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FINC400 I004 quiz 3




Question;FINC400 I004 Sum 13The quiz is accessible once and is available for the duration of 1.5-hours. Please do not exit from the quiz unless it has been completed, as it will not be accessible again.Question 1 of 254.0 PointsA lower price for the firm's product will reduce the firm's breakeven point. A. True B. Falseuestion 2 of 254.0 Points(point) Profit is generally adequate to finance significant growth. A. True B. FalseQuestion 5 of 254.0 PointsThe degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage. A. True B. FalseQuestion 6 of 254.0 PointsIf fixed costs rise while other variables stay constant A.the breakeven point rises. of operating leverage increases. profit declines. D.all of theseQuestion 7 of 254.0 PointsOperating leverage emphasizes the impact of using fixed assets in the business. A. True B. FalseQuestion 8 of 254.0 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 254.0 PointsThe contribution margin is equal to price per unit minus total costs per unit. A. True B. FalseQuestion 10 of 254.0 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.estion 11 of 254.0 PointsAn increase in sales and profits generates the necessary cash required for economic growth. A. True B. FalseQuestion 12 of 254.0 PointsThe percent-of-sales forecast is likely to be most accurate when used with cyclical companies. A. True B. FalseQuestion 13 of 254.0 PointsPro 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 254.0 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 254.0 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 254.0 PointsThe value of ending inventory should be equal to beginning inventory plus total production costs minus cost of goods sold. A. True B. FalseQuestion 17 of 254.0 Points(point) Leverage works best when volume is increasing. A. True B. FalseQuestion 18 of 254.0 Points(point) The percent-of-sales method would be more accurate under a steady sales assumption than cyclical sales. A. True B. FalseQuestion 19 of 254.0 PointsIf 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 theseQuestion 20 of 254.0 PointsSales (100,000 units) $ 1,000,000Variable costs 300,000Contribution margin 700,000Fixed manufacturing costs 200,000Operating income 500,000Interest 75,000Earnings before taxes 425,000Taxes (30%) 127,500Net Income $ 297,500Refer to the figure above. The Degree of Operating Leverage is A.1.40x B.1.56x C.3.33x D.2.22xQuestion 21 of 254.0 Points(point) The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales. A. True B. FalseQuestion 22 of 254.0 Points(point) As the contribution margin rises, the breakeven point goes down. A. True B. FalseQuestion 23 of 254.0 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.uestion 24 of 254.0 PointsWhich 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 theseQuestion 25 of 254.0 PointsThe finance department should work independently without the input of other departments because there may be significant biases when creating proformas. A. True B. False


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