Review Test Submission: Practice Quiz 1 - Module 1: Quizzes And Tests

6/28/2020

Review Test Submission: Practice Quiz 1 - Module 1 – ...

Ajil Mohan 136

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Quizzes and Tests

Review Test Submission: Practice Quiz 1 - Module 1

Review Test Submission: Practice Quiz 1 - Module 1 User

Ajil Mohan

Course

Managerial Acctg and Finance - ACCT-5507-WWA

Test

Practice Quiz 1 - Module 1

Started

6/28/20 10:15 PM

Submitted

6/28/20 10:16 PM

Status

Completed

Attempt Score

5 out of 20 points

Time Elapsed

1 minute out of 40 minutes

Instructions

Click on "Begin" to open and take the quiz.

Results Displayed All Answers, Submitted Answers, Correct Answers

Question 1

0 out of 1 points

A corporation: I. Is subject to double taxation. II. Can be sued. III. Can have an unlimited life. IV. Can be a general partner in a partnership. Selected Answer:

I, II, and III only

Answers:

I and III only II and III only II, III, and IV only I, II, and III only I, II, III, and IV

Question 2

0 out of 1 points

The purchase and sale of securities after the original issuance occurs in the: Selected Answer:

Primary market.

Answers:

Primary market. Secondary market. Dealer market.

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997699_1&course_id=_151952_1&content_id=_8516626_1&return_c…

1/7

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Review Test Submission: Practice Quiz 1 - Module 1 – ...

Auction market. Liquidation market.

Question 3

0 out of 1 points

Which one of the following statements concerning a partnership is true? Selected Answer:

Limited partners in a limited partnership should be actively involved in management decisions.

Answers:

Under a general partnership, only the key partner is personally liable for the business debts. Limited partners in a limited partnership should be actively involved in management decisions. Income from a limited partnership is taxed as corporate income. A primary advantage of a partnership is the ease of transferring ownership. A partnership terminates at the death of any partner.

Question 4

0 out of 1 points

The area of corporate finance concerned purchasing and selling stocks and bonds is called: Selected Answer:

International finance.

Answers:

Investments. Municipal finance. International finance. Institutional finance. Strategic finance.

Question 5

0 out of 1 points

Which one of the following statements concerning a proprietorship is true? Selected Answer:

A proprietorship can be a business jointly owned by two family members.

Answers:

A proprietorship can be a business jointly owned by two family members. Income from a proprietorship is taxed as a separate entity. A proprietor is personally responsible for 100% of the firm's liabilities. A partial transfer of ownership is easier with a proprietorship than with a corporation.

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997699_1&course_id=_151952_1&content_id=_8516626_1&return_c…

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Review Test Submission: Practice Quiz 1 - Module 1 – ...

Income from a proprietorship is taxed at a lower rate than other personal income.

Question 6

0 out of 1 points

NASDAQ is: Selected Answer:

Both an OTC and an auction market.

Answers:

The largest financial market in the U.S. in terms of the total value of listed stocks. Both an OTC and an auction market. An electronic market trading solely in corporate and government bonds. An electronic market which has no physical location. A market with far fewer listings than the NYSE.

Question 7

0 out of 1 points

A market where trading takes place directly between buyers and sellers is called a(n): Selected Answer:

Dealer market.

Answers:

primary market. OTC market. Dealer market. Auction market. Liquidation market.

Question 8

0 out of 1 points

The mix of debt and equity by which a corporation is financed refers to the firm's: Selected Answer:

Capital budgeting.

Answers:

Cash management. Capital structure. Capital budgeting. Working capital management. Leverage management.

Question 9

0 out of 1 points

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Review Test Submission: Practice Quiz 1 - Module 1 – ...

Which of the following is a disadvantage of the corporate form of ownership? Selected Answer:

Ability to raise capital

Answers:

Limited liability Ease of transfer of ownership Taxation Ability to raise capital The life of the corporation

Question 10

0 out of 1 points

Which one of the following actions is the best example of an agency problem? Basing management bonuses on the attainment of specific financial goals

Selected Answer: Answers:

Paying management bonuses based on the number of store locations opened during the year Paying management bonuses based on the current market value of the firm's stock Accepting a project that enhances both management salaries and the market value of the firm's stock Requiring stockholders approval of all management compensation decisions Basing management bonuses on the attainment of specific financial goals

Question 11

1 out of 1 points

The agency problem is best defined as a conflict of interest between a firm's: Selected Answer:

Stockholders and the firm's managers.

Answers:

Various employees. Various managers. Managers and the firm's employees. Stockholders and the firm's managers. Stockholders and the firm's debtors.

Question 12

0 out of 1 points

Double taxation refers to which of the following scenarios? Selected

The corporation pays taxes on revenues and earnings.

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Review Test Submission: Practice Quiz 1 - Module 1 – ...

Answer:

Both bondholders and shareholders must pay taxes.

Answers:

The corporation pays taxes on earnings, and creditors pay taxes on interest received. The corporation pays taxes on its earnings, and shareholders pay taxes on dividends. The corporation pays taxes on revenues and expenses. The corporation pays taxes on revenues and earnings.

Question 13

1 out of 1 points

Working capital management: Selected Answer:

Includes the daily oversight of a firm's cash requirements.

Answers:

Includes the daily oversight of a firm's cash requirements. Involves the determination of how much long-term debt should be issued. Is the oversight of a firm's long-term assets. Deals with the refinancing of the firm's debt if interest rates decline. Deals with the allocation of equipment to various jobs on a daily basis.

Question 14

0 out of 1 points

Which of the following help convince managers to work in the best interest of the stockholders? I. Compensation based on the value of the stock. II. Stock option plans. III. Threat of a company takeover. IV. Threat of a proxy fight. Selected Answer:

I, II, and III only

Answers:

I and II only III and IV only I, II, and III only I, III, and IV only I, II, III, and IV

Question 15

1 out of 1 points

When owners are managers (such as in a sole proprietorship), a firm will have agency costs. https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997699_1&course_id=_151952_1&content_id=_8516626_1&return_c…

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Review Test Submission: Practice Quiz 1 - Module 1 – ...

Selected Answer:

False

Answers:

True False

Question 16

0 out of 1 points

Which of the following is considered a benefit of the corporate form of organization? I. Ease of the transfer of ownership. II. Limited life. III. Double taxation. Selected Answer:

II only

Answers:

I only II only I and II only I and III only I, II, and III

Question 17

1 out of 1 points

In a limited partnership: Selected Answer:

A limited partner is liable only for the amount he/she contributed to the partnership. Only the limited partners are involved in the daily management of the firm.

Answers:

Both general and limited partners are involved in the daily management of the firm. A limited partner is liable only for the amount he/she contributed to the partnership. A general partner is liable only for the amount he/she contributed to the partnership. The income earned is taxed like a corporation.

Question 18

0 out of 1 points

A conflict of interest between the stockholders and management of a firm is called: Selected Answer:

Corporate activism.

Answers:

Stockholders' liability. Corporate breakdown.

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997699_1&course_id=_151952_1&content_id=_8516626_1&return_c…

6/7

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Review Test Submission: Practice Quiz 1 - Module 1 – ...

The agency problem. Corporate activism. Legal liability.

Question 19

0 out of 1 points

Which of the following represent cash outflows from a firm? I. Issuance of securities. II. Payment of dividends. III. New loan proceeds. IV. Payment of government taxes. Selected Answer:

I, II, and IV only

Answers:

I and III only II and IV only I and IV only I, II, and IV only II, III, and IV only

Question 20

1 out of 1 points

The treasurer and the controller of a corporation generally report to the: Selected Answer:

Vice president of finance.

Answers:

Board of directors. Chairman of the board. Chief executive officer. President. Vice president of finance.

Sunday, June 28, 2020 10:16:20 PM EDT

← OK

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997699_1&course_id=_151952_1&content_id=_8516626_1&return_c…

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Review Test Submission: Practice Quiz 2 - Module 2 – ...

Siddharth Laxman Anjarlekar 165

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Quizzes and Tests

Review Test Submission: Practice Quiz 2 - Module 2

Review Test Submission: Practice Quiz 2 - Module 2 User

Siddharth Laxman Anjarlekar

Course

Managerial Acctg and Finance - ACCT-5507-WWA

Test

Practice Quiz 2 - Module 2

Started

6/28/20 9:38 PM

Submitted

6/28/20 10:10 PM

Status

Completed

Attempt Score

16 out of 20 points

Time Elapsed

32 minutes out of 40 minutes

Instructions

Click on "Begin" to open and take the quiz.

Results Displayed

All Answers, Submitted Answers, Correct Answers, Feedback, Incorrectly Answered Questions

Question 1

1 out of 1 points

The ___________ tax rate is the rate that applies if one more dollar of income is earned and the ___________ tax rate is the total tax bill divided by taxable income. Selected Answer:

Marginal; average

Answers:

Marginal; flat Marginal; average Flat; marginal Flat; average Average; marginal

Response Feedback:

correct TB 02-32 The ___________ tax rate is the rate that applies ... Chapter - Chapter 02 #32 Difficulty: Basic Gradable: automatic Learning Objective: 02-03 How to determine a firm's cash flow from its financial statements. Type: Definitions

Question 2

1 out of 1 points

Given the following statement of comprehensive income data, calculate net income: sales = $135, cost of goods sold = $40, miscellaneous expenses = $35, depreciation = $20, interest https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997360_1&course_id=_151952_1&content_id=_8516627_1&return_…

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Review Test Submission: Practice Quiz 2 - Module 2 – ...

expense = $20, tax rate = 34%. Selected Answer:

$13.20

Answers:

$13.20 $19.80 $20.00 $23.10 $42.90

Response Feedback:

correct TB 02-172 Given the following statement of comprehensive inc... Chapter - Chapter 02 #172 Difficulty: Intermediate Gradable: automatic Learning Objective: 02-04 The difference between average and marginal tax rates. Type: Problems

Question 3

1 out of 1 points

What is net new borrowing for 2009? Selected Answer:

$70

Answers:

-$70 -$35 $35 $70

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997360_1&course_id=_151952_1&content_id=_8516627_1&return_…

2/13

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Review Test Submission: Practice Quiz 2 - Module 2 – ...

$105 Response Feedback:

correct TB 02-261 What is net new borrowing for 2009? Chapter - Chapter 02 #261 Difficulty: Challenge Gradable: automatic Learning Objective: 02-04 The difference between average and marginal tax rates. Type: Problems

Question 4

1 out of 1 points

What is the change in net working capital for 2009? Selected Answer:

-$122

Answers:

-$643 -$122 $122 $643 $765

Response Feedback:

correct TB 02-222 What is the change in net working capital for 2009... Chapter - Chapter 02 #222

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997360_1&course_id=_151952_1&content_id=_8516627_1&return_…

3/13

6/28/2020

Review Test Submission: Practice Quiz 2 - Module 2 – ...

Difficulty: Intermediate Gradable: automatic Learning Objective: 02-04 The difference between average and marginal tax rates. Type: Problems

Question 5

0 out of 1 points

Which one of the following will increase the operating cash flow of a firm, all else constant? Selected Answer:

an increase in depreciation expense

Answers:

an increase in depreciation expense an increase in the taxes paid a decrease in sales a decrease in the interest expense a decrease in variable costs

Response Feedback:

incorrect TB 02-159 Which one of the following will increase the opera... Chapter - Chapter 02 #159 Difficulty: Intermediate Gradable: automatic Learning Objective: 02-02 The difference between accounting income and cash flow. Type: Concepts

Question 6

1 out of 1 points

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997360_1&course_id=_151952_1&content_id=_8516627_1&return_…

4/13

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Review Test Submission: Practice Quiz 2 - Module 2 – ...

What is net capital spending for 2009? Selected Answer:

-$57

Answers:

-$250 -$57 $0 $57 $477 correct

Response Feedback:

TB 02-258 What is net capital spending for 2009? Chapter - Chapter 02 #258 Difficulty: Challenge Gradable: automatic Learning Objective: 02-04 The difference between average and marginal tax rates. Type: Problems

Question 7

1 out of 1 points

Anax Corporation purchased a long-term asset for $100,000. The asset has a 30% CCA rate. At the end of year 5, Anax sold the asset for 25% of its original value. Given this information, determine the value of the terminal loss or recapture at the end of year 5. Selected Answer:

Recapture; $3,391

Answers:

Recapture; $3,391 Recapture $4,391 Recapture $1,501 Terminal Loss $1,501 Terminal Loss $4,391

Response Feedback:

correct TB 02-326 Anax Corporation purchased a long-term asset for $... Chapter - Chapter 02 #326 Difficulty: Intermediate Gradable: automatic Learning Objective: 02-05 The basics of Capital Cost Allowance (CCA) and Undepreciated Capital Cost (UCC). Type: Problems

Question 8

1 out of 1 points

Book value: Selected Answer:

is based on historical cost.

Answers:

is equivalent to market value for firms with fixed assets. is based on historical cost.

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997360_1&course_id=_151952_1&content_id=_8516627_1&return_…

5/13

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Review Test Submission: Practice Quiz 2 - Module 2 – ...

generally tends to exceed market value when fixed assets are included. is more of a financial than an accounting valuation. is adjusted to market value whenever the market value exceeds the stated book value. Response Feedback:

correct TB 02-132 Book value: Chapter - Chapter 02 #132 Difficulty: Basic Gradable: automatic Learning Objective: 02-01 The difference between accounting value (or "book" value) and market value. Type: Concepts

Question 9

0 out of 1 points

What is the amount of net new borrowing for 2009? Selected Answer:

-$225

Answers:

-$225 -$25 $0 $25

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997360_1&course_id=_151952_1&content_id=_8516627_1&return_…

6/13

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Review Test Submission: Practice Quiz 2 - Module 2 – ...

$225 Response Feedback:

incorrect TB 02-252 What is the amount of net new borrowing for 2009? Chapter - Chapter 02 #252 Difficulty: Challenge Gradable: automatic Learning Objective: 02-04 The difference between average and marginal tax rates. Type: Problems

Question 10

1 out of 1 points

A(n) _________ asset is one which can be quickly converted into cash without significant loss in value. Selected Answer:

Liquid.

Answers:

Current. Fixed. Intangible. Liquid. Long-term.

