funds are not as highly regulated as most other types of;financial institutions. The;justification for this light regulation is that only "sophisticated;investors (i.e., those with high net worths and high incomes) are permitted to;invest in these funds, and such investors supposedly can do any necessary;due diligence" on their own rather than have it done by the SEC or;some other regulator.;24. Which;of the following statements is;CORRECT?;a. While the distinctions are becoming;blurred, investment banks generally specialize in lending money, whereas;commercial banks generally help companies raise capital from other parties.;b. The NYSE operates as an auction market, whereas Nasdaq is an example of a dealer;market.;c. Money market mutual funds usually invest their money in a well-diversified portfolio;of liquid common stocks.;d. Money markets are markets for long-term debt and common stocks.;e. A liquid security is a security whose value is derived from the price of some;other "underlying" asset.;25. Dell has an inventory period of 1;month, and an account receivable period of 0 (zero) months. It also has a;payable period of 6 months. What are the cash conversion cycle period and the;interest expense for Dell if they have annual net total (credit) sales volume;of $10 billion? The market interest rate is 6.0%.;a. -5.0, $-250 m;b. 6.0;$300m;c. 1.0;$100m;d. 3.0;$150m;e. 0.0;$100m


Paper#45033 | Written in 18-Jul-2015

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