Unit 5 IP
CompXM Practice Questions
1. Baldwin's EBIT (Earnings Before Interest and Taxes) last year was $10,701,648. What was
Baldwin's net profit?
Select One From List
$223,085
$167,340,889
$188,073
$10,701,648
2. Your company expects profits to be close to $4,000,000. The Board has instructed you to increase
retained earnings by approximately $2,000,000. What dividend amount, per share, will you pay
this year.
Select One From List
$6.40
$1.80
$5.10
$0.77
CompXM Practice Questions
3. Last year, Chester Company's Cake product had a higher contribution margin percentage
compared to Cedar product. However, Cedar's contribution margin (in dollars) is much higher.
This is because:
Select One From List
Cedar's labor and material costs were substantially higher than Cake's.
Cake has no inventory.
Cedar's sales were substantially higher than Cake's.
4. Digby's revenues were $220,974,547 last year. What percentage went to their marketing
budgets?
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15.9% (SG&A/Revenue)
12.9% (Promo&Sales/Revenue)
5.3% (Promo/Revenue)
7.6% (Sales/Revenue)
5. Consider the cost to separate (terminate) employees at $5,000 per worker (severance pay, etc.).
Consider the cost of training workers at $20 per hour. Consider the cost of recruiting a higher
caliber worker at $3,000. What action would cost Andrews Company the most?
CompXM Practice Questions
Select One From List
Firing a quarter of its workforce.
Paying their newly hired employees an additional $3,000.
Training the entire workforce 40 hours per year.
6. The closing price (street value) of your oldest bond is 1.0% above its face value. That means if
your company buys the bond back at street value:
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You pay $101 for every $100 issued.
You pay $10 for every $100 issued.
You pay $99 for every $100 issued.
7. Which of the following does not come after EBIT on the income statement?
Select One From List
Interest Expense
CompXM Practice Questions
Profit Sharing
Net Profit
Taxes
Depreciation
8. Chester Company issues $28M in stock this year. Assuming the stock price does not change from
last December 31st close, how many total shares will be outstanding?
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2,704,757
2,000,000
704,757
9. If $1.00 of Digby's assets produces $1.45 in sales, what is the company's Asset Turnover?
Select One From List
0.67
1.45
CompXM Practice Questions
0.5
2.5
10. Baldwin issues $15M in long term debt. The interest rate is 13%. What is the annual interest of
the bond?
Select One From List
$2,000,000
$1,950,000
$64,000,000
$16,950,000