FIN 301 - Exam 1

Which one of the following questions is a Operating or Capital Management or working capital management decision?

How much inventory should be on hand for immediate sale?

Theoretically best financial objective or goal for a company should be to

Maximize Shareholder Wealth

Taylor's Men's Wear has a debt-equity ratio of 48 percent, sales of $829,000, net income of $47,300, and total debt of $206,300. What is the return on equity?

11.01%

Lillian Ruth's Return on Common Equity Ratio can be determined as:

11.06%

Lillian Ruth's Dividend Payout Ratio can be determined as:

17.50%

Hungry Lunch has net income of $73,402, a price-earnings ratio of 13.7, and earnings per share of $.43. How many shares of stock are outstanding?

170702

Oscar's Dog House has a profit margin of 5.6 percent, a return on assets of 12.5 percent, and an equity multiplier of 1.49. What is the return on equity?

18.63%

A firm has 160,000 shares of stock outstanding, sales of $1.94 million, net income of $126,400, a price-earnings ratio of 21.3, and a book value per share of $7.92. What is the market-to-book ratio?

2.12

Lillian Ruth's Earning Power ratio can be determined as

7.96%

TJ's has annual sales of $813,200, total debt of $171,000, total equity of $396,000, and a profit margin of 5.78 percent. What is the return on assets or return on investment?

8.29%

One disadvantage of the corporate form of business ownership is the:

double taxation of distributed profits

Noncash items refer to:

expenses that do not directly affect cash flows.

Which one of the following ratios is a measure of a firm's liquidity?

quick ratio

A common-size income statement or vertical analysis of income statement is an accounting statement that expresses all of a firm's expenses as a percentage of:

sales

A business owned by a solitary individual who has unlimited liability for the firm's debt is called a:

sole proprietorship

Operating or Capital Management or Working Capital Management decisions include determining:

the minimum level of cash to be kept in a checking account.

Last year, Kaylor Equipment had $15,900 of sales, dividend payments of $75, an addition to retained earnings of $418, depreciation of $680, and $511 of interest expense. What are the earnings before interest and taxes at a tax rate of 21 percent?

$1,135.05

Williamsburg Markets has an operating cash flow of $4,267 and depreciation of $1,611. Current assets change by -$1,356 while current liabilities change by -$2,662, and change in fixed assets investment is $1229 during the year. What is free cash flow for the year?

$1,732

Bernice's has $823,000 in sales. The profit margin is 4.2 percent and the firm has 7,500 shares of stock outstanding. The market price per share is $16.50. What is the price-earnings ratio?

3.58

The Strong Box has sales of $859,700, cost of goods sold of $648,200, net income of $93,100, and accounts receivable of $102,300. How many days of sales are in receivables?

43.43

All-State Moving had sales of $899,000 in 2017 and $967,000 in 2018. Compute All State Moving percentage change in Sales from 2017 to 2018

7.56%

A business formed by two or more individuals who each have unlimited for all of the firm's business debts is called a:

general partnership

A business partner whose potential financial loss in the partnership will not exceed his or her investment in that partnership is call a:

limited partner.

RTF Oil has total sales of $911,400 and costs of $787,300. Depreciation is $52,600 and the tax rate is 21 percent. What is the operating cash flow?

$109,085

Andre's Bakery has sales of $487,000 with costs of goods sold of $263,000. Interest expense is $26,000 and depreciation is $42,000. The tax rate is 21 percent. What is the net income?

$123,240

A firm has common stock of $6,200, capital surplus of $9,100, total liabilities of $8,400, current assets of $5,900, and net fixed assets of $21,200. What is the amount of the total equity?

$18,700

At the beginning of the year, a firm had current assets of $121,306 and current liabilities of $124,509. At the end of the year, the current assets were $122,418 and the current liabilities were $103,718. What is the change in net working capital?

$21,903

Western Gear has net income of $12,400, a tax rate of 21 percent, and interest expense of $1,600. What is the times interest earned ratio for the year?

10.81

Your firm has total assets of $4,900, net fixed assets of $3,200, long-term debt or long term liabilities of $2,900, and current liabilities or short-term debt of $1,400. What is the amount of net working capital?

$300

A firm has net working capital of $560. Long-term debt is $3,970, total assets are $7,390, and net fixed assets are $3,910. What is the amount of the total liabilities?