Response Feedback:

correct TB 02-17 A(n) _________ asset is one which can be quickly c... Chapter - Chapter 02 #17 Difficulty: Basic Gradable: automatic Learning Objective: 02-04 The difference between average and marginal tax rates. Type: Definitions

Question 11

1 out of 1 points

Given the following information from More Money, Inc.'s 2009 financial statements, calculate cash flow from assets: operating cash flow = $284,500, net fixed assets declined by $8,000, depreciation expense = $13,000, and net working capital increased by $1,500. Selected Answer:

$278,000

Answers:

$262,000 $278,000 $281,000 $288,000 $301,000

Response Feedback:

correct TB 02-179 Given the following information from More Money, I... Chapter - Chapter 02 #179

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997360_1&course_id=_151952_1&content_id=_8516627_1&return_…

7/13

6/28/2020

Review Test Submission: Practice Quiz 2 - Module 2 – ...

Difficulty: Intermediate Gradable: automatic Learning Objective: 02-04 The difference between average and marginal tax rates. Type: Problems

Question 12

1 out of 1 points

Thompson's Jet Skis has operating cash flow of $218. Depreciation is $45 and interest paid is $35. A net total of $69 was paid on long-term debt. The firm spent $180 on fixed assets and increased net working capital by $38. What is the amount of the cash flow to stockholders? Selected Answer:

-$104

Answers:

-$104 -$28 $28 $114 $142

Response Feedback:

correct TB 02-246 Thompson's Jet Skis has operating cash flow of $21... Chapter - Chapter 02 #246 Difficulty: Intermediate Gradable: automatic Learning Objective: 02-02 The difference between accounting income and cash flow. Type: Problems

Question 13

1 out of 1 points

Cash flow to creditors must increase when: Selected Answer:

the cash flow to stockholders is constant and the cash flow from assets increases.

Answers:

a firm increases its long-term debt by more than its interest expense in any given year. the cash flow to stockholders is constant and the cash flow from assets increases. the operating cash flow increases and the cash flow to stockholders decreases. the interest rate on the firm's debt decreases. a firm borrows more than it repays in any one given year. Response Feedback:

correct TB 02-164 Cash flow to creditors must increase when:

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997360_1&course_id=_151952_1&content_id=_8516627_1&return_…

8/13

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Review Test Submission: Practice Quiz 2 - Module 2 – ...

Chapter - Chapter 02 #164 Difficulty: Intermediate Gradable: automatic Learning Objective: 02-02 The difference between accounting income and cash flow. Type: Concepts

Question 14

1 out of 1 points

Which one of the following statements concerning liquidity is correct? Selected Answer:

Statement of financial position accounts are listed in order of decreasing liquidity. If you can sell an asset today, it is a liquid asset.

Answers:

If you can sell an asset next year at a price equal to its actual value, the asset is highly liquid. Trademarks and patents are highly liquid. The less liquidity a firm has, the lower the probability the firm will encounter financial difficulties. Statement of financial position accounts are listed in order of decreasing liquidity. Response Feedback:

correct TB 02-129 Which one of the following statements concerning l... Chapter - Chapter 02 #129 Difficulty: Basic Gradable: automatic Learning Objective: 02-04 The difference between average and marginal tax rates. Type: Concepts

Question 15

1 out of 1 points

The earnings per share will: Selected Answer:

increase if the number of shares outstanding is decreased.

Answers:

increase if the tax rate increases. remain constant if the number of shares outstanding is increased. increase anytime the revenue of a firm increases. increase only if the net income of a firm increases. increase if the number of shares outstanding is decreased.

Response Feedback:

correct TB 02-157 The earnings per share will: Chapter - Chapter 02 #157

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9/13

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Review Test Submission: Practice Quiz 2 - Module 2 – ...

Difficulty: Intermediate Gradable: automatic Learning Objective: 02-02 The difference between accounting income and cash flow. Type: Concepts

Question 16

0 out of 1 points

Cymex Corporation purchased a long-term asset for $80,000. The asset has a 20% CCA rate. At the end of year 5, Cymex sold the asset for 25,000. Given this information, determine the value of the terminal loss or recapture at the end of year 5. Selected Answer:

Recapture $4,491

Answers:

Recapture; $8,601 Recapture $4,491 Recapture $1,501 Terminal Loss $1,501 Terminal Loss $4,491

Response Feedback:

incorrect TB 02-327 Cymex Corporation purchased a long-term asset for ... Chapter - Chapter 02 #327 Difficulty: Intermediate Gradable: automatic Learning Objective: 02-05 The basics of Capital Cost Allowance (CCA) and Undepreciated Capital Cost (UCC). Type: Problems

Question 17

1 out of 1 points

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997360_1&course_id=_151952_1&content_id=_8516627_1&return…

10/13

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Review Test Submission: Practice Quiz 2 - Module 2 – ...

What is the net new equity for 2009? Selected Answer:

$20

Answers:

-$40 -$20 $20 $40 $60

Response Feedback:

correct TB 02-226 What is the net new equity for 2009? Chapter - Chapter 02 #226 Difficulty: Intermediate Gradable: automatic Learning Objective: 02-04 The difference between average and marginal tax rates. Type: Problems

Question 18

0 out of 1 points

A firm has current assets of $400, shareholders' equity of $700, current liabilities of $300, and net fixed assets of $600. What is the amount of long-term debt? Selected Answer:

$100

Answers:

$0

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997360_1&course_id=_151952_1&content_id=_8516627_1&return…

11/13

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Review Test Submission: Practice Quiz 2 - Module 2 – ...

$100 $200 $300 $400 incorrect

Response Feedback:

TB 02-211 A firm has current assets of $400, shareholders' e... Chapter - Chapter 02 #211 Difficulty: Basic Gradable: automatic Learning Objective: 02-04 The difference between average and marginal tax rates. Type: Problems

Question 19

1 out of 1 points

The financial statement summarizing the value of a firm's equity on a particular date is the statement of comprehensive income. Selected Answer:

False

Answers:

True False

Response Feedback:

correct TB 02-02 The financial statement summarizing the value of a... Chapter - Chapter 02 #2 Difficulty: Basic Gradable: automatic Learning Objective: 02-04 The difference between average and marginal tax rates. Type: Concepts

Question 20

1 out of 1 points

Which of the following accurately describes the relation between book and market value? Selected Answer:

Book value is an accounting summary of value and is inferior to market value as a source of current information regarding the true value of the firm.

Answers:

Financial managers should rely on book values, and not market values, when making decisions for the firm, because the firm's tax liability is based on book values. Financial managers should rely on market values, and not book values, when making decisions for the firm, because the firm's tax liability is based on market values. Book value is an accounting summary of value and is inferior to market value as a source of current information regarding the true value of the firm.

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997360_1&course_id=_151952_1&content_id=_8516627_1&return…

12/13

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Review Test Submission: Practice Quiz 2 - Module 2 – ...

The market value of current assets is often difficult to determine, and thus of little value to the decision making process of financial managers. Market value always exceeds book value. Response Feedback:

correct TB 02-68 Which of the following accurately describes the re... Chapter - Chapter 02 #68 Difficulty: Intermediate Gradable: automatic Learning Objective: 02-01 The difference between accounting value (or "book" value) and market value. Type: Concepts

Sunday, June 28, 2020 10:10:43 PM EDT

← OK

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13/13

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Review Test Submission: Practice Quiz 3 - Module 3 – ...

Ajil Mohan 136

MyCourses

H M

Quizzes and Tests

Review Test Submission: Practice Quiz 3 - Module 3

Review Test Submission: Practice Quiz 3 - Module 3 User

Ajil Mohan

Course

Managerial Acctg and Finance - ACCT-5507-WWA

Test

Practice Quiz 3 - Module 3

Started

6/28/20 10:17 PM

Submitted

6/28/20 10:34 PM

Status

Completed

Attempt Score

12 out of 15 points

Time Elapsed

17 minutes out of 40 minutes

Instructions

Click on "Begin" to open and take the quiz.

Results Displayed

All Answers, Submitted Answers, Correct Answers, Feedback, Incorrectly Answered Questions

Question 1

1 out of 1 points

The net working capital turnover ratio is measured as: Selected Answer:

Sales divided by net working capital.

Answers:

Sales divided by net working capital. Sales minus net working capital. Sales times net working capital. Net working capital divided by sales. Net working capital plus sales.

Response Feedback:

correct TB 03-31 The net working capital turnover ratio is measured... Chapter - Chapter 03 #31 Difficulty: Basic Gradable: automatic Learning Objective: 03-02 How to standardize financial statements for comparison purposes. Type: Definitions

Question 2

1 out of 1 points

Rojers Communications Inc. sells for $34.50 and there are 605 million shares outstanding at the end of 2009. Based on the 2009 annual report, EBIT is $2,024 million, net income is $1,002 million, and depreciation is $1,760 million. What is the Enterprise Multiple? https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997725_1&course_id=_151952_1&content_id=_8516628_1&return_c…

1/9

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Review Test Submission: Practice Quiz 3 - Module 3 – ...

Selected Answer:

5.52

Answers:

5.52 10.31 20.83 4.52 5.00

Response Feedback:

correct TB 03-303 Rojers Communications Inc. sells for $34.50 and th... Chapter - Chapter 03 #303 Difficulty: Intermediate Gradable: automatic Learning Objective: 03-03 How to compute and; more importantly; interpret some common ratios. Type: Problems

Question 3

1 out of 1 points

Using the Du Pont Identity Method, calculate the equity multiplier given the following information. Profit margin 17%; total asset turnover 0.88; return on equity 17.95%. Selected Answer:

1.2

Answers:

1.6 1.4 1.2 1.0 0.8

Response Feedback: correct

TB 03-338 Using the Du Pont Identity Method, calculate the e... Chapter - Chapter 03 #338 Difficulty: Intermediate Gradable: automatic Learning Objective: 03-04 The determinants of a firm's profitability. Type: Problems

Question 4

0 out of 1 points

A Quebec City firm has a debt-equity ratio of .65. From this, you can determine that the firm has _____ in assets for every $1 in equity. Selected Answer:

$.65

Answers:

$.54 $.65 $1.54

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997725_1&course_id=_151952_1&content_id=_8516628_1&return_c…

2/9

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Review Test Submission: Practice Quiz 3 - Module 3 – ...

$1.65 $2.54 Response Feedback:

incorrect TB 03-255 A Quebec City firm has a debt-equity ratio of .65.... Chapter - Chapter 03 #255 Difficulty: Basic Gradable: automatic Learning Objective: 03-02 How to standardize financial statements for comparison purposes. Type: Problems

Question 5

1 out of 1 points

Using the Du Pont Identity Method, calculate return on equity given the following information. Profit margin 16%; total asset turnover 0.85; equity multiplier 1.5. Selected Answer:

20.40%

Answers:

20.40% 21.40% 22.40% D.23.40% 24.40%

Response Feedback: correct

TB 03-336 Using the Du Pont Identity Method, calculate retur... Chapter - Chapter 03 #336 Difficulty: Intermediate Gradable: automatic Learning Objective: 03-04 The determinants of a firm's profitability. Type: Problems

Question 6

0 out of 1 points

A firm has a profit margin of 9% on sales of $400,000. There are 10,000 shares of common stock outstanding. What is the earnings per share? Selected Answer:

$40.00

Answers:

$1.80 $3.60 $4.00 $36.00 $40.00

Response Feedback:

incorrect TB 03-234 A firm has a profit margin of 9% on sales of $400,... Chapter - Chapter 03 #234 Difficulty: Intermediate

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997725_1&course_id=_151952_1&content_id=_8516628_1&return_c…

3/9

6/28/2020

Review Test Submission: Practice Quiz 3 - Module 3 – ...

Gradable: automatic Learning Objective: 03-03 How to compute and; more importantly; interpret some common ratios. Type: Problems

Question 7

1 out of 1 points

If a firm is having difficulty controlling its operating expenses, the trouble will be most directly reflected in the firm's ________________ ratios. Selected Answer:

profitability

Answers:

liquidity profitability market value asset management long-term solvency

Response Feedback:

correct TB 03-98 If a firm is having difficulty controlling its ope... Chapter - Chapter 03 #98 Difficulty: Basic Gradable: automatic Learning Objective: 03-02 How to standardize financial statements for comparison purposes. Type: Concepts

Question 8

1 out of 1 points

If you were to prepare a statement of cash flows, what is the negative flow from cash due to operating activities? (Consider only outflows) Selected Answer:

-$215

Answers:

-$105 -$175 -$215 -$351 -$457

Response Feedback: correct

TB 03-215 If you were to prepare a statement of cash flows, ... Chapter - Chapter 03 #215 Difficulty: Intermediate Gradable: automatic Learning Objective: 03-01 The sources and uses of a firm's cash flows. Type: Problems

Question 9

0 out of 1 points

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997725_1&course_id=_151952_1&content_id=_8516628_1&return_c…

4/9

6/28/2020

Review Test Submission: Practice Quiz 3 - Module 3 – ...

The following statement of financial position and statement of comprehensive income should be used.

What is Woodburn's debt-equity ratio for 2009? Selected Answer:

.55

Answers:

.39 .47 .52 .55 .68

Response Feedback:

incorrect TB 03-287 What is Woodburn's debt-equity ratio for 2009? Chapter - Chapter 03 #287 Difficulty: Basic Gradable: automatic Learning Objective: 03-02 How to standardize financial statements for comparison purposes. Type: Problems

Question 10

1 out of 1 points

Jeminson's Hardware has accounts payable of $682, inventory of $3,608, cash of $340, fixed https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997725_1&course_id=_151952_1&content_id=_8516628_1&return_c…

5/9

6/28/2020

Review Test Submission: Practice Quiz 3 - Module 3 – ...

assets of $4,211, accounts receivable of $418, and long-term debt of $3,750. What is the value of the net working capital to total assets ratio? Selected Answer:

.43

Answers:

.29 .37 .43 .47 .56

Response Feedback:

correct TB 03-309 Jeminson's Hardware has accounts payable of $682, ... Chapter - Chapter 03 #309 Difficulty: Intermediate Gradable: automatic Learning Objective: 03-02 How to standardize financial statements for comparison purposes. Type: Problems

Question 11

1 out of 1 points

Ratios that measure the firm's financial leverage are known as: Selected Answer:

Long-term solvency ratios.

Answers:

Asset management ratios. Long-term solvency ratios. Short-term solvency ratios. Profitability ratios. Market value ratios.

Response Feedback:

correct TB 03-18 Ratios that measure the firm's financial leverage ... Chapter - Chapter 03 #18 Difficulty: Basic Gradable: automatic Learning Objective: 03-02 How to standardize financial statements for comparison purposes. Type: Definitions

Question 12

1 out of 1 points

Which one of the following statements is correct? Selected Answer: Answers:

Financial statements are frequently the basis used for performance evaluations. Book values should always be given precedence over market values.

