BA323 Test #1 Review

What occupation best fits into the corporate area of finance?

Chief Financial Officer (CFO)

Pharrell, Inc., has sales of $595,000, costs of $263,000, depreciation expense of $66,000, interest expense of $33,000, and a tax rate of 30%. The firm paid out $41,000 in cash dividends and has 50,000 shares of common stock outstanding. What is the dividends per share figure? (Round to two decimal places.)

$0.82

Pharrell, Inc., has sales of $602,000, costs of $256,000, depreciation expense of $62,500, interest expense of $29,500, and a tax rate of 40%. The firm paid out $44,500 in cash dividends. What is the addition to retained earnings? (Round to the nearest whole number.)

$107,900

Pharrell, Inc., has sales of $602,000, costs of $256,000, depreciation expense of $62,500, interest expense of $29,500, and a tax rate of 40%. What is the net income for this firm? (Round to the nearest whole number.)

$152,400

The SGS Co. had $101,000 in taxable income. Calculate the company's income taxes. Use the rates from Table 2.3. (Round to the nearest whole number.)

$22,640

Pharrell, Inc., has sales of $595,000, costs of $263,000, depreciation expense of $66,000, interest expense of $33,000, and a tax rate of 30%. The firm paid out $41,000 in cash dividends and has 50,000 shares of common stock outstanding. What is the earnings per share figure? (Round to two decimal places.)

$3.26

Bear Tracks Inc., has current assets of $2,220, net fixed assets of $9,800, current liabilities of $1,375, and long-term debt of $4,030. What is the value of the shareholders' equity account for this firm? (Round to the nearest whole number.)

$6,615

Hailey, Inc., has sales of $19,720, costs of $9,310, depreciation expense of $1,980, and interest expense of $1,470. Assume the tax rate is 40%. What is the operating cash flow (OCF)? (Round to the nearest whole number.)

$7,626

Bear Tracks Inc., has current assets of $2,220, net fixed assets of $9,800, current liabilities of $1,375, and long-term debt of $4,030. How much is the company's net working capital? (Round to the nearest whole number.)

$845

The SGS Co. had $297,000 in taxable income. What is the average tax rate? Use the rates from Table 2.3. (Round to two decimal places.)

33.36%

The SGS Co. had $297,000 in taxable income. What is the marginal tax rate? Use the rates from Table 2.3. (Round to the nearest whole number.)

39%

The potential conflict of interest between a firm's owners and its managers is referred to as which type of conflict?

Agency

Which function should be assigned to the corporate treasurer rather than to the controller?

Cash management

What function is generally a responsibility assigned to the corporate treasurer?

Capital expenditures

Uptown Markets is financed with 45% debt and 55% equity. This mixture of debt and equity is referred to as the firm's:

Capital structure

Jenna has been promoted and is now in charge of all external financing. In other words, she is in charge of:

Capital structure management

"Any one of the partners can be held solely liable for all the partnership's debt" - this applies to a:

General partnership

Jamie 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

If you accept a job as a domestic security analyst for a brokerage firm, you are most likely working in which one of the following financial areas?

Investments

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

Theo's BBQ has $48,000 in current assets and $39,000 in current liabilities. Decisions related to these accounts are referred to as:

Working capital management

A corporation is a:

legal entity separate from its owners

The primary goal of financial management is most associated with increasing the:

market value of the firm

An agency issue is most apt to develop when:

the control of a firm is separated from the firm's ownership

The primary goal of financial management is to maximize:

the market value of existing stock