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Question;1) Corporate governance is the;A. governance of the company by the board of directors with a focus on social responsibility.;B. relationship and exercise of oversight by the board of directors of the company.;C. operation of a company by the chief executive officer (CEO) and other senior executives on the management team.;D. relationship between the chief financial officer and institutional investors.;2) Regarding risk levels, financial managers should;A. evaluate investor?s desire for risk;B. pursue higher risk projects because they increase value;C. focus primarily on market fluctuations;D. avoid higher risk projects because they destroy value;3) One of the major disadvantages of a sole proprietorship is;A. low operating costs.;B. the simplicity of decision making.;C. low organizational costs.;D. that there is unlimited liability to the owner;4) Which of the following would represent a use of funds and, indirectly, a reduction in cash balances?;A. the sale of new bonds by the firm;B. a decrease in marketable securities;C. an increase in accounts payable;D. an increase in inventories;5) Which of the following is an inflow of cash?;A. the retirement of the firm?s bonds;B. the purchase of a new factory;C. the sale of the firm?s bonds;D. funds spent in normal business operations;6) Which account represents the cumulative earnings of the firm since its formation, minus dividends paid?;A. Accumulated depreciation;B. Common stock;C. Retained earnings;D. Paid-in capital;7) A quick ratio that is much smaller than the current ratio reflects;A. that the firm will have a high return on assets.;B. a large portion of current assets is in inventory.;C. that the firm will have a high inventory turnover.;D. a small portion of current assets is in inventory.;8) For a given level of profitability as measured by profit margin, the firm?s return on equity will;A. decrease as its times-interest-earned ratio decreases.;B. decrease as its current ratio increases.;C. increase as its debt-to assets ratio increases.;D. increase as its debt-to-assets ratio decreases.;9) The most rigorous test of a firm?s ability to pay its short-term obligations is its;A. times-interest-earned ratio.;B. quick ratio.;C. debt-to-assets ratio.;D. current ratio.;10) Refer to the figure above. The firm?s inventory turnover ratio is;A. 0.1x.;B. 8x.;C. 2.7x.;D. 10x.;11) Refer to the figure above. The firm?s debt to asset ratio is;A. 48%.;B. 33%.;C. 25%.;D. 58%.;12) Refer to the figure above. Megaframe?s current ratio is;A. 3.2:1;B. 1.625:1;C. 1.5:1;D. 1.9:1;13) The percent-of-sales method of financial forecasting;A. provides a month-to-month breakdown of data.;B. requires more time than a cash budget approach.;C. assumes that balance sheet accounts maintain a constant relationship to sales.;D. is more detailed than a cash budget approach.;14) In order to estimate production requirements, we;A. add beginning inventory to desired ending inventory and subtract projected sales in units.;B. add projected sales in units to desired ending inventory and subtract beginning inventory.;C. add beginning inventory to desired ending inventory and divide by two.;D. add beginning inventory to projected sales in units and subtract desired ending inventory.;15) In the percent-of-sales method, an increase in dividends;A. more information is needed.;B. has no effect on required new funds.;C. will increase required new funds.;D. will decrease required new funds.;16) In developing the pro forma income statement we follow four important steps;1) compute other expenses;2) determine a production schedule;3) establish a sales projection;4) determine profit by completing the actual pro forma statement.;What is the correct order for these four steps?;A.3,2,1,4;B.2,1,3,4;C.1,2,3,4;D.3,2,4,1;17) The pro forma income statement is important to the overall process of constructing pro forma statements because it allows us to determine a value for;A. prepaid expenses.;B. interest expense.;C. change in retained earnings.;D. gross profit.;18) The difference between total receipts and total payments is referred to as;A. cash balance.;B. net cash flow.;C. cumulative cash flow.;D. beginning cash flow.;Stas: 38% (18/48);19) Financial leverage deals with;A. the entire balance sheet.;B. the entire income statement.;C. the relationship of fixed and variable costs.;D. the relationship of debt and equity in the capital structure.;20) The degree of operating leverage is computed as;A. percent change in operating income divided by percent change in volume.;B. percent change in EPS divided by percent change in operating income.;C. percent change in operating profit divided by percent change in net income.;D. percent change in volume divided by percent change in operating profit.;21) When a firm employs no debt;A. it will not be profitable.;B. its operating leverage is equal to its financial leverage.;C. it has a financial leverage of one.;D. it has a financial leverage of zero.;22) If a firm has a price of $4.00, variable cost per unit of $2.50 and a breakeven point of 20,000 units, fixed costs are equal to;A. $50,000;B. $30,000;C. $13,333;D. $10,000;23) In break-even analysis, the contribution margin is defined as;A. fixed cost minus variable cost.;B. variable cost minus fixed cost.;C. price minus variable cost.;D. price minus fixed cost.;24) If TechCor has fixed costs of $80,000, variable costs of $1.20/unit, sales price/unit of $6, and depreciation expense of $25,000, what is their cash breakeven in units?;A. 45,833;B. 21,875;C. 9,167;D. 11,458;25) When the yield curve is upward sloping, generally a financial manager should;A. lease;B. wait for future financing;C. utilize long-term financing;D. utilize short-term