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997725_1&course_id=_151952_1&content_id=_8516628_1&return_c…

6/9

6/28/2020

Review Test Submission: Practice Quiz 3 - Module 3 – ...

Financial statements are frequently the basis used for performance evaluations. Historical information has no value when predicting the future. Potential lenders place little value on financial statement information. Reviewing financial information over time has very limited value. Response Feedback: correct

TB 03-176 Which one of the following statements is correct? Chapter - Chapter 03 #176 Difficulty: Basic Gradable: automatic Learning Objective: 03-04 The determinants of a firm's profitability. Type: Concepts

Question 13

1 out of 1 points

Calculate cash given the following information. Total current assets $57,000; supplies $4,000; average collection period 60.83 days; days' sales in inventory 97.33 days; sales 90,000; cost of goods sold 75,000. Selected Answer:

$18,000

Answers:

$24,000 $22,000 $20,000 $18,000 $16,000

Response Feedback:

correct TB 03-330 Calculate cash given the following information. To... Chapter - Chapter 03 #330 Difficulty: Intermediate Gradable: automatic Learning Objective: 03-03 How to compute and; more importantly; interpret some common ratios. Type: Problems

Question 14

1 out of 1 points

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997725_1&course_id=_151952_1&content_id=_8516628_1&return_c…

7/9

6/28/2020

Review Test Submission: Practice Quiz 3 - Module 3 – ...

What is the days' sales in receivables for 2009? Selected Answer:

43

Answers:

34 43 48 53 59

Response Feedback:

correct TB 03-239 What is the days' sales in receivables for 2009? Chapter - Chapter 03 #239 Difficulty: Intermediate Gradable: automatic Learning Objective: 03-02 How to standardize financial statements for comparison purposes. Type: Problems

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997725_1&course_id=_151952_1&content_id=_8516628_1&return_c…

8/9

6/28/2020

Review Test Submission: Practice Quiz 3 - Module 3 – ...

Question 15

1 out of 1 points

The ___________ breaks down return on equity into three component parts: operating efficiency of the firm, its asset use efficiency, and financial leverage. Selected Answer:

Du Pont identity

Answers:

Du Pont identity Return on assets Statement of cash flows Asset turnover ratio Equity multiplier

Response Feedback:

correct TB 03-40 The ___________ breaks down return on equity into ... Chapter - Chapter 03 #40 Difficulty: Basic Gradable: automatic Learning Objective: 03-03 How to compute and; more importantly; interpret some common ratios. Type: Definitions

Sunday, June 28, 2020 10:34:48 PM EDT

← OK

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997725_1&course_id=_151952_1&content_id=_8516628_1&return_c…

9/9

6/28/2020

Review Test Submission: Practice Quiz 4 - Module 4 – ...

Ajil Mohan 138

MyCourses

H M

Quizzes and Tests

Review Test Submission: Practice Quiz 4 - Module 4

Review Test Submission: Practice Quiz 4 - Module 4 User

Ajil Mohan

Course

Managerial Acctg and Finance - ACCT-5507-WWA

Test

Practice Quiz 4 - Module 4

Started

6/28/20 10:36 PM

Submitted

6/28/20 10:38 PM

Status

Completed

Attempt Score

5 out of 20 points

Time Elapsed

1 minute out of 40 minutes

Results Displayed

All Answers, Submitted Answers, Correct Answers, Feedback, Incorrectly Answered Questions

Question 1

1 out of 1 points

Syed's Industries has accounts receivable of $700, inventory of $1,200, sales of $4,200, and cost of goods sold of $3,400. How long does it take Syed's to both sell its inventory and then collect the payment on the sale? Selected Answer:

190 days

Answers:

128 days 146 days 163 days 190 days 211 days

Response Feedback:

correct TB 03-298 Syed's Industries has accounts receivable of $700,... Chapter - Chapter 03 #298 Difficulty: Intermediate Gradable: automatic Learning Objective: 03-02 How to standardize financial statements for comparison purposes. Type: Problems

Question 2

0 out of 1 points

A decrease in which one of the following is a source of cash? Selected Answer:

Notes payable

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1/10

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Review Test Submission: Practice Quiz 4 - Module 4 – ...

Answers:

Common stock Notes payable Inventory Retained earnings Long-term debt

Response Feedback: incorrect

TB 03-131 A decrease in which one of the following is a sour... Chapter - Chapter 03 #131 Difficulty: Basic Gradable: automatic Learning Objective: 03-01 The sources and uses of a firm's cash flows. Type: Concepts

Question 3

0 out of 1 points

The financial ratio days' sales in receivables is measured as: Selected Answer:

Accounts receivable times 365 days.

Answers:

Receivables turnover plus 365 days. Accounts receivable times 365 days. Accounts receivable plus sales, divided by 365 days. 365 days divided by receivables turnover. 365 days divided by accounts receivable.

Response Feedback:

incorrect TB 03-30 The financial ratio days' sales in receivables is ... Chapter - Chapter 03 #30 Difficulty: Basic Gradable: automatic Learning Objective: 03-02 How to standardize financial statements for comparison purposes. Type: Definitions

Question 4

0 out of 1 points

What is the net working capital turnover rate for 2009? Selected Answer:

2.34

Answers:

1.16 1.25 2.28 2.34 2.87

Response

incorrect

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997984_1&course_id=_151952_1&content_id=_8516629_1&return_…

2/10

6/28/2020

Review Test Submission: Practice Quiz 4 - Module 4 – ...

Feedback:

TB 03-241 What is the net working capital turnover rate for ... Chapter - Chapter 03 #241 Difficulty: Intermediate Gradable: automatic Learning Objective: 03-02 How to standardize financial statements for comparison purposes. Type: Problems

Question 5

1 out of 1 points

An equity multiplier of 1.64 means that for every $1 the firm raises in new equity, the firm can: Selected Answer:

Acquire an additional $1.64 in new assets.

Answers:

Acquire an additional $1.64 in new assets. Acquire an additional $1.64 in new debt. Earn $1.64 in additional profits. Earn $1.64 in additional profits per share. Pay $1.64 in additional dividends per share.

Response Feedback:

correct TB 03-116 An equity multiplier of 1.64 means that for every ... Chapter - Chapter 03 #116 Difficulty: Basic Gradable: automatic Learning Objective: 03-02 How to standardize financial statements for comparison purposes. Type: Concepts

Question 6

0 out of 1 points

Financial ratios that measure the firm's ability to pay its bills over the short run without undue stress are known as: Selected Answer:

Market value ratios.

Answers:

Asset management ratios. Long-term solvency ratios. Short-term solvency ratios. Profitability ratios. Market value ratios.

Response Feedback:

incorrect TB 03-12 Financial ratios that measure the firm's ability t... Chapter - Chapter 03 #12 Difficulty: Basic Gradable: automatic Learning Objective: 03-02 How to standardize financial statements for comparison purposes. Type: Definitions

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997984_1&course_id=_151952_1&content_id=_8516629_1&return_…

3/10

6/28/2020

Review Test Submission: Practice Quiz 4 - Module 4 – ...

Question 7

0 out of 1 points

Last year, which is used as the base year, a firm had cash of $46, accounts receivable of $132, inventory of $319, and net fixed assets of $640. This year, the firm has cash of $52, accounts receivable of $147, inventory of $312, and net fixed assets of $576. What is the common-base year value of accounts receivable? Selected Answer:

1.18

Answers:

.88 .90 1.11 1.13 1.18

Response Feedback: incorrect

TB 03-307 Last year, which is used as the base year, a firm ... Chapter - Chapter 03 #307 Difficulty: Intermediate Gradable: automatic Learning Objective: 03-01 The sources and uses of a firm's cash flows. Type: Problems

Question 8

1 out of 1 points

If a firm is having difficulty controlling its operating expenses, the trouble will be most directly reflected in the firm's ________________ ratios. Selected Answer:

profitability

Answers:

liquidity profitability market value asset management long-term solvency

Response Feedback:

correct TB 03-98 If a firm is having difficulty controlling its ope... Chapter - Chapter 03 #98 Difficulty: Basic Gradable: automatic Learning Objective: 03-02 How to standardize financial statements for comparison purposes. Type: Concepts

Question 9

0 out of 1 points

The financial ratio measured as the firm's long-term debt divided by its total capitalization is: https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997984_1&course_id=_151952_1&content_id=_8516629_1&return_…

4/10

6/28/2020

Review Test Submission: Practice Quiz 4 - Module 4 – ...

Selected Answer:

The interval measure.

Answers:

The interval measure. The equity multiplier. The total debt ratio. The long-term debt ratio. The debt-equity ratio.

Response Feedback:

incorrect TB 03-23 The financial ratio measured as the firm's long-te... Chapter - Chapter 03 #23 Difficulty: Basic Gradable: automatic Learning Objective: 03-02 How to standardize financial statements for comparison purposes. Type: Definitions

Question 10

0 out of 1 points

Jorge Corp. of North Bay has 100,000 shares outstanding. EBIT is $1 million and interest paid is $200,001. If the corporate tax rate is 34%, what is Jorge's earnings per share? Selected Answer:

$6.60

Answers:

$2.72 $3.40 $5.28 $6.60 $10.00

Response Feedback:

incorrect TB 03-194 Jorge Corp. of North Bay has 100,000 shares outsta... Chapter - Chapter 03 #194 Difficulty: Intermediate Gradable: automatic Learning Objective: 03-03 How to compute and; more importantly; interpret some common ratios. Type: Problems

Question 11

0 out of 1 points

A _____________ standardizes items on the statement of comprehensive income and statement of financial position as a percentage of total sales and total assets, respectively. Selected Answer:

tax reconciliation statement

Answers:

tax reconciliation statement statement of standardization statement of changes in financial position

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997984_1&course_id=_151952_1&content_id=_8516629_1&return_…

5/10

6/28/2020

Review Test Submission: Practice Quiz 4 - Module 4 – ...

common-base year statement common-size statement Response Feedback: incorrect

TB 03-09 A _____________ standardizes items on the statemen... Chapter - Chapter 03 #9 Difficulty: Basic Gradable: automatic Learning Objective: 03-01 The sources and uses of a firm's cash flows. Type: Definitions

Question 12

0 out of 1 points

The quick ratio is measured as: Selected Answer:

Current assets minus inventory minus current liabilities.

Answers:

Current assets divided by current liabilities. Cash on hand plus current liabilities, divided by current assets. Current liabilities divided by current assets, plus inventory. Current assets minus inventory, divided by current liabilities. Current assets minus inventory minus current liabilities.

Response Feedback:

incorrect TB 03-14 The quick ratio is measured as: Chapter - Chapter 03 #14 Difficulty: Basic Gradable: automatic Learning Objective: 03-02 How to standardize financial statements for comparison purposes. Type: Definitions

Question 13

0 out of 1 points

Which of the following is NOT a correct statement about the price/earnings ratio? Selected Answer:

A P/E ratio of 15 means the firm's shares are selling for 15 times current earnings.

Answers:

A high P/E ratio is often taken to mean the firm has significant prospects for future growth. A P/E ratio of 15 means investors are willing to pay $15 for each $1 of current earnings. Care must be taken in interpreting very high P/E ratios since they can result from a firm having very low earnings. A P/E ratio of 15 means the firm's shares are selling for 15 times current earnings.

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997984_1&course_id=_151952_1&content_id=_8516629_1&return_…

6/10

6/28/2020

Review Test Submission: Practice Quiz 4 - Module 4 – ...

A firm with high earnings per share will also have a very high P/E ratio. incorrect

Response Feedback:

TB 03-95 Which of the following is NOT a correct statement ... Chapter - Chapter 03 #95 Difficulty: Basic Gradable: automatic Learning Objective: 03-03 How to compute and; more importantly; interpret some common ratios. Type: Concepts

Question 14

1 out of 1 points

Which one of the following statements is correct concerning ratio analysis? Selected Answer:

A single ratio is often computed differently by different individuals.

Answers:

A single ratio is often computed differently by different individuals. Ratios do NOT address the problem of size differences among firms. There is only a very limited number of ratios which can be used for analytical purposes. Each ratio has a specific formula that is used consistently by all analysts. Ratios can NOT be used for comparison purposes over periods of time.

Response Feedback:

correct TB 03-150 Which one of the following statements is correct c... Chapter - Chapter 03 #150 Difficulty: Basic Gradable: automatic Learning Objective: 03-02 How to standardize financial statements for comparison purposes. Type: Concepts

Question 15

0 out of 1 points

Net income divided by total revenue is referred to as: Selected Answer:

The equity multiplier.

Answers:

The equity multiplier. Earnings per share. The retention ratio. The operating cash flow. The profit margin.

Response Feedback:

incorrect TB 03-55 Net income divided by total revenue is referred to... Chapter - Chapter 03 #55 Difficulty: Basic

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997984_1&course_id=_151952_1&content_id=_8516629_1&return_…

7/10

6/28/2020

Review Test Submission: Practice Quiz 4 - Module 4 – ...

Gradable: automatic Learning Objective: 03-03 How to compute and; more importantly; interpret some common ratios. Type: Definitions

Question 16

0 out of 1 points

Using the Du Pont Identity Method, calculate the equity multiplier given the following information. Profit margin 19%; total asset turnover 1.5; return on equity 37.05%. Selected Answer:

1.2

Answers:

1.2 1.3 1.4 1.5 1.6

Response Feedback: incorrect

TB 03-339 Using the Du Pont Identity Method, calculate the e... Chapter - Chapter 03 #339 Difficulty: Intermediate Gradable: automatic Learning Objective: 03-04 The determinants of a firm's profitability. Type: Problems

Question 17

0 out of 1 points

Financial statement analysis provides useful information to which of the following parties? I. Creditors II. Investors III. Internal division managers IV. Senior corporate officers Selected Answer:

II and IV only

Answers:

I and II only II and IV only III and IV only II, III, and IV only I, II, III, and IV

Response Feedback: incorrect

TB 03-130 Financial statement analysis provides useful infor... Chapter - Chapter 03 #130 Difficulty: Intermediate Gradable: automatic Learning Objective: 03-01 The sources and uses of a firm's cash flows. Type: Concepts

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997984_1&course_id=_151952_1&content_id=_8516629_1&return_…

8/10

6/28/2020

Review Test Submission: Practice Quiz 4 - Module 4 – ...

