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A firm's long term assets = $75,000, total assets = $200,000, inventory = $25,000 and current liabilities = $50,000.

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    And your question is?

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    1. An item which may be converted to cash within one year or one operating cycle of the firm is classified as a
    A) current liability.
    B) long-term asset.
    X C) current asset.
    D) long-term liability.


    2. Which account represents the cumulative earnings of the firm since its formation, minus dividends paid?
    A) Paid-in capital
    B) Common stock
    X C) Retained earnings
    D) Accumulated depreciation

    3. A firm's long term assets = $75,000, total assets = $200,000, inventory = $25,000 and current liabilities = $50,000.
    A) current ratio = 0.5; quick ratio = 1.5
    B) current ratio = 1.0; quick ratio = 2.0
    C) current ratio = 1.5; quick ratio = 2.0
    D) current ratio = 2.5; quick ratio = 2.0

    4. XYZ's receivables turnover is 10x. The accounts receivable at year-end are $600,000. The average collection period is 90 days (3 months). What was the sales figure for the year?
    A) $60,000
    B) $6,000,000
    C) $24,000,000
    D) none of the above

    5. A firm has total assets of $2,000,000. It has $900,000 in long-term debt. The stockholders equity is $900,000. What is the total debt to asset ratio?
    A) 45%
    B) 40%
    C) 55%
    D) none of the above


    6. 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





    7. If a firm has a break-even point of 20,000 units and the contribution margin on the firm's single product is $3.00 per unit and fixed costs are $60,000, what will the firm's net income be at sales of 30,000 units?
    A) $90,000
    B) $30,000
    C) $15,000
    D) $45,000

    8. A firm has forecasted sales of $3,000 in April, $4,500 in May and $6,500 in June. All sales are on credit. 30% is collected the month of sale and the remainder the following month. What will be balance in accounts receivable at the beginning of July?
    A) $1,950
    B) $6,500
    C) $4,550
    D) $5,100

    9. Mr. Blochirt is creating a college investment fund for his daughter. He will put in $850 per year for the next 15 years and expects to earn a 8% annual rate of return. How much money will his daughter have when she starts college?
    A) $11,250
    B) $12,263
    C) $24,003
    D) $23,079

    10. In determining the future value of a single amount, one measures
    A) the future value of periodic payments at a given interest rate.
    B) the present value of an amount discounted at a given interest rate.
    C) the future value of an amount allowed to grow at a given interest rate.
    D) the present value of periodic payments at a given interest rate.

    11. Companies that have higher risk than a competitor in the same industry will generally have
    A) to pay a higher interest rate than its competitors.
    B) a lower relative stock price than its competitors.
    C) a higher cost of funds than its competitors.
    D) all of the above.

    12. The statement of cash flows does not include which of the following sections?
    A) cash flows from operating activities
    B) cash flows from sales activities
    C) cash flows from investing activities
    D) cash flows from financing activities

    13. A firm has $200,000 in current assets, $400,000 in long-term assets, $80,000 in current liabilities, and $200,000 in long-term liabilities. What is its net working capital?
    A) $120,000
    B) $320,000
    C) $520,000
    D) none of the above



    14. TRUE OR FALSE? The first Nobel Prizes given to finance professors was for their contributions to capital structure theory and portfolio theories of risk and return.




    Use the following to answer questions 15-16:

    MEGAFRAME COMPUTER COMPANY
    Balance Sheet
    As of December 31, 2003

    ASSETS

    Cash $ 40,000
    Accounts Receivable 60,000
    Inventory 90,000
    New Plant and Equipment 220,000
    Total Assets $410,000

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Accounts Payable $ 60,000
    Accrued Expenses 40,000

    Long-Term debt 130,000
    Common Stock 60,000
    Paid-In capita 20,000
    Retained earnings 100,000
    Total Liabilities and Stockholders' Equity $410,000

    MEGAFRAME COMPUTER COMPANY
    Income Statement
    For the Year Ended December 31, 2003

    Sales (all on credit) $720,000
    Cost of Goods Sold 500,000
    Gross Profit 220,000
    Sales and Administrative Expense 20,000
    Depreciation 40,000
    Operating Profit 160,000
    Interest Expense 16,000
    Profit before Taxes 144,000
    Taxes (30%) 43,200
    Net Income $100,800




    15. Using the DuPont method, return on assets (investment) for Megaframe Computer is approximately
    A) 15%
    B) 25%
    C) 29%
    D) 35%

    16. The firm's debt to asset ratio is
    A) 56.1%
    B) 47.22%
    C) 33.33%
    D) none of the above





    MBA/503 Final Exam Name: Carrie McCorkindale


    1. An item which may be converted to cash within one year or one operating cycle of the firm is classified as a
    A) current liability.
    B) long-term asset.
    X C) current asset.
    D) long-term liability.


