FIN 571 Final Exam Year 2018
- What is the primary goal of financial management?
- The partnership form of organization
- Increased productivity due to technology has
- Insider trading occurs when
- When a firm’s earnings are falling more rapidly than its stock price, its P/E ratio will:
- The net worth of a firm
- A statement of cash flows allows a financial analyst to determine.
- A firm has $200,000 in current assets, $400,000 in long-term assets, $80,000 in current liabilities, and $200,000 in long-term liabilities. What is its net working capital?
- The ______________ method of inventory costing is least likely to lead to inflation-induced profits.
- The Bubba Corp. had net income before taxes of $200,000 and sales of $2,000,000. If it is in the 50% tax bracket its after-tax profit margin is:
- XYZ’s receivables turnover is 10x. The accounts receivable at year-end are $600,000. The average collection period is 90 days (3 months). What was the sales figure for the year?
- A firm has total assets of $2,000,000. It has $900,000 in long-term debt. The stockholders equity is $900,000. What is the total debt to asset ratio?
- Required production during a planning period will depend on the
- XYZ Co. has forecasted June sales of 600 units and July sales of 1000 units. The company maintains ending inventory equal to 125% of next month’s sales. June beginning inventory reflects this policy. What is June’s required production?
- The difference between total receipts and total payments referred to as
- In developing the pro forma income statement we follow four important steps:
1) compute other expenses,
2) determine a production schedule,
3) establish a sales projection,
4) determine profit by completing the actual pro forma statement.
What is the correct order for these four steps?
- In break-even analysis the contribution margin is defined as
- Firm A employs a high degree of operating leverage; Firm B takes a more conservative approach. Which of the following comparative statements about firms A and B is true?
- Heavy use of long-term debt may be beneficial in an inflationary economy because fin 571 final exam
- Under which of the following conditions could the overuse of financial leverage be detrimental to the firm?
- Risk exposure due to heavy short-term borrowing can be compensated for by
- When actual sales are greater than forecasted sales
- Yield curves change daily to reflect
- Retail companies like Target and Limited Brands are more likely to have
- When using the economic order quantity model fin 571 final exam
- Which of the following is not a true statement about commercial paper?
- Which of the following best describes the benefits to the borrower of selling asset backed securities?
- Price Corp. is considering selling to a group of new customers and creating new annual sales of $70,000. 5% will be uncollectible. The collection cost on these accounts is 3.5% of new sales, the cost of producing and selling is 80% of sales and the firm is in the 31% tax bracket. What is the profit on new sales?
- Mr. Jones borrows $2,000 for 90 days and pays $35 interest. What is his effective rate of interest?
- The prime rate
- Accounts receivable may be used as a source of financing by
- The required compensating balance is usually computed as a
- The concept of time value of money is important to financial decision making because
- Mr. Nailor invests $5,000 in a certificate of deposit at his local bank. He receives annual interest of 8% for 7 years. How much interest will his investment earn during this time period?
- Mr. Fish wants to build a house in 10 years. He estimates that the total cost will be $170,000. If he can put aside $10,000 at the end of each year, what rate of return must he earn in order to have the amount needed?
- A 20-year bond pays 12% on a face value of $1,000. If similar bonds are currently yielding 9%, What is the market value of the bond? Use annual analysis fin 571 final exam
- An issue of preferred stock is paying an annual dividend of $5. The growth rate for the firm’s common stock is 14%. What is the preferred stock price if the required rate of return is 11%?
- Which of the following does not influence the yield to maturity for a security?
- The cost of common stock is usually greater than the simple dividend yield because
- The dividend valuation model stresses the fin 571 final exam
- Although debt financing is usually the cheapest component of capital, it cannot be used to excess because
- Each project should be judged against
- The cost of debt is determined by taking the
- The pre-tax cost of debt for a new issue of debt is determined by fin 517 final exam
- During the next ten years, the major threat to the dominance of the U.S. money and capital markets will come from
- With respect to the United States and its relationship with the rest of the world, it can be said that
- Financial instruments in the capital markets generally fall under what category in the Balance Sheet?
- With regard to interest rates and bond prices it can be …..
- Which one of these conditions must be ….for a lease to qualify as a capital lease?
- Which of the following is not a true statement?
- Kuhns Corp. has 200,000 shares of preferred stock outstanding that is cumulative. The dividend is $6.50 per share and has not been …. for 3 years. If Kuhns earned $3 million this year, what could be the maximum payment to the preferred stockholders on a per share basis?
- When comparing common stock of the same company it is fair to say that fin 571 final exam
- Dr. J. wants to buy an IBM personal computer which will cost $2,788 four years from today. He would like to set aside an equal amount at the end of each year in order to accumulate the amount needed. He can earn 7% annual return. How much should he set aside?