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American Public University FINC400 quiz 1-8




Question;American Public University FINCFinc400 quiz 1-8;art 1 of 1 - Week 1;Quiz;Question 1 of 25;4.0;Points;The firm?s;price-earnings (P/E) ratio is influenced by its;;structure.;B.earnings;volatility.;C.sales;profit margins, and earnings.;D.all;of these.;Question 2 of 25;4.0 Points;The primary disadvantage;of accrual accounting is that;;does not match revenues and expenses in the period in which they are;incurred.;;does not appropriately measure accounting profit.;;does not recognize accounts receivable.;;does not adequately show the actual cash flow position of the firm;Question 3 of 25;4.0;Points;Total assets of a firm are;financed with liabilities and stockholders' equity.;True;False.;Question 4 of 25;4.0;Points;Gross profit is equal;to;A.sales;minus cost of goods sold.;B.sales;minus (selling and administrative expenses).;C.sales;minus (cost of goods sold and selling and administrative expenses).;D.sales;minus (cost of goods sold and depreciation expense).;Question 5 of 25;4.0 Points;The higher the profit of;a firm, the higher the value the firm is assured of receiving in the market.;A.;True;B.;False;uestion;6 of 25;4.0 Points;Ratios are used to;compare different firms in the same industry.;A.;True;B.;False;Question 7 of 25;4.0;Points;The Sarbanes-Oxley Act;was passed in an effort to;A.protect;small business from large corporations dominating the market.;B.ensure;that partnerships divide profits among partners in a fair manner.;C.guarantee;outside auditors can control corporate accounting practices.;D.control;corrupt corporate behavior.;uestion 8 of 25;4.0 Points;Which of the following;is not subtracted out in arriving at operating income?;A.interest;expense;B.cost;of goods sold;C.depreciation;D.selling;and administrative expense;Question 9 of 25;4.0 Points;Which of the following;is not a primary source of capital to the firm?;A.assets;B.common;stock;C.preferred;stock;D.bonds;Question 10 of 25;4.0 Points;A firm has $1,500,000 in;its common stock account and $1,000,000 in its paid-in capital account. The;firm issued 100,000 shares of common stock. What was the original issue price;if only one stock issue has ever been sold?;A.$35;per share;B.$25;per share;C.$15;per share;D.Not;enough information to tell;Question 11 of 25;4.0 Points;Debt utilization ratios;are used to evaluate the firm's debt position with regard to its asset base and;earning power.;A.;True;B.;False;uestion 12 of 25;4.0 Points;A firm with earnings per;share of $3 and a price-earnings ratio of 20 will have a stock price of;A.$60.00;B.$15.00;C.$6.67;D.the;market assigns a stock price independent of EPS and the P/E ratio.;Question 13 of 25;4.0 Points;The P/E ratio is;strongly related to the past performance of the firm.;A.;True;B.;False;Question 14 of 25;4.0 Points;Money markets would;include which of the following securities?;A.common;stock and corporate bonds.;B.treasury;bills and commercial paper.;C.certificates;of deposit and preferred stock.;D.all;of these.;uestion 15 of 25;4.0 Points;Agency theory assumes;that corporate managers act to increase the wealth of corporate shareholders.;A.;True;B.;False;Question 16 of 25;4.0 Points;Preferred stock is;excluded from stockholders equity because it does not have full voting rights.;A.;True;B.;False;Question 17 of 25;4.0 Points;Sales minus cost of;goods sold is equal to earnings before taxes.;A.;True;B.;False;Question 18 of 25;4.0;Points;Asset utilization ratios;A.relate;balance sheet assets to income statement sales.;B.measure;how much cash is available for reinvestment into current assets.;C.are;most important to stockholders.;D.measures;the firm's ability to generate a profit on sales.;Question 19 of 25;4.0;Points;The P/E ratio provides no;indication of investors' expectations about the future of a company.;A.;True;B.;False;Question 20 of 25;4.0 Points;Asset utilization ratios;relate balance sheet assets to income statement sales.;A.;True;B.;False;Question 21 of 25;4.0 Points;Financial markets exist;as a vast global network of individuals and financial institutions that may be;lenders, borrowers, or owners of public companies worldwide.;A.;True;B.;False;Question 22 of 25;4.0 Points;Which of the following;is an outflow of cash?;A.profitable;operations;B.the;sale of equipment;C.the;sale of the company?s common stock;D.the;payment of cash dividends;uestion 23 of 25;4.0 Points;The Bubba Corp. had;earnings before taxes of $400,000 and sales of $2,000,000. If it is in the 40%;tax bracket its after-tax profit margin is;A.40%;B.12%;C.20%;D.25%;Question 24 of 25;4.0 Points;The income statement is;the major device for measuring the profitability of a firm over a period of;time.;A.;True;B.;False;Question 25 of 25;4.0 Points;Which of the following;is an inflow of cash?;A.funds;spent in normal business operations;B.the;purchase of a new factory;C.the;sale of the firm's bonds;D.the;retirement of the firm's bonds;Week 2;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;Question 2 of 25 4.0;Points;(point) Profit is generally adequate to finance significant;growth.;A. True;B. False;Question 3 of 25 4.0;Points;If a firm has a break-even point of 40,000 units and the;contribution margin on the firm's single product is $4.00 per unit and fixed;costs are $60,000, what will the firm's operating profit be at sales of 40,000;units?;A.$100,000;B.$30,000;C.$15,000;D.$145,000;Question 4 of 25 4.0;Points;(point) The break-even point can be calculated as;A.variable costs divided by contribution;margin.; costs divided by contribution margin.;C.variable cost times contribution margin.;D.fixed cost divided by contribution margin.;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.;Question 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.;Question 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.;A. True;B. False;Week 3All rest attached in the docment


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