Can you help Fin Manag

1. The sole proprietorship represents single-person ownership and offers the advantages of simplicity of decision making and low organizational and operating costs. ____True ___False

2. In terms of revenues and profits, the corporation is not by far the most important form of business organization in the United States. ____True ___False

3. A major focus of the Sarbanes Oxley Act is to make sure that publicly traded companies accurately present their assets, liabilities and income in their financial statements. ____True ___False

4. Maximizing the earnings of the firm is not the goal of financial management. ____True ___False

5. The primary market includes the sale of securities by way of initial public offerings.

____True ___False

6. In the United States, stocks sold on either the New York Stock Exchange or NASDAQ are not considered sold in the primary market. ____True ___False

7. The P/E ratio is strongly related to the past performance of the firm. ____True ___False

8. Stockholders’ equity is not equal to assets minus liabilities. ____True ___False

9. As the contribution margin rises, the breakeven point goes down. ____True ___False

10. Which of the following is not considered to be a profitability ratio?

A. Profit margin

B. Times interest earned

C. Return on equity

D. Return on assets (investment)

11. Which of the following did not contribute to the financial crisis?

A. The change from mark-to-market accounting to

B. Solid credit ratings from the ratings agencies

C. The extension of credit to high-risk borrowers

D. The takeover of JP Morgan Chase by Bear Sterns

E. Mark this response if all of the above contributed to the financial crisis

12. The net worth of a firm

A. Is usually the same as the firm’s market value

B. Is based on current asset costs

C. Is based on current liabilities

D. NONE OF THESE

13. Match the following with questions below:

1) Depreciation

2) Cash flows from investing

3) Free cash flow

4) Marketable securities

5) Cash flow from financing

6) Statements of cash flows

7) Net worth or book value

8) Historical cost accounting

9) Income statement

10) Earnings per share

11) Notes payable

12) P/E ratio

13) Cash flows from operations

14) Liquidity

15) Stockholders’ equity

16) Marginal corporate tax rate

17) Balance sheet

a) All the assets of the firm minus the liabilities and preferred stock___________

b) A financial statement that indicates what the firm owns, and how these assets are financed in the form of liabilities or ownership interest ________

c) Changes accrual-based information from income statement and balance sheet to cash based information_______

d) The relative convertibility of short-term assets into cash_______

e) The levy expressed as a percentage that applies to each new dollar of taxable income _____

f) The multiplier applied to earnings per share to determine current value ______

g) The income available to common stockholders’ divided by the number of common shares outstanding ________

h) A financial statement that measures the profitability of the firm over a period of time_____

i) Temporary investments of excess cash________

j) Represents the net cash flow that results from changes in the amount of a firm’s long-term assets________

k) The total ownership position of preferred and common stockholders________

l) Traditional method of accounting using original costs minus depreciation________

m) Represents the net cash flow that results from a firm’s production and sales activities________

n) Short-term signed obligations to banks or other creditors________

o) Cash flow that is generated (or reduced) from the sale or repurchase of securities or the payment of cash dividends________

p) The allocation of the initial cost of an asset over its useful life_______

q) Cash flows from operations minus working capital minus dividend payments________

14. The Bubba Corp. had earnings before taxes of $400,000 and sales of $2,000,000. If it is in the 40% tax bracket its after-tax profit margin is:

A. 40%

B. 12%

C. 20%

D. 25%

15. At the break-even point, a firm’s profits are

A. Greater than zero

B. Less than zero

C. Equal to zero

D. Not enough information to tell

16. In break-even analysis, the contribution margin is defined as

A. Price minus variable cost

B. Price minus fixed cost

C. Variable cost minus fixed cost

D. Fixed cost minus variable cost

17. The London Interbank Offered Rate (LIBOR)

A. Competes with the U.S. prime rate for those companies with an international presence

B. Has been lower than the U.S. prime rate for at least the last decade

C. Is the interbank lending rate for London banks

D. are correct A and B

18. TVM problem: Suppose you deposit 2000 in the bank for 7 years at rate of 9%, how much would you have in 7 years?

19. Suppose you would like to purchase a car in 4 years, which will cost you 40,000 at rate of 7% How much do you need to save today?

20. Calculate payback an example of payback period and what is the payback period?

21. How long would it take to double your money at rate of 10%?

22. What interest rate should you seek if you would like to triple your money in 3 years?

23. What is the meaning and acronym of WACC and CAPM?

24. Explain what 4/15, net 30 mean, compute thecost for not taking the discount.

25. Calculate NPV if your initial investment was 1000, year 1 expect 200, year 2 expect 400 and year 5 500. Should you invest? Why or why not?

26. What is the balance sheet formula?

27. What is the formula for income statement?