Question 18

0 out of 1 points

Which one of the following transactions is a use of cash? Selected Answer:

Obtaining a bank loan

Answers:

Payment to a supplier for a credit purchase Sale of inventory on credit Cash sale to a customer Collection of an account due from a customer Obtaining a bank loan

Response Feedback: incorrect

TB 03-132 Which one of the following transactions is a use o... Chapter - Chapter 03 #132 Difficulty: Basic Gradable: automatic Learning Objective: 03-01 The sources and uses of a firm's cash flows. Type: Concepts

Question 19

1 out of 1 points

Ratios that measure the firm's financial leverage are known as: Selected Answer:

Long-term solvency ratios.

Answers:

Asset management ratios. Long-term solvency ratios. Short-term solvency ratios. Profitability ratios. Market value ratios.

Response Feedback:

correct TB 03-18 Ratios that measure the firm's financial leverage ... Chapter - Chapter 03 #18 Difficulty: Basic Gradable: automatic Learning Objective: 03-02 How to standardize financial statements for comparison purposes. Type: Definitions

Question 20

0 out of 1 points

The following statement of financial position and statement of comprehensive income should be used.

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997984_1&course_id=_151952_1&content_id=_8516629_1&return_…

9/10

6/28/2020

Review Test Submission: Practice Quiz 4 - Module 4 – ...

What is Woodburn's return on assets for 2009? Selected Answer:

20.70 percent

Answers:

18.50 percent 18.67 percent 19.89 percent 20.18 percent 20.70 percent

Response Feedback:

incorrect TB 03-288 What is Woodburn's return on assets for 2009? Chapter - Chapter 03 #288 Difficulty: Basic Gradable: automatic Learning Objective: 03-03 How to compute and; more importantly; interpret some common ratios. Type: Problems

Sunday, June 28, 2020 10:38:07 PM EDT

← OK

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997984_1&course_id=_151952_1&content_id=_8516629_1&return…

10/10

6/28/2020

Review Test Submission: Practice Quiz 5 - Module 5 – ...

Ajil Mohan 138

MyCourses

H M

Quizzes and Tests

Review Test Submission: Practice Quiz 5 - Module 5

Review Test Submission: Practice Quiz 5 - Module 5 User

Ajil Mohan

Course

Managerial Acctg and Finance - ACCT-5507-WWA

Test

Practice Quiz 5 - Module 5

Started

6/28/20 10:38 PM

Submitted

6/28/20 10:39 PM

Status

Completed

Attempt Score

3 out of 15 points

Time Elapsed

0 minute out of 40 minutes

Instructions

Click on the heading of this page to open and take the quiz.

Results Displayed

All Answers, Submitted Answers, Correct Answers, Feedback, Incorrectly Answered Questions

Question 1

0 out of 1 points

What is the future value of $25,000 received today if it is invested at 6.5% compounded annually for six years? Selected Answer:

$27,476.42

Answers:

$17,133.35 $27,476.42 $36,478.56 $39,521.75 $41,374.89

Response Feedback:

incorrect TB 05-86 What is the future value of $25,000 received today... Chapter - Chapter 05 #84 Difficulty: Basic Gradable: automatic Learning Objective: 05-01 How to determine the future value of an investment made today. Type: Problems

Question 2

0 out of 1 points

Five years ago, Precision Tool set aside $50,000 in case of a financial emergency. Today, that account has increased in value to $64,397. What rate of interest is the firm earning on this https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17998006_1&course_id=_151952_1&content_id=_8516630_1&return_c…

1/9

6/28/2020

Review Test Submission: Practice Quiz 5 - Module 5 – ...

money? Selected Answer:

6.18%

Answers:

5.19% 5.47% 6.18% 6.32% 6.45%

Response Feedback:

$64,397 = $50,000 × (1 + r) 5; r = 5.19% Using a Calculator

TB 05-204 Five years ago, Precision Tool set aside $50,000 i... Chapter - Chapter 05 #202 Difficulty: Basic Gradable: automatic Learning Objective: 05-03 How to find the return on an investment. Type: Problems

Question 3

0 out of 1 points

You deposit $500,000 in a higher risk investment. Three years later, you receive $711,900 and withdraw your funds. Given this information calculate the interest earned at the end of year 3. Selected Answer:

$77,096

Answers:

$77,096 $78,806 $79,096 $80,806 $81,096

Response Feedback:

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17998006_1&course_id=_151952_1&content_id=_8516630_1&return_c…

2/9

6/28/2020

Review Test Submission: Practice Quiz 5 - Module 5 – ...

TB 05-229 You deposit $500,000 in a higher risk investment. ... Chapter - Chapter 05 #227 Difficulty: Intermediate Gradable: automatic Learning Objective: 05-01 How to determine the future value of an investment made today. Type: Problems

Question 4

1 out of 1 points

Thirty years ago, an average house cost $120,000 in Vancouver. Now the average house price is $950,000. Determine the annual rate of growth in Vancouver's housing prices. Selected Answer:

7.14%

Answers:

8.31% 7.14% 6.25%

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17998006_1&course_id=_151952_1&content_id=_8516630_1&return_c…

3/9

6/28/2020

Review Test Submission: Practice Quiz 5 - Module 5 – ...

5.58% 4.63% Response Feedback:

TB 05-222 Thirty years ago, an average house cost $120,000 i... Chapter - Chapter 05 #220 Difficulty: Intermediate Gradable: automatic Learning Objective: 05-03 How to find the return on an investment. Type: Problems

Question 5

0 out of 1 points

You received a $1 savings account earning 5% on your 1 st birthday. How much will you have in the account on your 40 th birthday if you don't withdraw any money before then? Selected Answer:

$5.89

Answers:

$5.89 $6.34 $6.70 $7.00 $7.04

Response Feedback:

incorrect TB 05-85 You received a $1 savings account earning 5% on yo... Chapter - Chapter 05 #83 Difficulty: Basic Gradable: automatic Learning Objective: 05-01 How to determine the future value of an investment made today. Type: Problems

Question 6

1 out of 1 points

Fresh out of college, you are negotiating with your prospective new employer. They offer you a signing bonus of $2,000,000 today or a lump sum payment of $2,500,000 three years from now. https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17998006_1&course_id=_151952_1&content_id=_8516630_1&return_c…

4/9

6/28/2020

Review Test Submission: Practice Quiz 5 - Module 5 – ...

If you can earn 7% on your invested funds, which of the following is true? Selected Answer:

Take the lump sum because it has the higher present value.

Answers:

Take the signing bonus because it has the lower present value. Take the signing bonus because it has the higher future value. Take the lump sum because it has the higher present value. Take the lump sum because it has the lower future value. Based on these numbers, you are indifferent between the two.

Response Feedback:

correct TB 05-48 Fresh out of college, you are negotiating with you... Chapter - Chapter 05 #46 Difficulty: Basic Gradable: automatic Learning Objective: 05-02 How to determine the present value of cash to be received at a future date. Type: Concepts

Question 7

0 out of 1 points

The future value of a single sum will increase more rapidly when: I. The interest rate increases. II. The interest rate decreases. III. The frequency of compounding increases. IV. The frequency of compounding decreases. Selected Answer:

II and III only

Answers:

I only III only I and III only II and III only I and IV only

Response Feedback: incorrect

TB 05-62 The future value of a single sum will increase mor... Chapter - Chapter 05 #60 Difficulty: Intermediate Gradable: automatic Learning Objective: 05-03 How to find the return on an investment. Type: Concepts

Question 8

0 out of 1 points

You have $500 in an account which pays 5% compound interest. How much additional interest would you earn over four years if you moved the money to an account earning 6%? Selected Answer:

$29.94

Answers:

$21.89

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17998006_1&course_id=_151952_1&content_id=_8516630_1&return_c…

5/9

6/28/2020

Review Test Submission: Practice Quiz 5 - Module 5 – ...

$23.49 $24.93 $25.88 $29.94 Response Feedback: incorrect

TB 05-92 You have $500 in an account which pays 5% compound... Chapter - Chapter 05 #90 Difficulty: Intermediate Gradable: automatic Learning Objective: 05-03 How to find the return on an investment. Type: Problems

Question 9

0 out of 1 points

Stephen has $2,400 to invest. Which one of the following investment options will produce the largest future value for him? Selected Answer:

7%, compounded annually for 10 years

Answers:

7% simple interest for 10 years 7%, compounded annually for 10 years 7%, compounded monthly for 12 years 7%, compounded annually for 12 years 7, simple interest for 12 years

Response Feedback:

incorrect TB 05-84 Stephen has $2,400 to invest. Which one of the fol... Chapter - Chapter 05 #82 Difficulty: Basic Gradable: automatic Learning Objective: 05-01 How to determine the future value of an investment made today. Type: Concepts

Question 10

0 out of 1 points

Thirty years ago, your father invested $6,000. Today that investment is worth $67,270.98. What is the average rate of return your father earned on this investment? Selected Answer:

8.44%

Answers:

8.39% 8.44% 10.23% 10.34% 11.67%

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6/9

6/28/2020

Review Test Submission: Practice Quiz 5 - Module 5 – ...

Response Feedback: incorrect

TB 05-170 Thirty years ago, your father invested $6,000. Tod... Chapter - Chapter 05 #168 Difficulty: Basic Gradable: automatic Learning Objective: 05-03 How to find the return on an investment. Type: Problems

Question 11

1 out of 1 points

An account was opened with $1,000 ten years ago. Today, the account balance is $1,500. If the account paid interest compounded annually, how much interest on interest was earned? Selected Answer:

$86.20

Answers:

$86.20 $93.10 $102.39 $130.28 $500.00

Response Feedback: correct

TB 05-94 An account was opened with $1,000 ten years ago. T... Chapter - Chapter 05 #92 Difficulty: Intermediate Gradable: automatic Learning Objective: 05-03 How to find the return on an investment. Type: Problems

Question 12

0 out of 1 points

Katie is going to receive $1,000 three years from now. Wilt is going to receive $1,000 five years from now. Which one of the following statements is correct if both Katie and Wilt apply a 5% discount rate to these amounts? Selected Answer:

The present value of Katie and Wilt's money is equal.

Answers:

The present value of Katie and Wilt's money is equal. The value of Wilt's money will be greater than the value of Katie's money six years from now. In today's dollars, Wilt's money is worth more than Katie's. In five years, the value of Katie's money will be equal to the value of Wilt's money. Katie's money is worth more than Wilt's money today.

Response Feedback:

incorrect TB 05-69 Katie is going to receive $1,000 three years from ... Chapter - Chapter 05 #67

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Review Test Submission: Practice Quiz 5 - Module 5 – ...

Difficulty: Basic Gradable: automatic Learning Objective: 05-02 How to determine the present value of cash to be received at a future date. Type: Concepts

Question 13

0 out of 1 points

Your grandmother invested one lump sum 17 years ago at 4.25% interest. Today, she gave you the proceeds of that investment which totaled $5,539.92. How much did your grandmother originally invest? Selected Answer:

$2,768.40

Answers:

$2,700.00 $2,730.30 $2,750.00 $2,768.40 $2,774.90

Response Feedback:

incorrect TB 05-142 Your grandmother invested one lump sum 17 years ag... Chapter - Chapter 05 #140 Difficulty: Basic Gradable: automatic Learning Objective: 05-02 How to determine the present value of cash to be received at a future date. Type: Problems

Question 14

0 out of 1 points

You deposit $1,000 in a retirement account today at 8.5% interest. How much more money will you have if you leave the money invested for 40 years rather than 35 years? Selected Answer:

$7,799.08

Answers:

$7,714.91 $7,799.08 $7,839.73 $7,846.52 $8,753.38

Response Future value = $1,000 × (1 + .085) 40 = $26,133.02; Future value = $1,000 × (1 + Feedback: .085) 35 = $17,379.64; Difference = $26,133.02 - $17,379.64 = $8,753.38 Using a Calculator

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8/9

6/28/2020

Review Test Submission: Practice Quiz 5 - Module 5 – ...

TB 05-215 You deposit $1,000 in a retirement account today a... Chapter - Chapter 05 #213 Difficulty: Basic Gradable: automatic Learning Objective: 05-03 How to find the return on an investment. Type: Problems

Question 15

0 out of 1 points

An account paying annual compound interest was opened with $1,000 ten years ago. Today, the account balance is $1,500. If the same interest rate is offered on an account paying simple interest, how much income would be earned over the same time period? Selected Answer:

$92.47

Answers:

$86.20 $92.47 $413.80 $436.29 $500.00

Response Feedback: incorrect

TB 05-89 An account paying annual compound interest was ope... Chapter - Chapter 05 #87 Difficulty: Basic Gradable: automatic Learning Objective: 05-03 How to find the return on an investment. Type: Problems Sunday, June 28, 2020 10:39:35 PM EDT

← OK

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9/9

6/28/2020

Review Test Submission: Practice Quiz 6 - Module 6 – ...

Siddharth Laxman Anjarlekar 165

MyCourses

H M

Quizzes and Tests

Review Test Submission: Practice Quiz 6 - Module 6

Review Test Submission: Practice Quiz 6 - Module 6 User

Siddharth Laxman Anjarlekar

Course

Managerial Acctg and Finance - ACCT-5507-WWA

Test

Practice Quiz 6 - Module 6

Started

6/28/20 10:37 PM

Submitted

6/28/20 10:38 PM

Status

Completed

Attempt Score

4 out of 20 points

Time Elapsed

1 minute out of 40 minutes

Instructions

Click on "Begin" to open and take the quiz.

Results Displayed

All Answers, Submitted Answers, Correct Answers, Feedback, Incorrectly Answered Questions

Question 1

0 out of 1 points

The discounted payback period of a project will decrease whenever the: Selected Answer:

time period of the project is increased.

Answers:

discount rate applied to the project is increased. initial cash outlay of the project is increased. time period of the project is increased. amount of each project cash flow is increased. costs of the fixed assets utilized in the project increase.

Response Feedback:

incorrect TB 09-191 The discounted payback period of a project will de... Chapter - Chapter 09 #191 Difficulty: Basic Gradable: automatic Learning Objective: 09-03 The discounted payback rule and some of its shortcomings. Type: Concepts

Question 2

1 out of 1 points

Susan Sunshine has been investing $160,000 a year for the past 9 years into Sunshine in a Can, Inc. Today, as the sole shareholder, she sold Sunshine in a Can, Inc. for $2.6 million. What is her rate of return on this investment? https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997991_1&course_id=_151952_1&content_id=_8516632_1&return_…

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Review Test Submission: Practice Quiz 6 - Module 6 – ...

