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"17. If a company wishes to increase its current r...




"17. If a company wishes to increase its current ratio, it could: A. take out a short-term loan B. pay suppliers more quickly C. increase useful life of machinery D. not determinable without more information 18. Which of the following is least likely to increase the overall risk of a company? A. increased sales variability B. increased debt levels C. increased variable costs while decreasing fixed costs D. increased interest rates 19. 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? A. Future ROA will be higher if it uses all equity financing than if it uses some debt financing B. Future net income will be higher if it uses common stock rather than preferred stock to finance expansion C. Future ROA is independent of the form of financing D. Future net income is independent of the form of financing 20. Which of the following is not included the definition of earnings persistence? A. Stability of the earnings B. Magnitude of the earnings C. Predictability of the earnings D. The earnings' trend 22. Which of the following factors is least likely to affect earnings persistence? A. Changing price levels B. Extraordinary items C. Usual operating costs D. Accounting methods used 23. Which of the following would not be considered a component of business risk? A. Financial leverage B. Variability of demand C. Variability of price of inputs to production D. Changing regulatory requirements 24. Fristy Corporation has a book value of equity of $5,000 at the beginning of 2005, and net income of $1,000 for year ended 2005. It pays no dividends and its cost of equity capital is 10%. It expects return on beginning of year equity to remain constant for 2006 and 2007 and decrease to 10% thereafter. What should its price to book value be at the end of 2005 (pick closest number)? A. 1.0 B. 1.05 C. 1.09 D. 1.19 25. A profitable mature company would generally have A. High price/book and high price/earnings B. High price/book and low price/earnings C. Low price/book and high price/earnings D. Low price/book and low price/earnings 26. Variability in earning numbers: A. Is desirable as it increases variance of earnings and hence value of stock options B. Increases if a company increases its operating leverage C. Increases if a company decreases its financial leverage D. Is independent of operating leverage 27. Business risk: A. Is independent of actions by management B. Does not affect the systematic risk of a company C. Refers to financial leverage D. Is a component of the overall risk of a company 28. Which of the following statements concerning interim financial reports is incorrect? A. Accrual accounting is used for revenue and expense recognition B. Extraordinary items are reported in annual but not interim financial reports C. LIFO liquidation is not reported for interim purposes, unless decline in inventory is expected to be permanent D. Income taxes are accrued using effective tax rate expected for the annual period 29. When examining quarterly results of a company in a seasonal business it is useful A. to compare to the preceding quarter B. to match the company's results against economic statistics C. to compare to the same period in the prior year D. to analyze using a percentage income statement,Please let me know you are still working on this


Paper#6588 | Written in 18-Jul-2015

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