Question 1

Which one of the following is the primary difference between operating cash flow and net income?

Accepted Answer

A)  interest expense 
B)  indirect costs 
C)  taxes 
D)  fixed costs 
E)  depreciation 
A)  interest expense 
B)  indirect costs 
C)  taxes 
D)  fixed costs 
E)  depreciation

Question 2

Which one of the following is generally used as the basis for computing the cash flow per share?

Accepted Answer

A)  operating cash flow 
B)  investment cash flow 
C)  financing cash flow 
D)  net cash increase 
E)  retained cash earnings 
A)  operating cash flow 
B)  investment cash flow 
C)  financing cash flow 
D)  net cash increase 
E)  retained cash earnings

Question 3

Which one of the following ratios tells you the amount of assets a firm needs to generate $1 in sales?

Accepted Answer

A)  capital intensity ratio 
B)  return on assets 
C)  asset turnover rate 
D)  profit margin 
E)  earnings ratio 
A)  capital intensity ratio 
B)  return on assets 
C)  asset turnover rate 
D)  profit margin 
E)  earnings ratio

Question 4

O'Hara's Market has net income of $1.6 million and 525,000 shares of stock outstanding.What is the amount of the dividends per share if the plowback ratio is 60 percent?

Accepted Answer

A)  $0.94 
B)  $1.07 
C)  $1.22 
D)  $1.67 
E)  $1.98 
A)  $0.94 
B)  $1.07 
C)  $1.22 
D)  $1.67 
E)  $1.98

Question 5

Which one of the following is equal to net income expressed as a percentage of total assets?

Accepted Answer

A)  return on equity 
B)  return on the balance sheet 
C)  operating yield 
D)  net yield 
E)  return on assets 
A)  return on equity 
B)  return on the balance sheet 
C)  operating yield 
D)  net yield 
E)  return on assets

Question 6

Which one of the following will increase the return on equity?

Accepted Answer

A)  increase in the corporate tax rate 
B)  decrease in fixed costs 
C)  issuance of debt to purchase equipment 
D)  increase in variable costs per unit 
E)  decrease in net sales 
A)  increase in the corporate tax rate 
B)  decrease in fixed costs 
C)  issuance of debt to purchase equipment 
D)  increase in variable costs per unit 
E)  decrease in net sales

Question 7

What is the investment cash flow,given the following information?

Accepted Answer

A)  -$20 
B)  -$10 
C)  $10 
D)  $20 
E)  $100 
A)  -$20 
B)  -$10 
C)  $10 
D)  $20 
E)  $100

Question 8

A firm has $3,200 of cash,equipment worth $41,000,inventory of $15,500,$13,200 worth of patents,and $11,300 of accounts receivable.What is the value of the total current assets?

Accepted Answer

A)  $1,500 
B)  $14,700 
C)  $16,700 
D)  $30,000 
E)  $72,900 
A)  $1,500 
B)  $14,700 
C)  $16,700 
D)  $30,000 
E)  $72,900

Question 9

A firm has the following account balances for this year.Sales for the year are $420,000.Projected sales for next year are $441,000.The percentage of sales approach is used for pro forma purposes.All balance sheet accounts,except long-term debt and common stock,change according to that approach.The firm plans to decrease the long-term debt balance by $23,500 next year.Retained earnings is expected to increase by $5,400 next year.What is the projected external financing need?

Accepted Answer

A)  -$14,150 
B)  -$6,850 
C)  $32,850 
D)  $36,000 
E)  $56,350 
A)  -$14,150 
B)  -$6,850 
C)  $32,850 
D)  $36,000 
E)  $56,350

Question 10

Wholesale Grocer's has total assets of $580,000 and total liabilities of $375,000.Net sales for the year are $523,000 and the profit margin is 10.5 percent.What is the return on equity?

Accepted Answer

A)  10.6 percent 
B)  26.8 percent 
C)  31.2 percent 
D)  37.4 percent 
E)  44.6 percent 
A)  10.6 percent 
B)  26.8 percent 
C)  31.2 percent 
D)  37.4 percent 
E)  44.6 percent

Question 11

The Corner Market had annual sales of $355,000 and total assets of $305,000.What is the return on assets if the profit margin is 9.5 percent?