Selected Answer:

14.24 percent

Answers:

14.13 percent 14.24 percent 14.29 percent 14.37 percent 14.42 percent

Response Feedback:

This cannot be solved directly, so it's easiest to just use the calculator method to get an answer. You can then use the calculator answer as the rate in the formula just to verify that your answer is correct.

TB 06-309 Susan Sunshine has been investing $160,000 a year ... Chapter - Chapter 06 #309 Difficulty: Challenge Gradable: automatic Learning Objective: 06-02 How loan payments are calculated and how to find the interest rate on a loan. Type: Problems

Question 3

0 out of 1 points

You just won the lottery! As your prize you will receive $1,200 a month for 100 months. If you can earn 8 percent on your money, what is this prize worth to you today? Selected Answer:

$87,003.69

Answers:

$87,003.69 $87,380.23 $87,962.77 $88,104.26 $90,723.76

Response Feedback:

incorrect TB 06-184 You just won the lottery! As your prize you will r... Chapter - Chapter 06 #184 Difficulty: Basic Gradable: automatic Learning Objective: 06-01 How to determine the future and present value of investments with multiple cash flows. Type: Problems

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997991_1&course_id=_151952_1&content_id=_8516632_1&return_…

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6/28/2020

Review Test Submission: Practice Quiz 6 - Module 6 – ...

Question 4

0 out of 1 points

Which of the following is considered to be a redeeming feature of average accounting return analysis? Selected Answer:

Estimation of the appropriate cutoff rate is straightforward and easy.

Answers:

It incorporates time value of money. Estimation of the appropriate cutoff rate is straightforward and easy. Calculation relies on net income and not cash flows or asset values. Calculation relies on book values and not market values or cash flows. It is relatively easy to calculate. incorrect

Response Feedback:

TB 09-52 Which of the following is considered to be a redee... Chapter - Chapter 09 #52 Difficulty: Basic Gradable: automatic Learning Objective: 09-04 Accounting rates of return and some of the problems with them. Type: Concepts

Question 5

0 out of 1 points

Elderkin & Martin is considering an investment which will cost $259,000. The investment produces no cash flows for the first year. In the second year, the cash inflow is $58,000. This inflow will increase to $150,000 and then $200,000 for the following two years before ceasing permanently. The firm requires a 14 percent rate of return and has a required discounted payback period of three years. The firm should _____ the project because the discounted payback period is _____ years. Accept or reject this project? Why? Selected Answer:

accept; 2.26

Answers:

accept; 2.26 accept; 2.49 accept; 3.96 reject; 3.26 reject; 3.96

Response Feedback:

Discounted payback

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3/12

6/28/2020

Review Test Submission: Practice Quiz 6 - Module 6 – ...

years Elderkin & Martin should reject the project since the payback period of 3.96 years exceeds the required 3 years. TB 09-321 Elderkin & Martin is considering an investment... Chapter - Chapter 09 #321 Difficulty: Intermediate Gradable: automatic Learning Objective: 09-03 The discounted payback rule and some of its shortcomings. Type: Problems

Question 6

0 out of 1 points

You are analyzing a project and have prepared the following data:

Based on the profitability index of _____ for this project, you should _____ the project. Selected Answer:

1.08; reject

Answers:

.87; accept .87; reject 1.02; accept 1.02; reject 1.08; reject

Response Feedback:

incorrect TB 09-301 Based on the profitability index of _____ for this... Chapter - Chapter 09 #301 Difficulty: Basic Gradable: automatic Learning Objective: 09-07 The profitability index and its relation to net present value. Type: Problems

Question 7

0 out of 1 points

You hold a winning ticket from your provincial lottery. It entitles the bearer to receive payments of https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997991_1&course_id=_151952_1&content_id=_8516632_1&return_…

4/12

6/28/2020

Review Test Submission: Practice Quiz 6 - Module 6 – ...

$50,000 at the end of each of the next 20 years. Given what you know about the time value of money, you should be able to sell this ticket for no less than $1 million in the open market. Selected Answer:

True

Answers:

True False

Response Feedback:

incorrect TB 06-01 You hold a winning ticket from your provincial lot... Chapter - Chapter 06 #1 Difficulty: Basic Gradable: automatic Learning Objective: 06-01 How to determine the future and present value of investments with multiple cash flows. Type: Concepts

Question 8

0 out of 1 points

A donation of $70,000 to a charity provides an annual scholarship to recipients. If the investment earns 3.8% compounded semi-annually, determine the value of the annual scholarship. Selected Answer:

$4,685

Answers:

$6,685 $5,685 $4,685 $3,685 $2,685

Response Feedback:

TB 06-333 A donation of $70,000 to a charity provides an ann... Chapter - Chapter 06 #333 Difficulty: Intermediate Gradable: automatic Learning Objective: 06-01 How to determine the future and present value of investments with multiple cash flows. Type: Problems https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997991_1&course_id=_151952_1&content_id=_8516632_1&return_…

5/12

6/28/2020

Review Test Submission: Practice Quiz 6 - Module 6 – ...

Question 9

0 out of 1 points

Freda Mai has a $65,000 insurance annuity. The company has offered monthly payments for twenty years as a payout option for this annuity. The insurance company will use a 3% rate of return. How much more per month would Freda Mai receive if the insurance company would pay her a 5% rate of return on her annuity? Selected Answer:

$71.18

Answers:

$13.13 $29.37 $68.48 $71.18 $73.01

Response Feedback:

incorrect TB 06-173 Freda Mai has a $65,000 insurance annuity. The com... Chapter - Chapter 06 #173 Difficulty: Intermediate Gradable: automatic Learning Objective: 06-02 How loan payments are calculated and how to find the interest rate on a loan. Type: Problems

Question 10

0 out of 1 points

Which of the following can cause a project to have multiple IRRs? Selected Answer:

With mutually exclusive investments.

Answers:

The project has a large initial outlay. A ten-year project has a negative cash flow in the last year of the project's life. A project has negative cash flows in the first three years, but positive cash flows thereafter. Whenever project cash flows are conventional. With mutually exclusive investments.

Response Feedback:

incorrect TB 09-59 Which of the following can cause a project to have... Chapter - Chapter 09 #59 Difficulty: Basic Gradable: automatic Learning Objective: 09-05 The internal rate of return criterion and its strengths and weaknesses. Type: Concepts

Question 11

0 out of 1 points

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6/28/2020

Review Test Submission: Practice Quiz 6 - Module 6 – ...

You are considering the following two mutually exclusive projects. The required rate of return is 11.25 percent for project A and 10.75 percent for project B. Which project should you accept and why?

project B; because it is the largest sized project

Selected Answer: Answers:

project A; because its NPV is about $335 more than the NPV of project B project A; because it has the higher required rate of return project B; because it has the largest total cash inflow project B; because it returns all its cash flows within two years project B; because it is the largest sized project Response Feedback:

incorrect TB 09-225 You are considering the following two mutually exc... Chapter - Chapter 09 #225 Difficulty: Intermediate Gradable: automatic Learning Objective: 09-01 How to compute the net present value and why it is the best decision criterion. Type: Problems

Question 12

0 out of 1 points

What is the internal rate of return on an investment with the following cash flows?

Selected Answer:

7.67 percent

Answers:

6.33 percent 6.75 percent 6.87 percent 7.50 percent 7.67 percent

Response

incorrect

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7/12

6/28/2020

Review Test Submission: Practice Quiz 6 - Module 6 – ...

Feedback:

TB 09-281 What is the internal rate of return on an investme... Chapter - Chapter 09 #281 Difficulty: Intermediate Gradable: automatic Learning Objective: 09-05 The internal rate of return criterion and its strengths and weaknesses. Type: Problems

Question 13

1 out of 1 points

What is the internal rate of return for a project with the following cash flows?

Selected Answer:

12.3 percent

Answers:

11.9 percent 12.1 percent 12.3 percent 12.5 percent 12.7 percent

Response Feedback:

correct TB 09-284 What is the internal rate of return for a project ... Chapter - Chapter 09 #284 Difficulty: Intermediate Gradable: automatic Learning Objective: 09-05 The internal rate of return criterion and its strengths and weaknesses. Type: Problems

Question 14

0 out of 1 points

By definition, the net present value is equal to zero when the discount rate is equal to the: Selected Answer:

Rate used in the discounted payback formula.

Answers:

Average account rate of return. Rate used in the discounted payback formula. Profitability index rate. Internal rate of return. Crossover rate.

Response

incorrect

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Review Test Submission: Practice Quiz 6 - Module 6 – ...

Feedback:

TB 09-27 By definition, the net present value is equal to z... Chapter - Chapter 09 #27 Difficulty: Basic Gradable: automatic Learning Objective: 09-05 The internal rate of return criterion and its strengths and weaknesses. Type: Definitions

Question 15

0 out of 1 points

The present value factor for annuities is calculated as: Selected Answer:

Present value factor + (1/r)

Answers:

(1 + present value factor)/r (1 - present value factor)/r Present value factor + (1/r) (Present value factor/r) + (1/r)

Response Feedback:

incorrect TB 06-13 The present value factor for annuities is calculat... Chapter - Chapter 06 #13 Difficulty: Basic Gradable: automatic Learning Objective: 06-01 How to determine the future and present value of investments with multiple cash flows. Type: Definitions

Question 16

0 out of 1 points

What is the effective annual rate of 9.75 percent compounded continuously? Selected Answer:

9.99 percent

Answers:

9.99 percent 10.11 percent 10.24 percent 10.28 percent 10.30 percent

Response Feedback:

incorrect TB 06-238 What is the effective annual rate of 9.75 percent ... Chapter - Chapter 06 #238 Difficulty: Basic Gradable: automatic Learning Objective: 06-02 How loan payments are calculated and how to find the interest rate on a loan. Type: Problems

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997991_1&course_id=_151952_1&content_id=_8516632_1&return_…

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Review Test Submission: Practice Quiz 6 - Module 6 – ...

Question 17

1 out of 1 points

A perpetuity differs from an annuity because: Selected Answer:

Perpetuity payments never cease.

Answers:

Perpetuity payments vary with the rate of inflation. Perpetuity payments vary with the market rate of interest. Perpetuity payments are variable while annuity payments are constant. Perpetuity payments never cease. Annuity payments never cease.

Response Feedback:

correct TB 06-71 A perpetuity differs from an annuity because: Chapter - Chapter 06 #71 Difficulty: Basic Gradable: automatic Learning Objective: 06-02 How loan payments are calculated and how to find the interest rate on a loan. Type: Concepts

Question 18

0 out of 1 points

You just received an insurance settlement offer related to an accident you had four years ago. The offer gives you a choice of one of the following three offers: Option A: $6,500 on the first day of each year for 40 years Option B: $610 on the first day of each month for 25 years Option C: $75,000 as a lump sum payment today You can earn 8.75 percent on your investments. You do not care if you personally receive the funds or if they are paid to your heirs should you die within the settlement period. Which one of the following statements is correct given this information? Selected Answer:

Option C is the best choice since you can earn 8.75 percent on the entire lump sum starting immediately.

Answers:

Option C is the best choice since you can earn 8.75 percent on the entire lump sum starting immediately. Option B is the best choice since it offers the largest number of payments. Option A is the best choice since it has the largest present value. Option B is the best choice since it has the largest present value. You are indifferent to the three options as they are all equal in value to you. Response Feedback:

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997991_1&course_id=_151952_1&content_id=_8516632_1&return…

10/12

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Review Test Submission: Practice Quiz 6 - Module 6 – ...

Option A has a present value of $77,966.27. Option B has a present value of $74,737.30. Option C has a present value of $75,000. Option A is the best choice since it has the largest present value. TB 06-306 You just received an insurance settlement offer re... Chapter - Chapter 06 #306 Difficulty: Challenge Gradable: automatic Learning Objective: 06-01 How to determine the future and present value of investments with multiple cash flows. Type: Problems

Question 19

1 out of 1 points

What is the future value of $2,400 a year for three years at an 8 percent rate of interest? Selected Answer:

$7,791.36

Answers:

$6,185.03 $6,847.26 $7,134.16 $7,791.36 $8,414.67

Response Feedback:

correct TB 06-193 What is the future value of $2,400 a year for thre... Chapter - Chapter 06 #193 Difficulty: Basic Gradable: automatic Learning Objective: 06-01 How to determine the future and present value of investments with multiple cash flows. Type: Problems

Question 20

0 out of 1 points

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11/12

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Review Test Submission: Practice Quiz 6 - Module 6 – ...

Which one of the following statements concerning an ordinary annuity is true? Selected Answer:

If two annuities are equal in every way except that one is an ordinary annuity and one is an annuity due, then the ordinary annuity will have a larger present value than the annuity due.

