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kaplan mt482 unit 9 quiz




Question;Which of the following is least likely to affect analysis of;earnings persistence?;Managerial compensation;Changes in accounting principle;Cyclicality of business;Seasonality of business;Question 2. Question;Horace Corporation has $200,000 of convertible 5% bonds.;Each $500 bond is convertible into 50 shares of common stock. The bonds were;sold at par and are currently trading at par, and the required return on;nonconvertible bonds of similar risk is 11%. Common stock is trading at $ 23;per share.;The total leverage ratio of a company will;increase if operating leases are capitalized;increase if a company sells its receivables;increase if a company sells more equity;increase if a company pays suppliers more;quickly;Question 3. Question;If a firm capitalizes a lease instead of treating the lease;as an operating lease, the effect on the current ratio and the debt-to-equity;ratio will be to;Option A;Option B;Option C;Option D;Question 4. Question;A primary motivation for a company financing its business;activities through debt is not;Trading on the equity;Reducing earnings variability;Tax-deductibility of interest;Avoiding earnings dilution;Question 5. Question;ABC company is planning a major expansion for which it needs;$5 million in external funding. It has various options as how to finance this;expansion. Which of the following is correct?;Future ROA will be higher if it uses all;equity financing than if it uses some debt financing;Future net income will be higher if it uses;common stock rather than preferred stock to finance expansion;Future ROA is independent of the form of;financing;Future net income is independent of the form;of financing;Question 6. Question;Below is information for year ended 12/31/05 for Company A;and Company B.;Return on assets for Company A and B for 2005 are;Option A;Option B;Option C;Option D;Question 7. Question;Which of the following statements are correct with respect;to the times interest earned ratio?;I. It is independent of operating income;II. It is independent of the interest rate paid on debt;III. It is independent of the tax rate;IV. It is independent of the amount of dividends paid;I, II and III;I and III;I and IV;III and IV;Question 8. Question;Hupta Corporation;Net income is expected to increase by 10% for the next year;and dividend payout ratio is expected to remain constant. After 2006, residual;earnings are expected to decrease to zero. Using the earnings-based valuation;method what is the value per share of Hupta stock as of 12/31/05?;$33.60;$33.27;$32.73;$30.00;Question 9. Question;Which of the following is not included the definition of;earnings persistence?;Stability of the earnings;Magnitude of the earnings;Predictability of the earnings;The earnings' trend;Question 10. Question;A company has significant uncapitalized operating leases.;This company has positive net income. If these were capitalized the effect on;the following ratios would be;Option A;Option B;Option C;Option D


Paper#48824 | Written in 18-Jul-2015

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