Fin 301 Exam 1 class questions

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

increasing current profits when doing so lowers the value of the firm's equity.

Which of the following are expense for accounting purposes but are not operating cost flows for financial purposes?

interest expense and depreciation

During the year, kitchen Supply increased its accounts receivable by $130, decreased its inventory by $75, and decreased its accounts payable by $40. How did these three accounts affect the firm's cash flows for the year?

$95 use of cash

the daily news had net income of 121,600 of which 40% was distributed to the shareholders as dividends. during the year, the company sold 75,000 worth of common stock . what is the cash flow to stockholders?

-26,360

Russell's Deli has cash of $136, accounts receivable of $95, accounts payable of $210, and inventory of $409. What is the value of the quick ratio?

1.10

Seaweed Inc is currently operating at only 84% of fixed assets capacity. current sales are $550,000. what is the maximum rate at which sales can grow before any new fixed assets are needed?

19.05% =(550,000/0.84)= 654762 - 550,000= 104762/550,000=0.19047

what is the amount of dividends paid for 2012 based on the charts below?

31,400 (net income minus diff. in retained earnings in 2011/2012 )

What is the cash coverage ratio for 2012 based on the charts below? Galaxy United Inc.

9.18

Stop and Go has a 4.5 percent profit margin and an 18% dividend payout ratio, the total asset turnover is 1.6 and the debt-equity ratio is 0.45. what is the sustainable growth rate?

9.36%

Which one of the following statements is correct?

Financial statements are frequently used as the basis for performance evaluations.

Which of the following is the financial statement that summarizes a firms revenue and expenses over a period of time?

Income statement

Public offering of debt and equity must be registered with which of the following.

SEC (securities and exchange commission)

a supplier, who requires payment within ten days, should be most concerned with which one of the following ratios when granting credit?

cash

Net working capital is defined as:

current assets minus current liabilities

which of the following are included in current liabilites?

note payable to a supplier in 8 months and account payable to a supplier that is due next week.

Ratios that measure how efficiently a firm manages its assets and operations to generate net income are referred to as _____ ratios.

profitability

a common-size income statement is an accounting statement that expresses all of a firms expenses as percentage of:

sales

the sources and uses of cash over a stated period of time are reflected on the

statement of cash flows