Accepted Answer

A)  8.23 percent 
B)  9.88 percent 
C)  10.62 percent 
D)  11.06 percent 
E)  12.87 percent 
A)  8.23 percent 
B)  9.88 percent 
C)  10.62 percent 
D)  11.06 percent 
E)  12.87 percent

Question 12

A decrease in which one of the following will increase the return on assets?

Accepted Answer

A)  long-term debt 
B)  sales 
C)  inventory 
D)  retained earnings 
E)  dividends paid 
A)  long-term debt 
B)  sales 
C)  inventory 
D)  retained earnings 
E)  dividends paid

Question 13

Handy Man Services,Inc.has net income of $525,000.What is the addition to retained earnings if the dividend payout ratio is 40 percent?

Accepted Answer

A)  $123,253 
B)  $157,250 
C)  $183,750 
D)  $221,813 
E)  $315,000 
A)  $123,253 
B)  $157,250 
C)  $183,750 
D)  $221,813 
E)  $315,000

Question 14

AccentJewelry,Inc.has annual sales of $4.8 million and a gross profit margin of 55 percent.The operating expenses are $510,550 and depreciation is $160,250.Interest expense is $80,000 and the tax rate is 35 percent.What is the net income?

Accepted Answer

A)  $1,002,980 
B)  $1,084,818 
C)  $1,227,980 
D)  $1,589,200 
E)  $2,385,000 
A)  $1,002,980 
B)  $1,084,818 
C)  $1,227,980 
D)  $1,589,200 
E)  $2,385,000

Question 15

The Cruise Ship Co.has taxable income of $4,000,000.The company paid out $550,000 in interest expense.The tax rate is 35 percent and the dividend payout ratio is 30 percent.What is the amount that was paid out in dividends?

Accepted Answer

A)  $420,000 
B)  $550,000 
C)  $682,500 
D)  $780,000 
E)  $980,000 
A)  $420,000 
B)  $550,000 
C)  $682,500 
D)  $780,000 
E)  $980,000

Question 16

A firm has net sales of $35,000,operating expenses of $6,100,depreciation of $1,700,and cost of goods sold of $18,300.What is the gross margin?

Accepted Answer

A)  31.1 percent 
B)  35.4 percent 
C)  47.7 percent 
D)  52.9 percent 
E)  59.2 percent 
A)  31.1 percent 
B)  35.4 percent 
C)  47.7 percent 
D)  52.9 percent 
E)  59.2 percent

Question 17

Which one of the following is income realized in cash form?

Accepted Answer

A)  net income 
B)  revenue 
C)  cash flow 
D)  retained earnings 
E)  dividends 
A)  net income 
B)  revenue 
C)  cash flow 
D)  retained earnings 
E)  dividends

Question 18

Which one of the following is a tangible fixed asset?

Accepted Answer

A)  cash 
B)  equipment 
C)  accounts receivable 
D)  right 
E)  inventory 
A)  cash 
B)  equipment 
C)  accounts receivable 
D)  right 
E)  inventory

Question 19

A firm has net sales of $65,000,operating expenses of $21,300,depreciation of $5,000,cost of goods sold of $36,500,and interest expense of $4,500.What is the operating margin?

Accepted Answer

A)  -2.8 percent 
B)  2.6 percent 
C)  3.4 percent 
D)  9.2 percent 
E)  10.3 percent 
A)  -2.8 percent 
B)  2.6 percent 
C)  3.4 percent 
D)  9.2 percent 
E)  10.3 percent

Question 20

A firm has total equity of $61,600 and total liabilities of $18,900.Current assets are $44,700 and current liabilities are $15,200.What is the value of the net fixed assets?

Accepted Answer

A)  $8,300 
B)  $10,600 
C)  $29,500 
D)  $35,800 
E)  $42,700 
A)  $8,300 
B)  $10,600 
C)  $29,500 
D)  $35,800 
E)  $42,700

Which one of the following is the primary difference between operating cash flow and net income?

Which one of the following is generally used as the basis for computing the cash flow per share?

Which one of the following ratios tells you the amount of assets a firm needs to generate $1 in sales?

O'Hara's Market has net income of $1.6 million and 525,000 shares of stock outstanding.What is the amount of the dividends per share if the plowback ratio is 60 percent?

Which one of the following is equal to net income expressed as a percentage of total assets?

Which one of the following will increase the return on equity?

What is the investment cash flow,given the following information?

