FIN 320 Final Spring 2021
According to DeGeorge, what are the five "Keys to Success"?
1-Never break the law 2-Do whats right 3-Make money 4-Have fun 5-Anchor in life
Equity method investments represent which level of ownership interest in the US?
20% to 50%
A stock-split is best described as:
A distribution of stock to the owners of the company
Previously had authority to issue both accounting and auditing standards in the U. S.
AICPA
Which of the following estimates the age of fixed assets?
Accumulated depreciation / depreciation expense
Effective use of assets
Asset turnover
Which of the following is reported on the balance sheet under the new accounting for operating leases
Both right-of use assets and operating lease liabilities
Established a standardized set of internal controls
COSO
Which of the following statements regarding cash basis and accrual basis accounting is FALSE?
Cash basis the the only way to measure value added.
Which two cycles are combined to measure corporate risk?
Days to collect and days to move
Acquisition of a significant business
Decrease in asset turnover
Impairment of goodwill
Decrease in operating margin
Increase in effective tax rate
Decrease in treasury retention
Which of the following IS one of the "Big Four" accounting firms?
Deloitte
Which of the following items would be reported net and after tax as opposed to gross and after tax?
Discontinued operations
Currently has the authority to issue accounting standards in the U. S.
FASB
Risk/confidence
Financial leverage
the set of accounting standards in the U. S.
GAAP
Production efficiency (value added)
Gross profit margin
Which of the following would NOT be marked-to-market?
Hold to maturity securities
A principle-based set of accounting standards
IFRS
Reduction in advertising and promotions
Improved operating retention
Dividends declared per share is critical in determining the dividend payout ratio and therefore earning retention. Which financial statement normally discloses dividends declared per share?
Income statement
Reduction in dividends
Increase in earnings retention
Buying back treasury stock _________________ while retiring treasury stock_____________
Increases financial leverage decreases financial flexibility
n a normal amortization schedule of term debt:
Interest expense decreases and current portion of debt increases
A company receives an order for product from a customer in January. The order is modified in February, shipped in March, invoiced in April and cash is received in May. Under accrual accounting, when will the company record revenue?
March
Treasury function efficiency
Non-operating retention
Operating efficiency of a business
Operating (Ebit) Margin
Non-production operating efficiency
Operating retention
Which of the following is the most appropriate structure of a multistep income statement?
Operating, non-operating, non-recurring
Sun Inc. has acquired a controlling interest in Moon and a significant yet non-controlling interest in Star. Non-controlling interest on Sun Inc.'s financial statements represents:
Other shareholders ownership interest in Moon
Currently authorized to issue auditing standards in the U. S.
PCAOB
When speaking about the income statement financial analysts often talk about "above the line" and "below the line" items. Which of the following is reported above the line?
Pretax income
Overall efficiency
Profit margin
Which of the following is filed first by a company using the public market?
Report on Form S-1
Effective asset selection
Return on Assets
Overall profitability
Return on Equity
By law, has the responsibility for establishing both accounting and auditing standards in the U. S.
SEC
By law, who is held accountable for misrepresentations in financial data
The CEO and CFO
DelGrosso has a 1% interest in AutoZone, a 30% interest in Marco and an 80% interest in Lee. Which of the investments is most likely marked-to-market?
The investment in AutoZone
Profit margin is 10%, asset turnover is 1.0, earnings per share are $2.00 and dividends per share are $1.50. Which of the following statements is correct?
The sustainable growth rate is less than the return on equity
Which of the following improves the cash to cash cycle? Assume all unmentioned cycles remain constant.
a decrease in the days to collect
What is the normal relationship between financial leverage, solvency and financial flexibility?
as leverage increases, both solvency and flexibility decrease.
Which of the following measures corporate risk?
both leverage and solvency
The debt to EBITDA ratio for a company is consistently lower than that of its common competitor. The most logical reason for this is:
covenants with lenders who are concerned about the company's solvency
In the business model diagram, what is the scarce commodity that links all participants in the model?
currency
Successful use of leverage is intended to increase
earnings per share
a company's ability to adapt to unforeseen events
financial flexibility
Which of the following would be recorded on the income statement?
gain on sale of fixed assets
Decrease in cost of goods sold
increase in gross profit margin
Increase in price of product sold
increase in gross profit margin
Which of the following can NOT include level 1, 2 or 3 securities?
investments accounted for by the equity method
a company's ability to satisfy short-tem obligations as they come due
liquidity
Which of the following combinations of activities is indicative of a company in the late growth/early maturity stage?
mergers and acquisitions AND payment of dividends
What are the two primary uses of preferred stock?
mezzanine financing and blocking a hostile takeover attempt
Occurs when interests are not aligned
moral hazard
a company's ability to continue to operate as they have in the past
operating capability
Under the matching principle which type of cost is recorded as expense immediately as incurred?
period costs
If a company replaces finance leases with operating leases
property and equipment will decrease and right of use assets will increase
All other things being equal which of the following will increase future EPS?
purchasing treasury stock
Which of the following increases leverage without increasing corporate risk?
repurchasing a company's own common stock
a company's ability to satisfy long term obligations as they come due
solvency
Seeing "Marketable Securities" on a balance sheet most likely indicates that?
the company is compensating for a known risk
According to DeGeorge, what is the objective of every for-profit business AND what is the only way to accomplish this objective?
the objective of every for-profit business is to make money, for the owners, now and in the future. The only way to accomplish this objective is to add value to goods or services.
the ability to understand managements decision making process
transparency