Answers:

An ordinary annuity consists of equal payments that occur at the beginning of each period over a set period of time. If two annuities are equal in every way except that one is an ordinary annuity and one is an annuity due, then the ordinary annuity will have a larger future value than the annuity due. The future value of an ordinary annuity can be computed by dividing the future value of an annuity due by (1 + r). If two annuities are equal in every way except that one is an ordinary annuity and one is an annuity due, then the ordinary annuity will have a larger present value than the annuity due. Most financial calculators can compute ordinary annuity problems but not annuity due problems. Response Feedback:

incorrect TB 06-63 Which one of the following statements concerning a... Chapter - Chapter 06 #63 Difficulty: Intermediate Gradable: automatic Learning Objective: 06-01 How to determine the future and present value of investments with multiple cash flows. Type: Concepts

Sunday, June 28, 2020 10:38:14 PM EDT

← OK

https://learn.humber.ca/webapps/assessment/review/review.jsp?attempt_id=_17997991_1&course_id=_151952_1&content_id=_8516632_1&return…

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COMMERCE 2202 Practice Questions

1. ____________ refers to the difference between a firm's current assets and its current liabilities. A) Operating cash flow B) Capital spending C) Net working capital D) Cash flow from assets E) Cash flow to creditors Ans: C

Level: Basic

Subject: Net Working Capital

Type: Definitions

2. A(n) _________ asset is one which can be quickly converted into cash without significant loss in value. A) current B) fixed C) intangible D) liquid E) long-term Ans: D

Level: Basic

Subject: Liquid Assets

Type: Definitions

3. Financial leverage refers to: A) The proportion of debt used in a firm's capital structure. B) The ratio of retained earnings to shareholders' equity. C) The ratio of paid-in surplus to shareholders' equity. D) The ratio of cost-of-goods-sold to total sales. E) The amount of receivables present in the firm's asset structure. Ans: A

Level: Basic

Subject: Financial Leverage

Type: Definitions

4. The common set of standards and procedures by which audited financial statements are prepared is known as: A) The matching principle. B) The cash flow identity. C) Generally Accepted Accounting Principles (GAAP). D) The Freedom of Information Act (FOIA) . E) The 1993 Omnibus Budget Reconciliation Act. Ans: C

Level: Basic

Subject: GAAP

Type: Definitions

5. The financial statement summarizing a firm's performance over a period of time is the: A) Income statement. B) Balance sheet. C) Statement of cash flows. D) Tax reconciliation statement. E) Shareholders' equity sheet. Ans: A

Level: Basic

Subject: Income Statement

Type: Definitions

6. Earnings per share is equal to: A) Net income divided by the total number of shares outstanding. B) Net income divided by the par value of common stock. C) Gross income multiplied by the par value of common stock. D) Operating income divided by the par value of common stock. E) Net income divided by total stockholders' equity. Ans: A

Level: Basic

Subject: Earnings Per Share

Type: Definitions

7. Dividends per share is equal to: A) Dividends paid divided by the par value of common stock. B) Dividends paid divided by the total number of shares outstanding. C) Dividends paid divided by total stockholders' equity. D) Dividends paid multiplied by the par value of common stock. E) Dividends paid multiplied by the total number of shares outstanding. Ans: B

Level: Basic

Subject: Dividends Per Share

Type: Definitions

8. Non-cash items A) The credit sales of a firm. B) The accounts payable of a firm. C) Expenses incurred for the purchase of intangible fixed assets. D) Expenses charged against revenues that do not directly affect cash flow. E) All accounts on the balance sheet other than cash on hand. Ans: D

Level: Intermediate

Subject: Non-cash Items

Type: Definitions

9. ________________ refers to the cash flow that results from the firm's ongoing, normal business activities. A) Operating cash flow B) Capital spending C) Net working capital D) Cash flow from assets E) Cash flow to creditors Ans: A

Level: Basic

Subject: Operating Cash Flow

Type: Definitions

10.The corporate officer generally responsible for tasks related to cash and credit management, financial planning, and capital expenditures is the: A) Corporate Treasurer. B) Director. C) Corporate Controller. D) Chairman of the Board. E) Vice President of Operations. Ans: A

Level: Basic

Subject: Corporate Treasurer

Type: Definitions

11. The process of planning and managing a firm's long-term investments is called: A) Working capital management. B) Financial depreciation. C) Agency cost analysis. D) Capital budgeting. E) Capital structure. Ans: D

Level: Basic

Subject: Capital Budgeting

Type: Definitions

12. The mixture of debt and equity used by the firm to finance its operations is called: A) working capital management. B) financial depreciation. C) agency cost analysis. D) capital budgeting. E) capital structure. Ans: E

Level: Basic

Subject: Capital Structure

Type: Definitions

13. The management of the firm's short-term assets and liabilities is called: A) Working capital management. B) Financial depreciation. C) Agency cost analysis. D) Capital budgeting. E) Capital structure. Ans: A

Level: Basic

Subject: Working Capital

Type: Definitions

14. A business owned by a single individual is called a(n): A) Corporation. B) Sole proprietorship. C) Partnership. D) Closed receivership. E) Open structure. Ans: B

Level: Basic

Subject: Sole Proprietorship

Type: Definitions

15. A business formed by two or more individuals or entities is called a(n): A) Corporation. B) Sole proprietorship. C) Partnership. D) Closed receivership. E) Open structure. Ans: C

Level: Basic

Subject: Partnership

Type: Definitions

16. The division of profits and losses between the members of a partnership is formalized in the: A) Indemnity clause. B) Indenture contract. C) Statement of purpose. D) Partnership agreement. E) Group charter. Ans: D

Level: Basic

Subject: Partnership Agreement

Type: Definitions

17. A business created as a distinct legal entity composed of one or more individuals or entities is called a(n): A) Corporation. B) Sole proprietorship. C) Partnership. D) Closed receivership. E) Open structure. Ans: A

Level: Basic

Subject: Corporation

Type: Definitions

18. The document that legally establishes domicile for a corporation is called the: A) Indenture contract. B) Partnership agreement. C) Amended homestead filing. D) Bylaws. E) Articles of incorporation. Ans: E

Level: Basic

Subject: Articles Of Incorporation

Type: Definitions

19. The rules by which corporations govern themselves are called: A) Indenture provisions. B) Indemnity provisions. C) Partnership agreements. D) Bylaws. E) Articles of incorporation. Ans: D

Level: Basic

Subject: Bylaws

Type: Definitions

20. The primary goal of financial management is to: A) Maximize current sales. B) Maximize the current value per share of the existing stock. C) Avoid financial distress. D) Minimize operational costs. E) Maintain steady earnings growth. Ans: B

Level: Basic

Subject: Financial Management Goal

Type: Definitions

21. The possibility of conflict of interest between the stockholders and management of the firm is called: A) The shareholders' conundrum. B) Corporate breakdown. C) The agency problem. D) Corporate activism. E) Legal liability. Ans: C

Level: Basic

Subject: Agency Problem

Type: Definitions

22. Agency costs A) The total dividends paid to shareholders over the lifetime of the firm. B) The costs that result from default and bankruptcy of the firm. C) Corporate income subject to double taxation. D) The costs of the conflict of interest between stockholders and management. E) The total interest paid to creditors over the lifetime of the firm. Ans: D

Level: Basic

Subject: Agency Costs

Type: Definitions

23. A stakeholder is: A) Given to each stockholder when they first purchase their stock. B) A proxy vote made at a shareholders' meeting. C) A founding stockholder of the firm. D) An original creditor of the firm. E) A person or entity including a stockholder or creditor, who potentially has a claim on the cash flows of the firm. Ans: E

Level: Basic

Subject: Stakeholders

Type: Definitions

24. The original sale of securities by governments and corporations occurs in the: A) Primary market. B) Secondary market. C) Dealer market. D) Auction market. E) Liquidation market. Ans: A

Level: Basic

Subject: Primary Market

Type: Definitions

25. Using the Du Pont Identity Method, calculate the equity multiplier given the following information. Profit margin 19%; total asset turnover 1.5; return on equity 37.05%. A. 1.2 B. 1.3 C. 1.4 D. 1.5 E. 1.6

26. Calculate price earnings growth ratio given the following information: net income = $1,250,000; shares outstanding = 400,000; stock price = $35; future earnings growth rate = 8%. A. 1.30 B. 1.35 C. 1.40 D. 1.45 E. 1.50

27. What was inventory turnover for 2015? A. 1.38 B. 1.42 C. 1.48 D. 3.15 E. 3.38

28. Use the following statement of financial position and statement of comprehensive income

What is the equity multiplier for Bluebird for 2015? A. 1.53 B. 1.56 C. 1.59 D. 1.61 E. 1.64

29. Cash is $500, inventory is $4,800, accounts receivable is $3,200 and accounts payable is $2,400. What is the quick ratio? A. 0.77 B. 1.54 C. 1.67 D. 3.33 E. 3.54 30. Calculate the current ratio given the following information: current liabilities = $40,000; sales = $90,000; cost of goods sold = $32,000; cash ratio = 1.10; accounts receivable turnover = 5; inventory turnover = 3. A. 1.60 B. 1.70 C. 1.80 D. 1.90 E. 2.00

31. Herman's Bar and Grill paid $1,618 in interest and $265 in dividends last year. The times interest earned ratio is 1.9 and the depreciation expense is $50. What is the value of the cash coverage ratio? A. 1.62 B. 1.87 C. 1.93 D. 1.99 E. 2.11

32 Marble Comics' times interest earned ratio is: A. 0.34 B. 1.46 C. 1.95 D. 2.95 E. 4.80

33. Little's Inc. provides a 10% return on equity. Sales are $100,000 on total assets of $140,000 and total equity of $85,000. What is the profit margin? A. 6.07% B. 8.50% C. 10.00% D. 11.77% E. 14.00%

Use the following to answer questions 34-40: KLM, Inc. 2003 Income Statement Net sales Cost of goods sold Depreciation Earnings before interest and taxes Interest paid Taxable income Taxes Net income Dividends paid Addition to retained earnings

$3,685 $3,180 $104 $401 $25 $376 $128 $248 $60 $188

KLM Corporation Balance Sheets as of December 31, 2002 and 2003

Cash Accounts rec. Inventory Current assets Net fixed assets

2002 $520 $235 $964 $1,719 $890

2003 $601 $219 $799 $1,619 $930

Total assets

$2,609

$2,549

Accounts payable Notes payable Current liabilities Long-term debt Common stock Retained earnings Total liabilities and Owner's equity

2002 $621 $333 $954 $350 $800 $505 $2,609

2003 $704 $272 $976 $60 $820 $693 $2,549

34. What is the change in net working capital for 2003? A) -$643 B) -$122 C) $122 D) $643 E) $765 Ans: B

Level: Intermediate

Subject: Change In Net Working Capital

Type: Problems

35. What is the net capital spending for 2003? A) -$144 B) -$64 C) $64 D) $144 E) $208 Ans: D

Level: Intermediate

Subject: Net Capital Spending

Type: Problems

36. What is the cash flow from assets for 2003? A) $111 B) $355 C) $1,307 D) $2,259 E) $2,503 Ans: B

Level: Intermediate

Subject: Cash Flow From Assets

Type: Problems

37. What is the ending net working capital for 2003? A) -$60 B) $40 C) $60 D) $643 E) $765 Ans: D

Level: Intermediate

Subject: Net Working Capital

Type: Problems

38. What is the net new equity for 2003? A) -$40 B) -$20 C) $20 D) $40 E) $60 Ans: C

Level: Intermediate

Subject: Net New Equity

Type: Problems

39. What is the operating cash flow for 2003? A) $169 B) $272 C) $377 D) $425 E) $480 Ans: C

Level: Intermediate

Subject: Operating Cash Flow

Type: Problems

40. What is the cash flow to stockholders for 2003? A) $40 B) $60 C) $80 D) $148 E) $268 Ans: A

Level: Intermediate

Subject: Cash Flow To Stockholders

Type: Problems

41. Two of the primary advantages of a sole proprietorship are the: A) Ease of company formation and limited liability. B) Ease of company formation and less regulation. C) Ease of ownership transfer and less regulation. D) Ease of ownership transfer and ease of company formation. E) Ability to raise capital and less regulation. Ans: B

Level: Intermediate

Subject: Proprietorship

Type: Concepts

42. In a limited partnership: A) Only the limited partners are involved in the daily management of the firm. B) Both general and limited partners are involved in the daily management of the firm. C) A limited partner is liable only for the amount he/she contributed to the partnership. D) A general partner is liable only for the amount he/she contributed to the partnership. E) The income earned is taxed like a corporation. Ans: C

Level: Intermediate

Subject: Partnership

Type: Concepts

43. In a general partnership: A) Each partner is personally responsible for all of the firm's debt. B) Each partner is responsible only for his/her portion of the firm's debt based on ownership percentage. C) Each partner is liable only for the portion of the total debt he/she agreed in writing to pay. D) Only the general partner is liable for the firm's debt. E) None of the partners are personally liable for the firm's debt. Ans: A

Level: Intermediate

Subject: Partnership

Type: Concepts

44. Which of the following are disadvantages of the partnership form of ownership? A) Personal liability and double taxation B) Personal liability and limited firm life C) Double taxation and limited firm life D) Ease of formation and unlimited firm life E) Ease of formation and ease of ownership transfer Ans: B

Level: Intermediate

Subject: Partnership

Type: Concepts

45. Which of the following are advantages of the corporate form of ownership? A) Limited personal liability and limited firm life B) Ability to raise capital and limited firm life C) Limited personal liability and ability to raise capital D) Ease of ownership transfer and simplicity of company formation E) Simplicity of company formation and the ability to raise capital Ans: C

Level: Intermediate

Subject: Corporation

Type: Concepts

46. Which one of the following actions best meets the goal of financial management? A) Deciding a firm should be 100% equity financed B) Delaying cash payments in order to increase the total cash on hand C) Easing the accounts receivable policies in order to increase current sales D) Accepting a project that enhances the current market value of the firm's stock E) Issuing additional shares of stock to increase the total cash on hand Ans: D

Level: Intermediate

Subject: Goal of Financial Management

Type: Concepts

47. Which one of the following actions is the best example of an agency problem? A) Paying management bonuses based on the number of store locations opened during the year B) Paying management bonuses based on the current market value of the firm's stock C) Accepting a project that enhances both management salaries and the market value of the firm's stock D) Requiring stockholders approval of all management compensation decisions E) Basing management bonuses on the attainment of specific financial goals Ans: A

Level: Challenge

Subject: Agency Problem

Type: Concepts

48. Which one of the following means of management compensation is designed to help eliminate the agency problem? A) Providing cost of living adjustments B) Increasing health care benefits C) Offering stock options D) Providing annual raises E) Providing a corporate jet Ans: C

Level: Intermediate

Subject: Agency Problem

Type: Concepts

49. The primary purpose of an auction market is to: A) Offer new shares of stock to the general public. B) Handle private placements of shares of stock. C) Provide a market place for dealers. D) Provide electronic trading for dealers. E) Match buyers with sellers. Ans: E

Level: Intermediate

Subject: Auction Market

Type: Concepts

50. The primary purpose of capital budgeting is to: A) Determine the amount of cash and inventory to keep on hand. B) Estimate the initial cost of a project. C) Distinguish projects that have at least a five-year life from those that don't. D) Determine the risk level of a project. E) Identify projects that produce cash flows that exceed the cost of the project. Ans: E

Level: Basic

Subject: Capital Budgeting

Type: Concepts

51. An individual who places an order to buy 1000 shares of IBM stock: A) Is involved in a private placement of securities. B) Is most likely involved in an IPO. C) Is most likely participating in the secondary market. D) Must have hired a dealer to perform this transaction. E) Has to be listed as a private dealer. Ans: C

Level: Intermediate

Subject: Secondary Market

Type: Concepts

52. Stockholders elect: A) The Chief Executive Officer. B) The Corporate Directors. C) The Chairman of the Board. D) The President. E) All senior managers. Ans: B

