Finance test

Exam 1 Make-up opportunity

1) Operating profits are defined as _Earnings before interest and taxes_

2) _Retained earnings_ are the profits that a company has earned to date, less any dividends or other distributions paid to investors. 

3) An analysis in which the firm s ratio values are compared to those of a key competitor or group of competitors, primarily to identify areas for improvement is called _Benchmarking_

4) The Asset turnover ratio measures the value of a company's sales or revenues generated relative to the value of its assets.  It can also be used as an indicator of the efficiency with which a company is deploying its assets in generating revenue.  

5) The Operating Profit Margin measures the percentage of each sales dollar remaining after cost of sales and operating expenses have been deducted.

6) The Return on Total Assets ROA measures the overall effectiveness of management in generating profits with its available assets.

7) A firm with sales of $1,000,000, net profits after taxes of $60,000, total liabilities of $750,000, and total equity of $750,000 has a return on assets of _4%_____

8) Allocation of the historic costs of fixed assets against the annual revenue they generate is called Depreciation

9) For the year ended December 31, 2013, a corporation had cash flow from operating activities of $100,000, cash flow from investment activities of $40,000, and cash flow from financing activities of $10,000. If the beginning cash and marketable securities balance is $30,000, the Statement of Cash Flows for 2010 would show a net decrease of $____________ in cash and marketable securities

10) __________________ is the concept that receiving something today is worth more than receiving the same item at a future date. 

11) Candy Corporation has pretax profits of $1.2 million, an average tax rate of 40 percent, and it pays preferred dividends of $20,000. There are 100,000 shares outstanding and no interest expenses. What is Candy Corporation's earnings per share?

12) If the annual percentage rate of return (APR) on a credit card that you carry is 18 percent and if interest is compounded monthly, what is the effective, or true, annual rate (EAR) charged by the credit card company?