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kaplan mt482 unit 8 quiz




Question;The residual income model defines stock price as book value;plus the present value of residual income. What is the effect on stock price in;a given period if the firm's cost of capital is greater than its return on;equity?;Cannot be determined;No effect;Stock price increases;Stock price decreases;Question 2. Question;Gupta Corporation has forecasted its need for external;funding in the following year. It needs to raise $2M in either debt or equity.;It would like to minimize its need for external funding without decreasing its;projected growth. Which of the following would reduce its need for additional;funding?;An increase in the dividend payout ratio;An increase in days sales outstanding;An increase in accounts payable;A decrease in inventory turnover;Question 3. Question;The treasurer of Simmons Corporation, a newly formed;software company is trying to ascertain Simmons cash flows for the next three;months. Expected sales are;50% of sales are made for cash. Simmons expects to receive;25% in the month following the sale and 20% in the second month following the;sale. The remaining 5% are expected to be un-collectible. Gross margin is 20%;and purchases are made one month prior to sale. Purchases are paid one month;after received.;Cash outflows in March for purchases will be;$240;$220;$200;$176;Question 4. Question;Below is selected data for Gertup Corporation as of;12/31/05;If sales increased by 10% per annum for the next 20 years;sales for year 2025 would be closest to;$ 407,000;$ 124,459;$ 113,000;$ 55,500;Question 5. Question;What is the correct order of the following steps in;preparing a projected balance sheet (not all steps may be shown)?;I. Project future cash;II. Project future accounts receivable;III. Project future accounts payable;IV. Project future property plant and equipment;I, II, IV, III;II, IV, III, I;I, III, II, IV;I, III, IV, II;Question 6. Question;The statement of cash flows for Georgey Company for 2004 and;2005 is as follows;Which of the following statements is correct?;Restructuring is a major source of cash for;Georgey;Accounts receivable increased in 2005;Depreciation is a major source of cash for;Georgey;Major use of cash resulted in decreased;leverage;Question 7. Question;Hiruit company's sales in December were $5,500. They expect;sales to increase 10% in January and February and 15% in March. All of its;sales are made on credit. The typical collection pattern is;Gross margin is 30%. Inventory levels at the end of December;are $900 and are expected to grow at the same rate as sales. Purchases are paid;for the month after they are made. Net accounts receivable at the end of;December are $400.;In March Hiruit should collect how much cash from sales made;in March and previous months;$7,653.25;$7,342.5;$7,030.1;$6,331.3;Question 8. Question;Which of the following statements is incorrect?;It is possible for a profitable company to go;out of business because of short-term liquidity problems;If a company has a current ratio greater than;2, it will never go out of business because of liquidity problems;The current ratio is always greater than or;equal to the quick ratio;The accuracy of a cash flow forecast is;inversely related to the forecast horizon.;Question 9. Question;The reliability of a short-term cash forecast depends most;heavily on the quality of;Cost of goods sold forecast;Current ratio forecast;Sales forecast;Shares outstanding forecast;Question 10. Question;Below is selected data for Gertup Corporation as of;12/31/05;Due to competitive pressures, Gertup has had to increase;credit terms to customers to maintain sales. This resulted in Gertup's accounts;receivable doubling from 12/31/04 to 12/31/05. The average accounts receivable;turnover was 30 days. Without the increased credit terms accounts receivable;turnover would have remained at 12/31/04 levels. The impact of the change in;credit policy was;None as sales remained the same;Decrease liquidity, and decrease available;cash;Increased current ratio and liquidity of the;company;Current ratio stayed the same and liquidity;remained constant;Points Received: 2 of 2;Comments


Paper#48823 | Written in 18-Jul-2015

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