Level: Basic

Subject: Organizational Chart

Type: Concepts

53. The current ratio is measured as: A) Current assets minus current liabilities. B) Current assets divided by current liabilities. C) Current liabilities minus inventory, divided by current assets. D) Cash on hand divided by current liabilities. E) Current liabilities divided by current assets. Ans: B

Level: Basic

Subject: Current Ratio

Type: Definitions

54. The quick ratio is measured as: A) Current assets divided by current liabilities. B) Cash on hand plus current liabilities, divided by current assets. C) Current liabilities divided by current assets, plus inventory. D) Current assets minus inventory, divided by current liabilities. E) Current assets minus inventory minus current liabilities. Ans: D

Level: Basic

Subject: Quick Ratio

Type: Definitions

55. The cash ratio is measured as: A) Current assets divided by current liabilities. B) Current assets minus cash on hand, divided by current liabilities. C) Current liabilities plus current assets, divided by cash on hand. D) Cash on hand plus inventory, divided by current liabilities. E) Cash on hand divided by current liabilities. Ans: E

Level: Basic

Subject: Cash Ratio

Type: Definitions

56. The financial ratio measured as current assets divided by average daily operating costs is the: A) Cash ratio. B) NWC to total assets ratio. C) Acid-test ratio. D) Interval measure. E) Operating measure. Ans: D

Level: Basic

Subject: Interval Measure

Type: Definitions

57. The interval measure is an example of a ____________ ratio. A) short-term solvency B) financial leverage C) asset management D) profitability E) market value Ans: A

Level: Basic

Subject: Interval Measure

Type: Definitions

58. Ratios that measure the firm's financial leverage are known as: A) Asset management ratios. B) Long-term solvency ratios. C) Short-term solvency ratios. D) Profitability ratios. E) Market value ratios. Ans: B

Level: Basic

Subject: Long-Term Solvency Ratios

Type: Definitions

59. The financial ratio measured as total assets minus total equity, divided by total assets, is the: A) Total debt ratio. B) Equity multiplier. C) Debt-equity ratio. D) Current ratio. E) Times interest earned ratio. Ans: A

Level: Basic

Subject: Total Debt Ratio

Type: Definitions

60. The debt-equity ratio is measured as: A) Total equity minus total debt. B) Total equity divided by total debt. C) Total debt divided by total equity. D) Total debt plus total equity. E) Total debt minus total assets, divided by total equity. Ans: C

Level: Basic

Subject: Debt-Equity Ratio

Type: Definitions

61. The equity multiplier ratio is measured as: A) Total equity divided by total assets. B) Total equity plus total debt. C) Total assets minus total equity, divided by total assets. D) Total assets plus total equity, divided by total debt. E) Total assets divided by total equity. Ans: E Level: Basic Subject: Equity Multiplier Type: Definitions 62. The total long-term debt and equity of the firm is frequently called: A) Total assets. B) Total capitalization. C) Total financing. D) Debt-equity consolidation. E) Debt-equity reconciliation. Ans: B

Level: Basic

Subject: Total Capitalization

Type: Definitions

63. If a firm acquires more long-term debt while also issuing additional shares of stock, then the: A) Debt-equity ratio will increase. B) Debt-equity ratio will decrease. C) Debt equity ratio will remain constant. D) Change in the debt-equity ratio cannot be determined from the information provided. E) Net Income will increase. Ans: D

Level: Intermediate

Subject: Debt-Equity Ratio

Type: Concepts

64. If the level of inventory rises, all else constant, then: A) The days sales in inventory will also rise. B) The NWC ratio will also rise. C) Inventory turnover will also rise. D) Fixed asset turnover will decline. E) Current ratio will decline. Ans: A

Level: Intermediate

Subject: Days Sales In Inventory

Type: Concepts

65. An increase in the receivables turnover means that: A) The majority of customers are paying slower. B) The prices of items purchased are rising. C) The days sales in receivables is rising. D) Profit margins are rising. E) Customers are paying their bills faster. Ans: E

Level: Intermediate

Subject: Receivables Turnover

Type: Concepts

66. A fixed asset turnover ratio of .72 means that: A) For every $1 in total assets, a firm can generate $0.72 in net income. B) For every $1 in net fixed assets, a firm can generate $0.72 in net income. C) For every $1 in total assets, a firm can generate $0.72 in sales. D) For every $1 in net fixed assets, a firm can generate $0.72 in sales. E) For every $1 in net fixed assets, a firm can obtain $0.72 in debt. Ans: D

Level: Intermediate

Subject: Fixed Asset Turnover

Type: Concepts

67. Last year a firm had a total debt ratio of .31. This year the total debt ratio is .33. Which one of the following statements can be made with certainty based on this information? A) The firm is bankrupt. B) The firm increased its equity financing. C) The firm had to have sold some long-term assets. D) The firm had to have borrowed more money. E) The firm changed its capital structure. Ans: E

Level: Challenge

Subject: Total Debt Ratio

Type: Concepts

68. Which one of the following measures indicates how long a firm can continue operating without any additional cash inflows? A) Current ratio B) Cash ratio C) Quick ratio D) Interval measure E) Total debt ratio Ans: D

Level: Intermediate

Subject: Interval Measure

Type: Concepts

69. Which one of the following measures the efficiency with which a firm uses it resources to generate sales? A) Price earnings ratio B) Return on equity C) Total asset turnover D) Current ratio E) Return on assets Ans: C

Level: Intermediate

Subject: Total Asset Turnover

Type: Concepts

70.A reduction in interest expense, all else constant, will cause a(n): A) Decrease in the times interest earned ratio. B) Increase in the cash coverage ratio. C) Decrease in the long-term debt ratio. D) Decrease in the return on equity. E) Increase in the price earnings ratio. Ans: B Level: Challenge Subject: Profit Margin Type: Concepts 71.Financial statement analysis provides useful information to which of the following parties? I. Creditors II. Investors III. Internal division managers IV. Senior corporate officers A) I and II only B) II and IV only C) III and IV only D) II, III, and IV only E) I, II, III, and IV Ans: E

Level: Intermediate

Subject: Financial Statement Analysis

Type: Concepts

72.Martin's Method Acting School has a current ratio of 2, a quick ratio of 1.8, net income of $180,000, a profit margin of 10%, and an accounts receivable balance of $150,000. What is the firm's average collection period? A) 50 days B) 43 days C) 30 days D) 24 days E) 16 days Ans: C

Level: Intermediate

Subject: Average Collection Period

Type: Problems

73.If a firm has a total debt ratio of 1.5, what is its equity multiplier? A) –2.00 times B) 0.50 times C) 0.67 times D) 1.50 times E) 3.00 times Ans: A

Level: Intermediate

Subject: Debt Ratio & Equity Multiplier

Type: Problems

74.Tron, Inc. has a times interest earned ratio of 4.0. Based on this ratio, a creditor knows that Tron's EBIT must decline by more than __________ before Tron will be unable to cover its interest expense. A) 33% B) 40% C) 67% D) 75% E) 80% Ans: D

Level: Intermediate

Subject: Times Interest Earned

Type: Problems

75.Given a profit margin = 10%, ROE = 20%, D/E = 1.5, and assets = $200, calculate sales. A) $10 B) $160 C) $250 D) $640 E) $1,000 Ans: B

Level: Intermediate

Subject: Du Pont Identity

Type: Problems

76.The long-range time period, usually the next two to five years, over which the financial planning process focuses is known as the: A) Planning horizon. B) Planning strategy. C) Planning agenda. D) Short run. E) Current financing period. Ans: A

Level: Basic

Subject: Planning Horizon

Type: Definitions

77.The process by which smaller investment proposals of each of a firm's operational units are added up and treated as one big project is known as: A) Separation. B) Aggregation. C) Conglomeration. D) Appropriation. E) Striation. Ans: B

Level: Basic

Subject: Aggregation

Type: Definitions

78.Pro forma financial statements are: A) Illegal. B) Accounting statements filed with the Securities and Exchange Commission (SEC) . C) Accounting statements filed with CCRA. D) Projections in the form of accounting statements, based on a sales forecast assumption. E) The most-recently compiled accounting statements of the firm released to the public. Ans: D

Level: Basic

Subject: Pro Forma Statements

Type: Definitions

79.The designated source(s) of external financing required to make the pro forma balance sheet balance is called the: A) Retained earnings account. B) Common stock account. C) Debt-equity ratio. D) Cash flow variable. E) Plug variable. Ans: E

Level: Basic

Subject: Plug Variable

Type: Definitions

80.The financial planning method in which accounts are varied depending on a firm's predicted sales level is called the: A) Percentage of sales approach. B) Sales dilution approach. C) Sales reconciliation approach. D) Common-size approach. E) Time-trend approach. Ans: A

Level: Basic

Subject: Percentage Of Sales

Type: Definitions

81.If a firm believes its costs and assets grow at the same rate as sales, the dividend payout ratio is fixed, no new equity is possible, and the current debt-equity ratio is optimal, then which of the following is true? I. The sustainable growth rate gives the maximum rate at which sales can grow. II. External financing will be zero. III. Asset growth must completely come from increases in accounts payable and retained earnings. IV. If the firm pays out in dividends all of its net income, sales cannot grow. A) I only B) I, II, and III only C) I and IV only D) II, III, and IV only

E)

I, II, III, and IV

Ans: C 82.

Level: Intermediate

Level: Intermediate

Level: Basic

Subject: Sustainable Growth Rate

Subject: Sustainable Growth Rate

Type: Concepts

Type: Concepts

Type: Concepts

Which of the following are constant under the percentage of sales approach? A) Profit margin and dividend payout ratio B) Addition to retained earnings and net income C) Dividends paid and the profit margin D) Costs as a percentage of sales and dividends paid E) Costs as a percentage of sales and the addition to retained earnings Ans: A Level: Intermediate Type: Concepts

86.

Subject: Sustainable Growth Rate

You wish to compute a firm's sustainable growth rate from its accounting statements. To do so, you could use the values of A) total assets, net income, and the retention ratio B) total assets, interest paid, and equity C) net income, equity, and the dividend payout ratio D) interest paid, equity, and total assets E) net income, equity, and total assets Ans: C

85.

Level: Intermediate

Which of the following firms would most likely be interested in knowing their sustainable growth rate? A) A firm that believes its equity multiplier is at its optimal level B) A firm that has no capacity to raise new debt C) A firm in a mature industry that expects limited sales growth in the future D) A firm that pays no dividends E) A firm that has a low level of investment in fixed assets Ans: A

84.

Type: Concepts

If a firm is to grow at its sustainable growth rate, its growth depends on which of the following factors? I. Profit margin II. Financial policy III. Dividend policy A) I only B) I and II only C) I and III only D) II and III only E) I, II, and III Ans: E

83.

Subject: Sustainable Growth

Subject: Percentage Of Sales Approach

The elements of financial planning include: I The results of the net working capital decisions. II Consideration of the degree of financial leverage to be employed.

III IV A) B) C) D) E)

Investment opportunities the firm chooses to pursue. The amount of cash needed to pay dividends. I and IV only. I, II, and III only. II, III, and IV only. I, III, and IV only. I, II, III, and IV.

Ans: E Level: Intermediate Type: Concepts 87.

Financial planning generally considers: A) Two to five proposals over the short-term. B) A two to five year time frame while aggregating smaller proposals. C) The details of each individual project over the long-term. D) Three alternative scenarios over the short-term. E) An aggregation of projects over the next twenty-four months. Ans: B

88.

Subject: Planning Horizon

Type: Concepts

Level: Intermediate

Subject: Financial Planning

Type: Concepts

The sales forecast for most financial plans is: A) Developed based upon the net income figure provided by management. B) Projected based on the anticipated level of debt financing. C) Used as the plug figure. D) Derived from the output of the financial planning process. E) Externally supplied. Ans: E

90.

Level: Intermediate

Financial planning allows firms to: I. Avoid future losses. II. Develop contingency plans. III. Ascertain expected financing needs. IV. Explore and evaluate various options. A) I and IV only. B) III and IV only. C) II and III only. D) II, III, and IV only. E) I, II, III, and IV. Ans: D

89.

Subject: Elements Of Financial Planning

Level: Basic

Subject: Sales Forecast

Type: Concepts

Two of the more important economic factors that must be considered when doing a financial plan for a firm are the: A) GDP growth rate and the interest rate. B) Unemployment rate and the GDP growth rate. C) Marginal tax rate and the interest rate. D) GDP growth rate and the marginal tax rate. E) Inflation rate and the interest rate. Ans: C

Level: Intermediate

Subject: Economic Assumptions

Type: Concepts

91.The interest rate used to calculate the present value of future cash flows is called the ____________ rate. A) free interest B) annual interest C) compound interest D) simple interest E) discount Ans: E

Level: Basic

Subject: Discount Rate

Type: Definitions

92.The concept that a dollar received today is worth more than a dollar received tomorrow is referred to as the: A) Present value. B) Simple interest value. C) Compound value. D) Time value of money. E) Future value of money. Ans: D

Level: Basic

Subject: Time Value Of Money

Type: Definitions

93.The factor (1 + r)t is called the: A) Simple rate of interest. B) Current factor. C) Future value factor. D) Present value factor. E) Discount factor. Ans: C

Level: Basic

Subject: Future Value Factor

Type: Definitions

94.The value computed using the factor 1 / (1 + r)t is called the: A) Present value. B) Interest rate. C) Number of periods. D) Future value. E) Compound value. Ans: A

Level: Basic

Subject: Present Value

Type: Definitions

95.Compound interest means that you earn: A) Interest only on the initial amount invested. B) Interest on the initial principal only. C) Interest on both the principal and prior reinvested interest. D) A decreasing amount of interest each year. E) The same amount of interest each year. Ans: C

Level: Basic

Subject: Compound Interest

Type: Definitions

96.Calculating the present value of a future cash flow to determine its value today is called: A) Discounted cash flow valuation. B) The discount rate. C) Future value compounding. D) Present value compounding. E) Timing the cash flow. Ans: A

Level: Basic

Subject: Discounted Cash Flow

Type: Definitions

97.The rate used to find the present value of a future payment is called the: A) Simple rate. B) Discount rate. C) Compound rate. D) Future value rate. E) Loan rate. Ans: B

Level: Basic

Subject: Discount Rate

Type: Definitions

98.The discounted value of money is called the: A) Compound value. B) Simple value. C) Future value. D) Complex value. E) Present value. Ans: E

