Question details

FIN200 FINAL EXAMS 100% CORRECT ANSWERS BUY THIS ONE NOW USE AS A GUIDE ONLY
$ 20.00

1) Maximization of shareholder wealth is a concept in which 
    A.
 
profits are maximized on a quarterly basis.
    B.
 
optimally increasing the long-term value of the firm is emphasized.
    C.
 
increased earnings is of primary importance.
    D.
 
virtually all earnings are paid as dividends to common stockholders.

2) Regarding risk levels, financial managers should 
    A.
 
avoid higher risk projects because they destroy value
    B.
 
evaluate investor's desire for risk
    C.
 
pursue higher risk projects because they increase value
    D.
 
focus primarily on market fluctuations

3) One of the major disadvantages of a sole proprietorship is 
    A.
 
the simplicity of decision making.
    B.
 
low operating costs.
    C.
 
that there is unlimited liability to the owner.
    D.
 
low organizational costs.


4) The statement of cash flows does NOT include which of the following sections? 
    A.
 
cash flows from sales activities
    B.
 
cash flows from financing activities
    C.
 
cash flows from operating activities
    D.
 
cash flows from investing activities

5) Which account represents the cumulative earnings of the firm since its formation, minus dividends paid? 
    A.
 
Common stock
    B.
 
Accumulated depreciation
    C.
 
Paid-in capital
    D.
 
Retained earnings

6) Which of the following would represent a use of funds and, indirectly, a reduction in cash balances? 
    A.
 
a decrease in marketable securities
    B.
 
the sale of new bonds by the firm
    C.
 
an increase in inventories
    D.
 
an increase in accounts payable


7) Which of the following is not considered to be a profitability ratio? 
    A.
 
times interest earned
    B.
 
return on assets (investment)
    C.
 
profit margin
    D.
 
return on equity

8) If a firm has both interest expense and lease payments, 
    A.
 
times interest earned will be greater than fixed charge coverage.
    B.
 
fixed charge coverage cannot be computed.
    C.
 
times interest earned will be smaller than fixed charge coverage.
    D.
 
times interest earned will be the same as fixed charge coverage.

9) In examining the liquidity ratios, the primary emphasis is the firm's 
    A.
 
overall debt position.
    B.
 
ability to earn an adequate return.
    C.
 
ability to effectively employ its resources.
    D.
 
ability to pay short-term obligations on time.


10) A firm has current assets of $75,000 and total assets of $375,000. The firm's sales are $900,000. The firm's fixed asset turnover is 
    A.
 
12.0x
    B.
 
5.0x
    C.
 
3.0x
    D.
 
2.4x


11)   

Refer to the figure above. Megaframe's current ratio is 
    A.
 
1.625:1
    B.
 
3.2:1
    C.
 
1.9:1
    D.
 
1.5:1


12)   

Refer to the figure above. The firm's inventory turnover ratio is 
    A.
 
8x.
    B.
 
0.1x.
    C.
 
10x.
    D.
 
2.7x.

 

13) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced 
    A.
 
is lower.
    B.
 
can be either higher or lower.
    C.
 
is higher.
    D.
 
is the same.

14) The percent-of-sales method of financial forecasting 
    A.
 
requires more time than a cash budget approach.
    B.
 
is more detailed than a cash budget approach.
    C.
 
assumes that balance sheet accounts maintain a constant relationship to sales.
    D.
 
provides a month-to-month breakdown of data.

15) The need for an increase or decrease in short-term borrowing can be predicted by 
    A.
 
trend analysis.
    B.
 
ratio analysis.
    C.
 
a cash budget.
    D.
 
an income statement.


16) A firm has beginning inventory of 300 units at a cost of $11 each. Production during the period was 650 units at $12 each. If sales were 700 units, what is the cost of goods sold (assume FIFO)? 
    A.
 
$8,000
    B.
 
$9,000
    C.
 
$7,700
    D.
 
$8,100


17) The pro forma income statement is important to the overall process of constructing pro forma statements because it allows us to determine a value for: 
    A.
 
gross profit.
    B.
 
change in retained earnings.
    C.
 
interest expense.
    D.
 
prepaid expenses.


18) A firm utilizing LIFO inventory accounting would, in calculating gross profits, assume that 
    A.
 
all sales were from beginning inventory.
    B.
 
all sales were from current production.
    C.
 
sales were from current production until current production was depleted, and then use sales from beginning inventory.
    D.
 
all sales were for cash.

 

Available solutions