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