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;;Which of the following is a characteristic of an efficient market?;a. Small number of individuals.;b. Opportunities exist for investors to profit from publicly available information.;c. Security prices reflect fair value of the firm.;d. Immediate response occurs for new public information.;1. Diversification increases when ________ decreases.;a. variability;b. return;c. risk;d. a and c;e. all of the above;2. Corporations receive money from investors with;a. initial public offerings.;b. seasoned new issues.;c. primary market transactions.;d. a and b.;e. all of the above.;3. Which of the following is true regarding an initial public offering?;a. The corporation gets proceeds from the investor.;b. Investors get proceeds from other investors.;c. The security is sold for the first time to the public.;d. Both a and c.;e. All of the above.;Table 1(Use this table for questions 5-8);Smith Company Balance Sheet;Assets;Cash and marketable securities $300,000;Accounts receivable 2,215,000;Inventories 1,837,500;Prepaid expenses 24,000;Total current assets $3,286,500;Fixed assets 2,700,000;Less: accumulated depreciation 1,087,500;Net fixed assets $1,612,500;Total assets $4,899,000;Liabilities;Accounts payable $240,000;Notes payable 825,000;Accrued taxes 42,500;Total current liabilities $1,107,000;Long-term debt 975,000;Owner?s equity 2,817,000;Total liabilities and owner?s equity $4,899,000;Net sales (all credit) $6,375,000;Less: Cost of goods sold 4,312,500;Selling and administrative expense 1,387,500;Depreciation expense 135,000;Interest expense 127,000;Earnings before taxes $412,500;Income taxes 225,000;Net income $187,500;Common stock dividends $97,500;Change in retained earnings $90,000;4. Based on the information in Table 1, the current ratio is;a. 2.97.;b. 1.46.;c. 2.11.;d. 2.23.;5. Based on the information in Table 1, the debt ratio is;a. 0.70.;b. 0.20.;c. 0.74.;d. 0.42.;6. Based on the information in Table 1, the net profit margin is;a. 4.61%;b. 2.94%.;c. 1.97%.;d. 5.33%.;7. Based on the information in Table 1, the inventory turnover ratio is;a. 0.29 times.;b. 2.35 times.;c. 0.43 times.;d. 3.47 times.;8. Marshall Networks, Inc. has a total asset turnover of 2.5 and a net profit margin of 3.5%. The firm has a return on equity of 17.5%. Calculate Marshall?s debt ratio.;a. 30%;b. 40%;c. 50%;d. 60%;Use the following information and the percent-of-sales method to Answer questions 10 -12.;Below is the 2004 year-end balance sheet for Banner, Inc. Sales for 2004 were $1,600,000 and are expected to be $2,000,000 during 2005. In addition, we know that Banner plans to pay $90,000 in 2005 dividends and expects projected net income of 4% of sales. (For consistency with the Answer selections provided, round your forecast percentages to two decimals.);Banner, Inc. Balance Sheet;December 31, 2004;Assets;Current assets $890,000;Net fixed assets 1,000,000;Total $1,890,000;Liabilities and Owners? Equity;Accounts payable $160,000;Accrued expenses 100,000;Notes payable 700,000;Long-term debt 300,000;Total liabilities 1,260,000;Common stock (plus paid-in capital) 360,000;Retained earnings 270,000


Paper#80757 | Written in 18-Jul-2015

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