A firm has $3,200 of cash,equipment worth $41,000,inventory of $15,500,$13,200 worth of patents,and $11,300 of accounts receivable.What is the value of the total current assets?

Wholesale Grocer's has total assets of $580,000 and total liabilities of $375,000.Net sales for the year are $523,000 and the profit margin is 10.5 percent.What is the return on equity?

The Corner Market had annual sales of $355,000 and total assets of $305,000.What is the return on assets if the profit margin is 9.5 percent?

A decrease in which one of the following will increase the return on assets?

Handy Man Services,Inc.has net income of $525,000.What is the addition to retained earnings if the dividend payout ratio is 40 percent?

AccentJewelry,Inc.has annual sales of $4.8 million and a gross profit margin of 55 percent.The operating expenses are $510,550 and depreciation is $160,250.Interest expense is $80,000 and the tax rate is 35 percent.What is the net income?

The Cruise Ship Co.has taxable income of $4,000,000.The company paid out $550,000 in interest expense.The tax rate is 35 percent and the dividend payout ratio is 30 percent.What is the amount that was paid out in dividends?

A firm has net sales of $35,000,operating expenses of $6,100,depreciation of $1,700,and cost of goods sold of $18,300.What is the gross margin?

Which one of the following is income realized in cash form?

Which one of the following is a tangible fixed asset?

A firm has net sales of $65,000,operating expenses of $21,300,depreciation of $5,000,cost of goods sold of $36,500,and interest expense of $4,500.What is the operating margin?

A firm has total equity of $61,600 and total liabilities of $18,900.Current assets are $44,700 and current liabilities are $15,200.What is the value of the net fixed assets?

A Brief History of Risk and Return

The Investment Process

Overview of Security Types

Mutual Funds and Other Investment Companies

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return,Risk,and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Corporate and Government Bonds

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

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Exam 17: Projecting Cash Flow and Earnings

Which one of the following is the primary difference between operating cash flow and net income?

Which one of the following is generally used as the basis for computing the cash flow per share?

Which one of the following ratios tells you the amount of assets a firm needs to generate $1 in sales?

O'Hara's Market has net income of $1.6 million and 525,000 shares of stock outstanding.What is the amount of the dividends per share if the plowback ratio is 60 percent?

Which one of the following is equal to net income expressed as a percentage of total assets?

Which one of the following will increase the return on equity?

What is the investment cash flow,given the following information?

A firm has $3,200 of cash,equipment worth $41,000,inventory of $15,500,$13,200 worth of patents,and $11,300 of accounts receivable.What is the value of the total current assets?

Wholesale Grocer's has total assets of $580,000 and total liabilities of $375,000.Net sales for the year are $523,000 and the profit margin is 10.5 percent.What is the return on equity?

The Corner Market had annual sales of $355,000 and total assets of $305,000.What is the return on assets if the profit margin is 9.5 percent?

A decrease in which one of the following will increase the return on assets?

Handy Man Services,Inc.has net income of $525,000.What is the addition to retained earnings if the dividend payout ratio is 40 percent?

AccentJewelry,Inc.has annual sales of $4.8 million and a gross profit margin of 55 percent.The operating expenses are $510,550 and depreciation is $160,250.Interest expense is $80,000 and the tax rate is 35 percent.What is the net income?

The Cruise Ship Co.has taxable income of $4,000,000.The company paid out $550,000 in interest expense.The tax rate is 35 percent and the dividend payout ratio is 30 percent.What is the amount that was paid out in dividends?

A firm has net sales of $35,000,operating expenses of $6,100,depreciation of $1,700,and cost of goods sold of $18,300.What is the gross margin?

Which one of the following is income realized in cash form?

Which one of the following is a tangible fixed asset?

A firm has net sales of $65,000,operating expenses of $21,300,depreciation of $5,000,cost of goods sold of $36,500,and interest expense of $4,500.What is the operating margin?

A firm has total equity of $61,600 and total liabilities of $18,900.Current assets are $44,700 and current liabilities are $15,200.What is the value of the net fixed assets?

A Brief History of Risk and Return

The Investment Process

Overview of Security Types

Mutual Funds and Other Investment Companies

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return,Risk,and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Corporate and Government Bonds

Global Economic Activity and Industry Analysis

Mortgage-Backed Securities

Filters