fin 320 exam 1

World Exports has total assets of $938,280, a total asset turnover rate of 1.18, a debt-equity ratio of .47, and a return on equity of 18.7 percent. What is the firm's net income?

$119,359.43

Preston Woods has 17,500 shares of stock outstanding along with $408,000 of debt. The market and book values of the debt are the same. The firm has sales of $697,000 and a profit margin of 6.8 percent. The tax rate is 21 percent, the debt-equity ratio is 40 percent, and the price-earnings ratio is 11.8. The firm has $130,000 of current assets of which $41,200 is cash. What is the enterprise value?

$926,073

2. Outdoor Gear reduced its costs this year. This cost improvement will increase which of the following ratios? I. Profit margin II. Return on assets III. Total asset turnover IV. Return on equity

1,2,4 because all involve net income... are profitability measures

Western Wear has total sales of $642,100, EBIT of $93,900, net income of $50,800, current assets of $153,500, total assets of $658,000, current liabilities of $78,900, and total liabilities of $213,600. What are the values of the three components of the DuPont identity?

8 C)

3. A positive cash flow to stockholders indicates which one of the following with certainty?

A. The dividends paid exceeded the net new equity raised.

1. Which one of the following statements related to liquidity is correct?

B. Liquid assets are of value to a firm because they can be converted easily into cash and help the firm meets its obligations.

6. The Fundamental goal of financial management should be

B. Maximize the current value per share of the existing stock

Skylar's Bed and Breakfast has $126,500 in total assets, depreciation of 3,500, and interest of $1,850. The total asset turnover rate is 1.02. Earnings before interest and taxes are equal to 24 percent of sales. What is the cash coverage ratio?

C) 18.63

2. Which one of the following statements is correct?

C. Corporations can raise large amounts of capital generally easier than partnerships can.

8. The total market value of the firm's equity is determined by ___________.

C. Investors in the stock market shareholders determine the price of stock in the stock market

10. One example of a primary market transaction would be the:

C. sale of 1,000 shares of newly issued stock by Alt Company to Miquel. primary market transactions are ones who hit the public for the FIRST time "NEW"

Which one of the following reflects an agency problem? (Remember agency problems arise from managers and shareholders not being fully aligned.)

D. Hiring outside accountants to audit the company's financial statements.

5. The term "agency costs" would most appropriately apply to

D. The costs of the conflict of interest between stockholders and management.

2. Which one of the following must be true if a firm had a negative cash flow from assets?

D. The firm utilized outside funding. Remember, in the context of cash flow to investors, outflows to investors are positive. Inflows from investors are negative

1. Which one of the following statements concerning a sole proprietorship is correct?

E. It is generally easy to create a sole proprietorship.

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

all 3

cash flow to stockholders formula

dividends paid-net new equity raised

what is ebit

earnings before interest and taxes netsales-cogs-dep

A firm has a current ratio of 1.4 and a quick ratio of .9. Given this, you know for certain that the firm:

has a positive net working capital Current ratio > 1.... implies CA > CL.... which implies CA-CL > 0

3. Which one of the following best illustrates that the management of a firm is adhering to the goal of financial management?

increase in market per share

cash flow to creditors formula

interest paid-net new borrowing net new borrowing= ending balance of L.T debt- beg balance of L.T debt

Sam, Alfredo, and Juan want to start a small U.S. business. Juan will fund the venture but wants to limit his liability to his initial investment and has no interest in the daily operations. Sam will contribute his full efforts on a daily basis but has limited funds to invest in the business. Alfredo will be involved as an active consultant and manager and will also contribute funds. Sam and Alfredo are willing to accept liability for the firm's debts as they feel they have nothing to lose by doing so. All three individuals will share in the firm's profits and wish to keep the initial organizational costs of the business to a minimum. Which form of business entity should these individuals adopt?

limited partnership

what are the three components of the dupont identity

the profit margin, the total asset turnover, and the equity multiplier

8. Southern Foods has net income of $39,900, net sales of $318,600, total assets of $663,000, common stock of $106,800 (with 106,800 shares with a par value of $1 per share), and retained earnings of $224,400. The stock has a market value of $5.45 per share. What is the priceearnings ratio?

to find earnings per share, make sure to take the shares (106,800 annd divide by par value $1) answer=14.59

Secondary market

trading with eachother