Business Finance

Probably the least effective means of aligning management goals with shareholder interests is:

automatically increasing management salaries on an annual basis.

Security dealers:

buy and sell from their own inventory.

Net working capital is defined as:

current assets minus current liabilities

The Sarbanes-Oxley Act of 2002 has:

essentially made officers of publicly traded firms personally responsible for the firm's financial statements.

A firm's liquidity level decreases when:

inventory is purchased with cash.

If a firm has a negative cash flow from assets every year for several years, the firm:

may be continually increasing in size.

The passage of the Tax Cuts and Jobs Act of 2017 created a revised progressive tax structure, which applies to all of the following except:

Corporations

A firm has net working capital of $580, net fixed assets of $2,326, sales of $6,900, and current liabilities of $890. How many dollars worth of sales are generated from every $1 in total assets?

$1.82 or $1.817

A firm has sales of $1,030, net income of $207, net fixed assets of $506, and current assets of $262. The firm has $82 in inventory. What is the common-size balance sheet value of inventory?

10.68%

A firm has sales of $4,720, costs of $2,625, interest paid of $167, and depreciation of $469. The tax rate is 22 percent. What is the cash coverage ratio?

12.54 times

Use the following information to answer this question. Windswept, Incorporated2022 Income Statement(in millions)Net sales$ 12,050Cost of goods sold7,800Depreciation480Earnings before interest and taxes$ 3,770Interest paid94Taxable income$ 3,676Taxes1,287Net income$ 2,389 Windswept, Incorporated2021 and 2022 Balance Sheets(in millions) 20212022 20212022Cash$ 230$ 260Accounts payable$ 1,700$ 1,640Accounts receivable1,050950Long-term debt1,0401,360Inventory1,9101,690Common stock3,3003,010Total$ 3,190$ 2,900Retained earnings620870Net fixed assets3,4703,980 Total assets$ 6,660$ 6,880Total liabilities & equity$ 6,660$ 6,880 What is the fixed asset turnover for 2022?

3.03

The Green Giant has a 4 percent profit margin and a 30 percent dividend payout ratio. The total asset turnover is 1.2 times and the equity multiplier is 1.5 times. What is the sustainable rate of growth?

5.31%

Which of the following statements is false?

Acorns is a creative crowdfunding app, allowing smaller investors to join together to fund design ventures.

Which one of the following functions should be assigned to the corporate treasurer rather than to the controller?

Cash management

Silvia is employed as a currency trader in the Japanese yen market. Her job falls into which one of the following areas of finance?

International finance

Vera opened a used bookstore and is both the 100 percent owner and the store's manager. Which type of business entity does Vera own if she is personally liable for all the store's debts?

Sole proprietorship

One advantage of the corporate form of organization is the:

ability to raise larger sums of equity capital than other organizational forms.

An employee has a claim on the cash flows of Westlake Machines. This claim is defined as a claim by one of the firm's:

shareholders

The primary goal of financial management is to maximize:

the market value of existing stock.

Medeiros Imports has cash of $41,100 and accounts receivable of $54,200, all of which is expected to be collected. The inventory cost $82,300 and can be sold today for $116,500. The fixed assets were purchased at a total cost of $234,500 of which $118,900 has been depreciated. The fixed assets can be sold today for $138,000. What is the total book value of the firm's assets?

$293,200

Nikki Heart Photography has total assets of $31,300, long-term debt of $8,600, net fixed assets of $25,600, and owners' equity of $20,540. What is the value of the net working capital?

$3540

On December 31, 2020, The Water Street Theatre had net fixed assets of $812,650 while the December 31, 2021 balance sheet showed net fixed assets of $784,900. Depreciation for 2021 was $84,900. What was the firm's net capital spending for 2021?

$57,150

A firm has total debt of $1,370 and a debt-equity ratio of .22. What is the value of the total assets?

$7,597.27

The financial statements of the Santa Domingo Marina reflect depreciation expenses of $41,600 and interest expenses of $27,900 for the year. The current assets increased by $31,800 and the net fixed assets increased by $28,600. What is the amount of the net capital spending for the year?

$70,200

The Underground Cafe has an operating cash flow of $187,000 and a cash flow to creditors of $71,400 for the past year. The firm reduced its net working capital by $28,000 and incurred net capital spending of $47,900. What is the amount of the cash flow to stockholders for the last year?

$97,500

Raymonds's sales for the year were $1,678,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $1,141,000, $304,000, and $143,000, respectively. In addition, the company had an interest expense of $74,000 and a tax rate of 21 percent. What is the operating cash flow for the year?

$229,640

Samuelson's has a debt-equity ratio of 45 percent, sales of $11,000, net income of $2,300, and total debt of $11,700. What is the return on equity?

8.85%