MGMT 640 FINANCIAL DECISION MAKING FOR MANAGERS
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MidtermExamPartI.docxMidterm Exam Part I
Question 2
Which of the following cannot be engaged in managing the business?
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a limited partner |
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a general partner |
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a sole proprietor |
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none of these |
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Question 2 |
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1 / 1 point |
One reason for the existence of agency problems between managers and share holders is that:
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managers know how to manage the firm better than shareholders. |
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there is a separation of ownership and control of the firm. |
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none of these. |
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Question 3 |
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1 / 1 point |
On June 23, 20X8, Mikhal Cosmetics sold $250,000 worth of its products to Rynex Corporation. The goods were shipped to Rynex on July 2. The payment from Rynex was received on September 20. Under the "cash basis of accounting" revenue should be recorded on:
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June 23, 20X8. |
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July 2, 20X8. |
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none of the above |
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Question 4 |
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1 / 1 point |
During the last year, Sigma Co had Net Income of $156, paid $20 in dividends, and sold new stock for $37. Beginning equity for the year was $600. Ending equity was
Answer:
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773 |
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Question 5 |
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1 / 1 point |
The following items are components of a traditional balance sheet. How much are the total assets of the firm?
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Plant and equipment |
$42,500 |
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Common stock |
15,000 |
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Cash |
5,200 |
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Inventory |
22,000 |
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Bad debt reserve |
6,000 |
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Additional paid-in capital |
6,000 |
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Accumulated depreciation |
28,800 |
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Accounts receivable |
22,000 |
Answer:
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56,900 |
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Question 6 |
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1 / 1 point |
Book value is the value of a company according to its balance sheet. Market value is the value of the company in the eyes of the stock market.
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True |
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False |
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Question 7 |
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1 / 1 point |
When evaluating a Statement of Cash Flows, which of the following would be considered an example(s) of cash flow from financing activities?
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Depreciation |
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Capital Expenditure |
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Repayment of Bank Loan |
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All of the Above |
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Question 8 |
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1 / 1 point |
When reviewing a Balance Sheet, which of the following items would you expect to find under Assets?
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A. Cash |
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B. Accounts Payable |
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C. Inventory |
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A & B |
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A & C |
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Question 9 |
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1 / 1 point |
Cameron Balance Sheet
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Accounts Payable and Accruals |
28 |
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Accounts Receivable |
62 |
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Accumulated Depreciation |
(175) |
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Cash |
39 |
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Common Stock |
120 |
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Fixed Assets (gross) |
390 |
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Inventory |
125 |
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Long-Term Debt |
200 |
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Retained Earnings |
65 |
What is Cameron Inc.’s Net Working Capital?
Answer:
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198 |
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Question 10 |
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1 / 1 point |
A firm’s current ratio is 1.2, and its quick ratio is 1.0. If its current liabilities are $13,600, what are its inventories?
Answer:
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2,720 |
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Question 11 |
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1 / 1 point |
Iris Income Statement
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Cost of Goods Sold |
340 |
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Depreciation Expense |
35 |
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Interest Expense |
20 |
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Operating Expense (excluding depreciation) |
115 |
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Sales |
770 |
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What was Iris Inc.’s earnings before interest and taxes (EBIT)?
Answer:
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280 |
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Question 12 |
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1 / 1 point |
Iris Balance Sheet
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Accounts Payable and Accruals |
65 |
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Accounts Receivable |
50 |
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Accumulated Depreciation |
(175) |
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Cash |
34 |
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Common Stock |
120 |
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Fixed Assets (gross) |
390 |
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Inventory |
127 |
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Long-Term Debt |
200 |
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Retained Earnings |
65 |
What is Iris Inc.’s Total Assets?
Answer:
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426 |
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Question 13 |
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1 / 1 point |
If firm A has a higher debt-to-equity ratio than firm B, then
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firm B has higher financial leverage than firm A. |
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firm B has a lower equity multiplier than firm A. |
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none of the above |
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Question 14 |
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1 / 1 point |
Flying Tigers, Inc., has net sales of $744,000 and accounts receivables of $166,000. What is the firm's accounts receivables turnover? (Give your answer upto two decimal places)
Answer:
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4.48 |
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Question 15 |
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1 / 1 point |
Reagan Corp. has reported a net income of $811,200 for the year. The company's share price is $13.72, and the company has 323,710 shares outstanding. Compute the firm's price-earnings ratio upto two decimal places.
Answer:
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5.47 |
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Question 16 |
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1 / 1 point |
You purchased a piece of property for $30,000 nine years ago and sold it today for $83,190. What was the annual rate of return on your investment?
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9% |
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10% |
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11% |
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12% |
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Question 17 |
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1 / 1 point |
The First National Bank has agreed to lend you $30,000 today, but you must repay $42,135 in 3 years. What rate is the bank is charging you?
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13% |
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12% |
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11% |
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10% |
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Question 18 |
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1 / 1 point |
The Florida lottery agrees to pay the winner $257,000 at the end of each year for the next 20 years. What is the future value of this prize if each payment is put in an account earning 0.07?
Answer:
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10,535,841.53 |
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Question 19 |
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1 / 1 point |
Which of the following is not a “Fundamental Decision of Financial Management”?
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The capital budgeting decision |
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The macroeconomic management decision |
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The financing decision |
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Working capital management decision |
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Question 20 |
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1 / 1 point |
Which of the following is least likely to be part of an Annual Report?
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financial tables |
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discussions of the firm’s product lines, its services to its customers, and its contributions to the communities in which it operates |
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audited financial statements |
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ratio analysis of other firms in the same industry |
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Attempt Score: 20 / 20 - 100 % |
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Overall Grade (highest attempt): 20 / 20 - 100 % |