    2. Which account represents the cumulative earnings of the firm since its formation, minus dividends paid?
    A) Paid-in capital
    B) Common stock
    X C) Retained earnings
    D) Accumulated depreciation

    3. A firm's long term assets = $75,000, total assets = $200,000, inventory = $25,000 and current liabilities = $50,000.
    A) current ratio = 0.5; quick ratio = 1.5
    B) current ratio = 1.0; quick ratio = 2.0
    C) current ratio = 1.5; quick ratio = 2.0
    D) current ratio = 2.5; quick ratio = 2.0

    4. XYZ's receivables turnover is 10x. The accounts receivable at year-end are $600,000. The average collection period is 90 days (3 months). What was the sales figure for the year?
    A) $60,000
    B) $6,000,000
    C) $24,000,000
    D) none of the above

    5. A firm has total assets of $2,000,000. It has $900,000 in long-term debt. The stockholders equity is $900,000. What is the total debt to asset ratio?
    A) 45%
    B) 40%
    C) 55%
    D) none of the above


    6. 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





    7. If a firm has a break-even point of 20,000 units and the contribution margin on the firm's single product is $3.00 per unit and fixed costs are $60,000, what will the firm's net income be at sales of 30,000 units?
    A) $90,000
    B) $30,000
    C) $15,000
    D) $45,000

    8. A firm has forecasted sales of $3,000 in April, $4,500 in May and $6,500 in June. All sales are on credit. 30% is collected the month of sale and the remainder the following month. What will be balance in accounts receivable at the beginning of July?
    A) $1,950
    B) $6,500
    C) $4,550
    D) $5,100

    9. Mr. Blochirt is creating a college investment fund for his daughter. He will put in $850 per year for the next 15 years and expects to earn a 8% annual rate of return. How much money will his daughter have when she starts college?
    A) $11,250
    B) $12,263
    C) $24,003
    D) $23,079

    10. In determining the future value of a single amount, one measures
    A) the future value of periodic payments at a given interest rate.
    B) the present value of an amount discounted at a given interest rate.
    C) the future value of an amount allowed to grow at a given interest rate.
    D) the present value of periodic payments at a given interest rate.

    11. Companies that have higher risk than a competitor in the same industry will generally have
    A) to pay a higher interest rate than its competitors.
    B) a lower relative stock price than its competitors.
    C) a higher cost of funds than its competitors.
    D) all of the above.

    12. The statement of cash flows does not include which of the following sections?
    A) cash flows from operating activities
    B) cash flows from sales activities
    C) cash flows from investing activities
    D) cash flows from financing activities

    13. A firm has $200,000 in current assets, $400,000 in long-term assets, $80,000 in current liabilities, and $200,000 in long-term liabilities. What is its net working capital?
    A) $120,000
    B) $320,000
    C) $520,000
    D) none of the above



    14. TRUE OR FALSE? The first Nobel Prizes given to finance professors was for their contributions to capital structure theory and portfolio theories of risk and return.




    Use the following to answer questions 15-16:

    MEGAFRAME COMPUTER COMPANY
    Balance Sheet
    As of December 31, 2003

    ASSETS

    Cash $ 40,000
    Accounts Receivable 60,000
    Inventory 90,000
    New Plant and Equipment 220,000
    Total Assets $410,000

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Accounts Payable $ 60,000
    Accrued Expenses 40,000

    Long-Term debt 130,000
    Common Stock 60,000
    Paid-In capita 20,000
    Retained earnings 100,000
    Total Liabilities and Stockholders' Equity $410,000

    MEGAFRAME COMPUTER COMPANY
    Income Statement
    For the Year Ended December 31, 2003

    Sales (all on credit) $720,000
    Cost of Goods Sold 500,000
    Gross Profit 220,000
    Sales and Administrative Expense 20,000
    Depreciation 40,000
    Operating Profit 160,000
    Interest Expense 16,000
    Profit before Taxes 144,000
    Taxes (30%) 43,200
    Net Income $100,800




    15. Using the DuPont method, return on assets (investment) for Megaframe Computer is approximately
    A) 15%
    B) 25%
    C) 29%
    D) 35%

    16. The firm's debt to asset ratio is
    A) 56.1%
    B) 47.22%
    C) 33.33%
    D) none of the above

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