Finance 303 Test 1
Where would you find Current Portion of Long Term Debt?
Balance Sheet - Current Liabilities
The DuPont identity can be accurately defined as:
Equity multiplier × Return on assets.
Negative Free Cash Flow is always a bad thing for a company.
False
Where would you find a company's interest expense?
Income Statement
What are the portions of a Statement of Cash Flows?
Operating Cash Flows, Investing Cash Flows, Financing Cash Flows
Capital budgeting includes the evaluation of which of the following?
Size, timing, and risk of future cash flows
Margie opened a used bookstore and is both the 100 percent owner and the store's manager. Which type of business entity does Margie own if she is personally liable for all the store's debts?
Sole proprietorship
Which ratio below would give the best sense of the overall efficiency of the firm?
Total Asset Turnover (TATO)
The Wood Shop generates $.97 in sales for every $1 invested in total assets. Which one of the following ratios would reflect this relationship?
Total asset turnover
Stadford, Inc. is financed with 40 percent debt and 60 percent equity. This mixture of debt and equity is referred to as the firm's:
capital structure.
Uptown Markets is financed with 45 percent debt and 55 percent equity. This mixture of debt and equity is referred to as the firm's:
capital structure.
Net working capital is defined as:
current assets minus current liabilities.
The primary goal of financial management is to maximize:
the market value of existing stock.
Shareholders' equity is best defined as:
the residual value of a firm.
Common-size financial statements present all balance sheet account values as a percentage of:
total assets.
If the return on assets for a firm is 14.5% and the firm is financed with 50% debt and 50% equity, what is the return on equity?
29.0%
If inventories grew from 135,000 to 141,750 over the 2009 to 2010 years, what was the percentage increase in inventories?
5.0%
What is the Days Sales Outstanding for a firm with the following information (assume 365 day year): Sales: 900 COGS: 500 Depreciation: 100 Interest: 50 Inventory: 100 Accounts Receivable: 150
60.83 days
If sales are $450,000 and cost of goods sold is $286,750 - what is the common size number for COGS?
63.7
Builder's Outlet just hired a new chief financial officer. To get a feel for the company, she wants to compare the firm's sales and costs over the past three years to determine if any trends are present and also determine where the firm might need to make changes. Which one of the following statements will best suit her purposes?
Common-size income statement
Which one of the following is an intangible fixed asset?
Copyright
Matt and Alicia created a firm that is a separate legal entity and will share ownership of that firm on a 75/25 basis. Which type of entity did they create if they have no personal liability for the firm's debts?
Corporation
The DuPont identity can be used to help a financial manager determine the:
degree of financial leverage used by a firm, operating efficiency of a firm, utilization rate of a firm's assets, rate of return on a firm's assets.
All else held constant, the book value of owners' equity will decrease when:
dividends exceed net income for a period.
The accounting statement that measures the revenues, expenses, and net income of a firm over a period of time is called the:
income statement.
The cash ratio is used to evaluate the:
length of time that a firm can pay its bills if no additional cash becomes available.
The primary goal of financial management is most associated with increasing the:
market value of the firm.
The change in retained earnings over the course of an accounting period will typically be equal to:
net income - dividends paid
The market value:
of an asset tends to provide a better guide to the actual worth of that asset than does the book value.
What are the three "levers" for Return on Equity? That is, what three ratios can be used to calculate return on equity?
profit margin, total asset turnover and equity multiplier
Which one of the following has nearly the same meaning as free cash flow?
Cash flow from assets
Which of the following are advantages of the corporate form of organization?
Ability to raise large sums of equity capital, Ease of ownership transfer, Limited liability for all owners
The potential conflict of interest between a firm's owners and its managers is referred to as which type of conflict?
Agency
Which one of the following statements concerning the balance sheet is correct?
Assets are listed in descending order of liquidity.
Will and Bill both enjoy sunshine, water, and surfboards. Thus, the two friends decided to create a business together renting surfboards, paddle boats, and inflatable devices in California. Will and Bill will equally share in the decision making and in the business profits or losses. Which type of business did they create if they both have full personal liability for the firm's debts?
General partnership
Will and Bill both enjoy sunshine, water, and surfboards. Thus, the two friends decided to create a business together renting surfboards, paddle boats, and inflatable devices in California. Will and Bill will equally share in the decision making and in the profits or losses. Which type of business did they create if they both have full personal liability for the firm's debts?
General partnership
The primary goal of financial management is to maximize which one of the following for a corporation?
Market value of existing stock
If a firm has an inventory turnover of 15, the firm:
sells its entire inventory an average of 15 times each year.
A firm has an equity multiplier of 1.5. This means that the firm has a:
total debt ratio of .33.
Theo's BBQ has $48,000 in current assets and $39,000 in current liabilities. Decisions related to these accounts as referred to as:
working capital management.