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Question;1. Which of the following financial statements is;concerned with the company at a point in time?;income statement;statement of cash flows;retained earnings statement;balance sheet;2. A cost which remains constant per unit;at various levels of activity is a;fixed cost;mixed cost;variable cost;manufacturing cost;3. M&M Proposition 1: Dynamo Corp.;produces annual cash flows of $150 and is expected to exist forever. The;company is currently financed with 75 percent equity and 25 percent debt. Your;analysis tells you that the appropriate discount rates are 10 percent for the;cash flows, and 7 percent for the debt. You currently own 10 percent of the;stock.;If Dynamo wishes to change its capital structure;from 75 percent equity to 60 percent equity and use the debt proceeds to pay a;special dividend to shareholders, how much debt should they use?;$600;$375;$225;$321;4. Serox stock was selling for $20 two;years ago. The stock sold for $25 one year ago, and it is currently selling for;$28. Serox pays a $1.10 dividend per year. What was the rate of;return for owning Serox in the most recent year? (Round to the nearest;percent.);32%;16%;12%;40%;5. The process of evaluating financial;data that change under alternative courses of action is called;contribution margin analysis;cost-benefit analysis;double entry analysis;incremental analysis;6. What decision criteria should managers;use in selecting projects when there is not enough capital to invest in all;available positive NPV projects?;the discounted payback;the profitability index;the internal rate of return;the modified internal rate of return;7. The convention of consistency refers;to consistent use of accounting principles;among firms;within industries;throughout the accounting period;among accounting periods;8. External financing needed: Jockey;Company has total assets worth $4,417,665. At year-end it will have net income;of $2,771,342 and pay out 60 percent as dividends. If the firm wants no;external financing, what is the growth rate it can support?;27.3%;32.9%;25.1%;30.3%;9. Which of the following is considered a;hybrid organizational form?;limited liability partnership;partnership;sole proprietorship;corporation;10. An activity that has a direct cause-effect;relationship with the resources consumed is a(n);overhead rate;product activity;cost driver;cost pool;11. Next year Jenkins Traders will pay a;dividend of $3.00. It expects to increase its dividend by $0.25 in each;of the following three years. If their required rate of return if 14;percent, what is the present value of their dividends over the next four years?;$11.63;$13.50;$9.72;$12.50;12. TuleTime Comics is considering a new;show that will generate annual cash flows of $100,000 into the infinite future.;If the initial outlay for such a production is $1,500,000 and the appropriate;discount rate is 6 percent for the cash flows, then what is the profitability;index for the project?;1.90;0.90;0.11;1.11;13. Your firm has an equity multiplier of;2.47. What is the debt-to-equity ratio?;0;1.74;0.60;1.47;14. If a company?s weighted average cost;of capital is less than the required return on equity, then the firm;partnership;is perceived to be safe;is financed with more than 50% debt;has debt in its capital structure;15. When a company assigns the costs of direct;materials, direct labor, and both variable and fixed manufacturing overhead to;products, that company is using;operations costing;variable costing;absorption costing;product costing;16. The major element in budgetary;control is;the comparison of actual results with planned;objectives.;the valuation of inventories;the preparation of long-term plans;the approval of the budget by the stockholders;17. Horizontal analysis is a technique;for evaluating a series of financial statement data over a period of time;to determine which items are in error.;that has been arranged from the highest number to;the lowest number.;to determine the amount and/or percentage increase;or decrease that has taken place.;that has been arranged from the lowest number to the;highest number.;18. Which of the following is an advantage of;corporations relative to partnerships and sole proprietorships?;lower taxes;most common form of organization;harder to transfer ownership;reduced legal liability for investors;19. The break-even point is where;contribution margin equals total fixed costs.;total variable costs equal total fixed costs.;total sales equal total variable costs.;total sales equal total fixed costs.;20. Turnbull Corp. had an EBIT of $247;million in the last fiscal year. Its depreciation and amortization;expenses amounted to $84 million. The firm has 135 million shares;outstanding and a share price of $12.80. A competing firm that is very similar;to Turnbull has an enterprise value/EBITDA