$6,890

A firm has $680 in inventory, $2,140 in fixed assets, $210 in accounts receivables, $250 in accounts payable, and $80 in cash. What is the amount of the net working capital?

$720

Beach Front Industries has sales of $546,000, costs of goods sold of $295,000, depreciation expense of $37,000, interest expense of $15,000, and a tax rate of 21 percent. The firm paid $59,000 in cash dividends. What is the addition to retained earnings?

$98,210

Corner Books has a debt-equity ratio of .57. What is the total debt ratio?

0.36

Nielsen's has inventory of $29,406, accounts receivable of $46,215, net working capital of $4,507, and accounts payable of $48,919. What is the quick ratio?

0.49

If a firm has a debt-equity ratio of 1.0. then its total debt ratio must be which of the following?

0.5

Lancaster Toys has a profit margin of 5.1 percent, a total asset turnover of 1.84, and a return on equity of 16.2 percent. What is the debt-equity ratio?

0.73

Duke's Garage has cash of $68, accounts receivable of $142, accounts payable of $235, and inventory of $318. What is the value of the quick ratio using the traditional approach?

0.89

The Harrisburg Store has net working capital of $2,715, net fixed assets of $22,407, sales of $31,350, and current liabilities of $3,908. Compute total asset turnover ratio?

1.08

Gem Jewelers has current assets of $687,600, total assets of $1,711,000, net working capital of $223,700, and long-term debt of $450,000. What is the debt-equity ratio?

1.15

The following would be considered as a source of cast for a Statement of Cash Flows:

A decrease in inventory

Which one of the following is a current liability?

Account payable to a supplier that is due next week

Current liabilities may include the following accounts:

Accounts Payable and Taxes Payable

Which one of the following accounts is the most liquid?

Accounts receivable

Which one of the following is a current asset?

Accounts receivable

The following would be considered as a use of cash for a Statement of Cash Flows:

An increase in Land

The following would be considered as sources of cash for a Statement of Cash Flows

An increase in notes payable

Which of the following individuals have unlimited liability for a firm's debts based on their ownership interest?

Both general partners and sole proprietors

Common equity includes the following accounts:

Common Stock and Retained Earnings

Which business form is best suited to raising large amounts of capital?

Corporation

Which business form is the most regulated form of organization?

Corporation

Which one of the following will decrease the value of a firm's net working capital?

Decrease in Amount of Inventory

An increase in current liabilites will have which one of the following effects, all else held constant? Assume all ratios have positive values

Decrease in the quick ratio

Which one of the following terms is defined as the mixture of a firm's debt and equity financing?

Financing or Capital Acquisition or Capital Structure

Which one of the following is the financial statement that summarizes a firm's revenue and expenses over a period of time?

Income statement

Which one of the following actions by a financial manager is most apt to create an agency problem?

Increasing current profits when doing so lowers the value of the company's equity

Which one of the following terms is defined as the management of a firm's long-term investments?

Investment or Capital Distribution

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

Treasury stock may be acquired by a firm in order to

Remove shares from the market place to avoid a hostile takeover

Free cash flow is

The amount of excess cash that is available to both the creditors and the owners or equity holders of a firm

The decision to issue additional shares of stock is an example of:

a capital acquisition or financing decision.

Agency problems are most associated with:

corporations.

Net working capital is defined as:

current assets minus current liabilites.

Hayes Bakery has sales of $30,600, costs of goods sold of $15,350, an addition to retained earnings of $4,221, dividends paid of $469, interest expense of $1,300, and a tax rate of 21 percent. What is the amount of the depreciation expense?

$8,013.29

Oil Creek Auto has sales of $3,340, net income of $274, net fixed assets of $2,600, and current assets of $920. The firm has $430 in inventory. What is the common-size statement value of inventory?

12.22%

Frank's Used Cars has sales of $807,200, total assets of $768,100, and a profit margin of 6.68 percent. The firm has a total debt ratio of 54 percent. What is the return on equity?

15.26%

Lassiter Industries has annual sales of $328,000 with 8,000 shares of stock outstanding. The firm has a profit margin of 4.5 percent and a price-sales ratio of 1.20. What is the firm's price-earnings ratio?

26.7

A firm's short-term assets and its short-term liabilities are reffered to as the firm's:

Operating or Capital Management or Working Capital Management

The Statement of Cash Flows separates cash flows into all of the following activity sections except:

Payment Activities

in vertical analysis of a balance sheet all accounts for the current year are expressed as a percentage of:

total assets