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