multiple of 5.40.;What is the enterprise value of Turnbull;Corp.? Round to the nearest million dollars.;$1,787 million;$1,344 million;$1,315 million;$453.6 million;21. Which of the following is considered;a hybrid organizational form?;partnership;limited liability partnership;corporation;sole proprietorship;22. The most important information needed;to determine if companies can pay their current obligations is the;projected net income for next year;relationship between short-term and long-term;liabilities;relationship between current assets and current;liabilities;net income for this year;23. Gateway, Corp. has an inventory;turnover of 5.6. What is the firm?s days?s sales in inventory?;61.7;57.9;65.2;64.3;24. Horizontal analysis is also known as;vertical analysis;linear analysis;trend analysis;common size analysis;25. Which of the following presents a;summary of changes in a firm?s balance sheet from the beginning of an;accounting period to the end of that accounting period?;the statement of net worth;the statement of working capital;the statement of cash flows;the statement of retained earnings;26. Ajax Corp. is expecting the following;cash flows - $79,000, $112,000, $164,000, $84,000, and $242,000 ? over the next;five years. If the company?s opportunity cost is 15 percent, what is;the present value of these cash flows? (Round to the nearest dollar.);$477,235;$429,560;$414,322;$480,906;27. Bond price: Regatta, Inc., has;six-year bonds outstanding that pay a 8.25 percent coupon rate. Investors;buying the bond today can expect to earn a yield to maturity of 6.875 percent.;What should the company's bonds be priced at today? Assume annual coupon;payments. (Round to the nearest dollar.);$972;$1,066;$1,014;$923;28. Process costing is used when;dissimilar products are involved;production is aimed at fulfilling a specific;customer order.;the production process is continuous.;costs are to be assigned to specific jobs.;29. Jack Robbins is saving for a new car.;He needs to have $21,000 for the car in three years. How much will he have to;invest today in an account paying 8 percent annually to achieve his target? (Round;to nearest dollar);$22,680;$26,454;$19,444;$16,670;30. The accumulation of accounting data;on the basis of the individual manager who has the authority to make day-to-day;decisions about activities in an area is called;flexible accounting;static reporting;master budgeting;responsibility accounting;31. Variance reports are;SEC financial reports;internal reports for management;external financial reports;all of these;32. The cash conversion cycle?;shows how long the firm keeps its inventory before;selling it.;estimates how long it takes on average for the firm;to collect its outstanding accounts receivables balance.;begins when the firm uses its cash to purchase raw;materials and ends when the firm collects cash payments on its credit sales.;begins when the firm invests cash to purchase the;raw materials that would be used to produce the goods that the firm;manufactures.;33. In a process cost system, product;costs are summarized;when the products are sold.;on job cost sheets.;on production cost reports.;after each unit is produced.;34. Internal reports that review the;actual impact of decisions are prepared by;the controller;department heads;factory workers;management accountants;35. How firms estimate their cost of;capital: The WACC for a firm is 13.00 percent. You know that the firm?s cost of;debt capital is 10 percent and the cost of equity capital is 20% What;proportion of the firm is financed with debt?;70%;50%;30%;33%;36. The group of users of accounting;information charged with achieving the goals of the business is its;auditors;investors;managers;creditors;37. An unrealistic budget is more likely;to result when it;has been developed in a bottom up fashion.;has been developed by all levels of management.;is developed with performance appraisal usages in;mind.;has been developed in a top down fashion.;38. Jayadev Athreya has started his;first job. He will invest $5,000 at the end of each year for the next 45 years;in a fund that will earn a return of 10 percent. How much will Jayadev;have at the end of 45 years?;$3,594,524;$2,667,904;$1,745,600;$5,233,442;39. Firms that achieve higher growth;rates without seeking external financing;Have a low plowback ratio;are highly leveraged;have less equity and/or are able to generate high;net income leading to a high ROE.;None of these;40. Teakap, Inc. has current assets;of $1,456,312 and total assets of $4,812,369 for the year ending September 30;2006. It also has current liabilities of $1,041,012, common equity of;$1,500,000 and retained earnings of $1,468,347. How much long-term debt does;the firm have?;$803,010;$1,844,022;$2,123,612;$2,303,010


Paper#47451 | Written in 18-Jul-2015

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