financing;26) Normally, permanent current assets should be financed by;A. internally generated funds.;B. borrowed funds.;C. long-term funds.;D. short-term funds.;27) During tight money periods;A. the relationship between short and long-term rates remains unchanged.;B. short-term rates are equal to long-term rates.;C. long-term rates are higher than short-term rates.;D. short-term rates are higher than long-term rates.;28) An aggressive working capital policy would have which of following characteristics?;A. A short average collection period.;B. A high ratio of short-term debt to long-term sources of funds.;C. A high ratio of long-term debt to fixed assets.;D. A low ratio of short-term debt to fixed assets.;29) Risk exposure due to heavy short-term borrowing can be compensated for by;A. carrying more receivables to increase cash flow.;B. carrying highly liquid assets.;C. carrying illiquid assets.;D. carrying longer term, more profitable current assets.;30) An aggressive, risk-oriented firm will likely;A. borrow short-term and carry high levels of liquidity.;B. borrow long-term and carry low levels of liquidity.;C. borrow short-term and carry low levels of liquidity.;D. borrow long-term and carry high levels of liquidity.;31) The system whereby funds are moved between computer terminals without use of checks is;A. magnetic character recognition.;B. electronic funds transfer.;C. float.;D. a lock-box system.;32) The difference between the amount of cash on the firm?s books and the amount credited to it by the bank is;A. float.;B. an overdraft.;C. interest revenue.;D. extended disbursement.;33) How would electronic funds transfer affect the use of ?float??;A. Have no effect on its use;B. Increase its use somewhat;C. Decrease its use somewhat;D. Virtually eliminate its use;34) When developing a credit scoring report, many variables would be considered. Which of the following best represent the major factors Dun & Bradstreet would examine?;A. The company?s cash balances, return on equity, and its average tax rates.;B. The age of the management team, the dollar amount of sales, net profits, and long-term debt.;C. The age of the company, the number of employees, the level of current assets.;D. The financial statements, satisfactory or slow payment experiences, negative public records (suits, liens, judgments, bankruptcies).;35) The most subjective and also significant segment of the 5 C?s of credit for giving final approval is;A. conditions.;B. capacity.;C. collateral.;D. character.;36) The three primary policy variables to consider when extending credit include all of the following except;A. collection policy.;B. credit standards.;C. the level of inflation.;D. the terms of trade.;37) Large firms tend to be;A. firms with low levels of inventory turnover and accounts receivable turnover.;B. net users of trade credit.;C. net suppliers of trade credit.;D. firms with high levels of profitability.;38) Which of the following is not a true statement about commercial paper?;A. Industrial companies, utility firms or finance companies too small to sell direct paper sell dealer paper.;B. Finance paper is sold directly to the lender by the finance company.;C. Finance paper is also referred to as direct paper.;D. Dealer paper is sold directly to the lender by a finance company.;39) Commercial paper that is sold without going through a broker or dealer is known as;A. term paper.;B. direct paper.;C. dealer paper.;D. book-entry transactions.;40) General Rent-All?s officers arrange a $50,000 loan. The company is required to maintain a minimum checking account balance of 10% of the outstanding loan. This practice is called;A. a balloon payment.;B. an installment loan.;C. a compensating balance.;D. a discounted loan.;41) Firms exposed to the risk of interest rate changes may reduce that risk by;A. pledging or factoring accounts receivable.;B. obtaining a Eurodollar loan.;C. hedging in the financial futures market.;D. hedging in the commodities market.;42) From the banker?s point of view, short-term bank credit is an excellent way of financing;A. seasonal bulges in inventory and receivables.;B. fixed assets.;C. repayment of long-term debt.;D. permanent working capital needs.;43) As the interest rate increases, the present value of an amount to be received at the end of a fixed period;A. Not enough information to tell;B. increases;C. remains the same;D. decreases;44) Increasing the number of periods will increase all of the following except;A. the future value of an annuity.;B. the present value of an annuity.;C. the future value of $1.;D. the present value of $1.;45) As the discount rate becomes higher and higher, the present value of inflows approaches;A. need more information;B. 0;C. plus infinity;D. minus infinity;46) If you invest $8,000 at 12% interest, how much will you have in 7 years?;A. $80,712;B. $18,016;C. $3616;D. $17,688;47) Ali Shah sets aside 2,000 each year for 5 years. He then withdraws the funds on an equal annual basis for the next 4 years. If Ali wishes to determine the amount of the annuity to be withdrawn each year, he should use the following two tables in this order;A. future value of an annuity of $1, future value of a $1;B. present value of an annuity of $1, future value of an annuity of $1;C. future value of an annuity of $1, present value of a $1;D. future value of an annuity of $1, present value of an annuity of $1;48) Mr. Blochirt is creating a college investment fund for his daughter. He will put in $850 per year for the next 15 years and expects to earn an 8% annual rate of return. How much money will his daughter have when she starts college?;A. $23,079;B. $11,250;C. $24,003;D. $12,263


Paper#51731 | Written in 18-Jul-2015

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