Level: Basic

Subject: Present Value

Type: Definitions

99.The rate of return used when computing a present value is referred to as the ______ rate while the rate used when computing a future value is referred to as the _____ rate. A) Compound; discount B) Compound; simple C) Compound; compound D) Discount; discount E) Discount; compound Ans: E

Level: Basic

Subject: Discount Rate Versus Compound Rate

Type: Definitions

100.On a financial calculator, the symbol "N" represents the: A) Current value. B) Time periods. C) Future value. D) Rate of simple interest. E) Rate of compound interest. Ans: B

Level: Basic

Subject: Number Of Periods

Type: Definitions

101.Ito invested $4,350. After seven years he had an account value of $6,980.58. Maria invested $5,920. After six years she had an account value of $8,834.62. Which one of the following statements is correct? A) Maria earned a rate of interest that was 0.9% higher than Ito's rate. B) Maria earned a rate of interest of 5.89%. C) Ito earned a rate of interest that was 0.09% higher than Maria's rate. D) Ito earned a rate of interest of 6.90%. E) Both Ito and Maria earned the same rate of interest. Ans: C

Level: Intermediate

Subject: Interest Rate

Type: Problems

102.Koji invested $3,300 at 7.75% interest. After a period of time he withdrew $9,383.31. How long did Koji have his money invested? A) 13 years B) 14 years C) 15 years D) 16 years E) 17 years Ans: B

Level: Basic

Subject: Number Of Periods

Type: Problems

103.Sampson, Inc. invested $1.325 million in a project that earned an 8.25% rate of return. Sampson sold their investment for $3,713,459. How much sooner could Sampson have sold the company if they only wanted $3 million from the project? A) 2.69 years B) 3.33 years C) 5.17 years D) 6.67 years E) 10.31 years Ans: A

Level: Challenge

Subject: Number Of Periods

Type: Problems

104.Lakeside Inc. invested $735,000 at an 11.25% rate of return. The company sold their investment for $1,067,425. How much longer would Lakeside have had to wait if they had wanted to sell their investment for $1.25 million? A) .98 year B) 1.48 years C) 1.98 years D) 2.31 years E) 3.50 years Ans: B

Level: Intermediate

Subject: Number Of Periods

Type: Problems

105.Martha is going to receive $6,000 in two years from Tom. She will receive an additional $4,000 in three years from Tom. She earns 7.15% on her investments. How much is this money from Tom worth to Martha today? A) $7,893.46 B) $8,477.47 C) $8,891.74 D) $9,225.97 E) $9,251.50 Ans: B

Level: Intermediate

Subject: Present Value

Type: Problems

106.The I.C. James Co. invested $10,000 six years ago at 5% simple interest. The I.M. Smart Co. invested $10,000 six years ago at 5% interest which is compounded annually. Which one of the following statements is true concerning these two investments? I. The I.C. James Co. has an account value of $13,400.96 today. II. The I.C. James Co. will have an account value of $13,400.96 six years from now. III. The I.M Smart Co. will earn $525 interest in the second year. IV Both the I.C. James Co. and the I.M. Smart Co. will earn $500 interest in the first year. A) I and III only B) I, III and IV only C) II and IV only D) II, III and IV only E) III and IV only Ans: E

Level: Challenge

Subject: Interest Rate

Type: Problems

107.The Smith Co. has $450,000 to invest at 5.5% interest. How much more money will they have if they invest these funds for eight years instead of five years? A) $62,948.21 B) $68,851.36 C) $74,250.00 D) $78,408.62 E) $102,476.93 Ans: E

Level: Intermediate

Subject: Future Value

Type: Problems

108.Today Richard is investing $1,000 at 5% interest for five years. One year ago, Richard invested $1,000 at 6.25% for six years. How much money will Richard have saved in total five years from now if both investments compound interest annually? A) $2,543.77 B) $2,641.98 C) $2,678.81 D) $2,630.36 E) $2,714.99 Ans: E

Level: Intermediate

Subject: Future Value

Type: Problems

109. Lisa deposited $500 in a savings account this morning. The account pays 2.5% simple interest. If Lisa leaves this money in the account for five years, how much total interest will she earn? A. $10.75 B. $12.50 C. $53.75 D. $62.50 E. $67.25

110. Many economists view a 3% annual inflation rate as "acceptable". Assuming a 3% annual increase in the price of automobiles, how much will a new Suburban cost you five years from now, if today's price is $48,000? A. $41,405 B. $48,000 C. $54,024 D. $55,200 E. $55,645

111. Today, you earn a salary of $37,800. What will your annual salary be twelve years from now if you receive annual raises of 3.6%? A. $55,981.03 B. $56,324.17 C. $56,907.08 D. $57,784.17 E. $58,213.46

112. Your big brother deposited $10,000 today at 9% interest for 6 years. You would like to have just as much money at the end of the next 6 years as your brother. However, you can only earn 7.5% interest. How much more money must you deposit today than your brother did if you are to have the same amount at the end of the 6 years? A. $398.68 B. $487.63 C. $575.00 D. $648.21 E. $866.96

113. Today, you earn a salary of $42,500. What will be your annual salary 10 years from now if you earn annual raises of 3.2%? A. $56,100.00 B. $57,414.06 C. $58,235.24 D. $59,122.08 E. $59,360.45

114. You setup an educational savings plan that will pay $15,000 to your newborn child in 18 years. If the plan uses a rate of 4.75% per year, what was contributed into this plan? A. $4,459 B. $5,800 C. $6,506 D. $7,007 E. $8,576

115. Cooper invests $6,500 in a savings account at his local bank. The bank pays 2.75% simple interest. Cooper does not make any additional withdrawals or deposits to this account. How much will his account be worth after 12 years? A. $2,145 B. $2,655 C. $6,679 D. $8,645 E. $9,001

116. Calculate cash given the following information. Total current assets $57,000; supplies $4,000; average collection period 60.83 days; days' sales in inventory 97.33 days; sales 90,000; cost of goods sold 75,000. A. $24,000 B. $22,000 C. $20,000 D. $18,000 E. $16,000

117. A firm currently has sales of $1.32 million and $964,500 in fixed assets. Currently operations are at 84% of capacity. By how much can sales increase without requiring the firm to purchase any additional fixed assets? (Enter values in dollars) A. $154,320 B. $183,714 C. $211,200 D. $251,429 E. $355,500

118. Suppliers, Inc. has current sales of $2,400 and a profit margin of 9%. The firm estimates that sales will decrease by 4% next year and that all costs will vary in direct relationship to sales. What is the pro forma net income? A. $207.36 B. $210.82 C. $216.00 D. $224.64 E. $230.14

119. JanexCorporation had OCF of $250, net capital spending of $500 and change in net working capital of $150. Given this information, determine its cash flow from assets. A. $400 B. $800 C. $(400) D. $(800) E. $150 120. Shareholders' equity in a firm is $500. The firm owes a total of $400 of which 75 percent is payable this year. The firm has net fixed assets of $600. What is the amount of the net working capital? A. -$200 B. -$100 C. $0 D. $100 E. $200 121. RDJ Manufacturing had 300 million shares of stock outstanding at the end of 2015. During 2015, the company reported net income of $600 million, retained earnings of $900 million, and $240 million in dividends paid. What is RDJ's earnings per share? A. $0.50 B. $0.67 C. $0.80 D. $1.25 E. $2.00 122. The Burger Joint paid $420 in dividends and $611 in interest expense. The addition to retained earnings is $397.74 and net new equity is $750. The tax rate is 34 percent. Sales are $6,250 and depreciation is $710. What are the earnings before interest and taxes? A. $1,576.67 B. $1,582.16 C. $1,660.00 D. $1,780.82 E. $1,850.00 123. Using the Du Pont Identity Method, calculate the equity multiplier given the following information. Profit margin 17%; total asset turnover 0.88; return on equity 17.95%. A. 1.6 B. 1.4 C. 1.2 D. 1.0 E. 0.8

124. Using the Du Pont Identity Method, calculate the equity multiplier given the following information. Profit margin 19%; total asset turnover 1.5; return on equity 37.05%. A. 1.2 B. 1.3 C. 1.4 D. 1.5 E. 1.6 125. Calculate price earnings growth ratio given the following information: net income = $1,250,000; shares outstanding = 400,000; stock price = $35; future earnings growth rate = 8%. A. 1.30 B. 1.35 C. 1.40 D. 1.45 E. 1.50 126. Cash is $500, inventory is $4,800, accounts receivable is $3,200 and accounts payable is $2,400. What is the quick ratio? A. 0.77 B. 1.54 C. 1.67 D. 3.33 E. 3.54 127. Calculate the current ratio given the following information: current liabilities = $40,000; sales = $90,000; cost of goods sold = $32,000; cash ratio = 1.10; accounts receivable turnover = 5; inventory turnover = 3. A. 1.60 B. 1.70 C. 1.80 D. 1.90 E. 2.00 128. Herman's Bar and Grill paid $1,618 in interest and $265 in dividends last year. The times interest earned ratio is 1.9 and the depreciation expense is $50. What is the value of the cash coverage ratio? A. 1.62 B. 1.87 C. 1.93 D. 1.99 E. 2.11

129. Little's Inc. provides a 10% return on equity. Sales are $100,000 on total assets of $140,000 and total equity of $85,000. What is the profit margin? A. 6.07% B. 8.50% C. 10.00% D. 11.77% E. 14.00% 130. Frederico's has a profit margin of 6 %, a return on assets of 8 %, and an equity multiplier of 1.4. What is the return on equity? A. 6.7 % B. 8.4 % C. 11.2 % D. 14.6 % E. 19.6 % 131. Calculate the times interest earned ratio given the following information: depreciation expense = $30,000; EBIT = $180,000; cash coverage ratio = 14 times. A. 8.0 times B. 7.5 times C. 11.5 times D. 12.0 times E. 12.5 times 132. A London Ontario firm has a net income of $32,000 which provides a 12% return on assets. The firm has a debt-equity ratio of .40. What is the return on equity? A. 7.20% B. 8.57% C. 11.67% D. 12.00% E. 16.80% 133. Calculate net working capital turnover given the following data. Total fixed assets $200,000; long-term liabilities $55,000; total liabilities $80,000; total shareholders' equity $220,000; total sales $800,000. A. 13.75 B. 12.67 C. 11.75 D. 10.67 E. 9.67

134. An individual who places an order to buy 1000 shares of IBM stock: A. Is involved in a private placement of securities. B. Is most likely involved in an IPO. C. Is most likely participating in the secondary market. D. Must have hired a dealer to perform this transaction. E. Has to be listed as a private dealer.

135. Working capital management: A. Includes the daily oversight of a firm's cash requirements. B. Involves the determination of how much long-term debt should be issued. C. Is the oversight of a firm's long-term assets. D. Deals with the refinancing of the firm's debt if interest rates decline. E. Deals with the allocation of equipment to various jobs on a daily basis.

136. Which one of the following actions by a financial manager is most aligned with the goal of financial management? A. Increasing the size of a firm by acquiring a non-profitable competitor. B. Increasing the sales of the firm by expanding the company's sales force. C. Issuing additional shares of stock to repay all of the firm's long-term debt. D. Improving the efficiency of the company such that the value of the stock increases. E. Increasing the bonuses paid to the top executives as the size of the firm increases.

A. It was intended to protect investors from corporate abuses. B. It was intended to increase corporate social responsibility of publicly listed organizations. C. It was intended to provide consumer protection on product quality. D. It was intended to protect employees through better corporate codes of conduct. E. It was intended to harmonize accounting standards in North America.

138. An entity wherein one or more owners may elect to actively manage the firm while other owners choose limited liability instead of management responsibility is called a: A. Corporation. B. General partnership. C. Limited liability corporation. D. Limited liability company. E. Limited partnership.

139. Limited liability may be a characteristic of each of the following form(s) of organization EXCEPT a ________________. A. Sole proprietorship. B. Corporation. C. Limited partnership. D. Limited liability company. E. Co-operative(Co-op)

140. A business that is a distinct legal entity is a: A. Proprietorship. B. Partnership with only two partners. C. Limited partnership. D. General partnership. E. Corporation.

141. It is easiest to raise capital for a project under which form of business organization? A. Corporation. B. General partnership. C. Limited partnership. D. Sole proprietorship. E. The form of business organization does NOT affect the ability to raise capital.

142. Robert Fischer is one of the owners of a firm which generated $18,000 in taxable income last year. Robert did not have to pay any personal tax on his share of the firm's income. Robert must be a partial owner of a: A. Sole proprietorship. B. General partnership. C. Limited partnership. D. Non-dividend paying corporation. E. Limited liability company.

143. Which type of business organization has all the respective rights and privileges of a legal person? A. Sole proprietorship. B. General partnership. C. Limited partnership. D. Corporation. E. Limited liability company.

144. Which form of business structure faces the greatest agency problems? A. Sole proprietorship. B. General partnership. C. Limited partnership. D. Corporation. E. Limited liability company.

145. Which of the following are advantages of the corporate form of ownership? A. Limited personal liability and limited firm life. B. Ability to raise capital and limited firm life. C. Limited personal liability and ability to raise capital. D. Ease of ownership transfer and simplicity of company formation. E. Simplicity of company formation and the ability to raise capital.

146. Working capital management is concerned with which statement of financial position accounts? A. Current assets only. B. Current and long-term assets only. C. Long-term assets only. D. Current assets and current liabilities only. E. Current assets, long-term assets and current liabilities only.

147. Which of the following is not an agency cost? A. Flying an executive overseas without a genuine business purpose for doing so. B. Paying more than the actual market value to purchase a competitor. C. Low-interest loans to corporate executives. D. Protecting management jobs which could effectively be eliminated. E. Interest paid on long-term corporate borrowing.

148. Conflicts that arise between the interests of managers and stockholders are referred to as: A. Control problems. B. Agency problems. C. Management conflicts. D. Stockholder conflicts. E. Proxy fights.

149. Which of the following is a capital structure decision? A. Cost of acquiring funds for the company. B. Management of current assets and liabilities. C. Management of net working capital. D. Which projects should be accepted or rejected. E. Timing and risks of cash flows for an upcoming project.

150. Which one of the following best illustrates the agency problem? A. An employee offers a suggestion which will save the company money and reduce the stress of his job. B. The company creates a management bonus program whereby managers are rewarded when the market price of the firm's stock rises. C. Management rejects a merger which was desired by the shareholders. D. Management expands its operations overseas which is favourably received by the financial markets. E. Management reduces the risk level of the firm while maintaining a steady stock price.