Question 1

Which one of the following statements is correct?

Accepted Answer

A) Pretax income is equal to gross profit minus interest expense. 
B) Gross profit is equal to sales minus costs of goods sold and depreciation. 
C) Operating expenses are indirect costs. 
D) Costs that vary directly with production are classified as operating expenses. 
E) The change in retained earnings is equal to net income plus dividends paid. 
A) Pretax income is equal to gross profit minus interest expense. 
B) Gross profit is equal to sales minus costs of goods sold and depreciation. 
C) Operating expenses are indirect costs. 
D) Costs that vary directly with production are classified as operating expenses. 
E) The change in retained earnings is equal to net income plus dividends paid.

Question 2

Income and expense items NOT realized in cash form are called which one of the following?

Accepted Answer

A) deductible expenses 
B) noncash items 
C) intangible assets 
D) operating income 
E) financing activities 
A) deductible expenses 
B) noncash items 
C) intangible assets 
D) operating income 
E) financing activities

Question 3

Smith's Corner Market had annual sales of $425,300 and total assets of $366,000.What is the return on assets if the profit margin is 11 percent?

Accepted Answer

A) 8.2 percent 
B) 9.8 percent 
C) 10.6 percent 
D) 11.0 percent 
E) 12.8 percent 
A) 8.2 percent 
B) 9.8 percent 
C) 10.6 percent 
D) 11.0 percent 
E) 12.8 percent

Question 4

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

Question 5

Behrend Corporation has annual sales of $4.5 million,depreciation of $425,000,operating expenses of $679,000,cost of goods sold of $2.3 million,and interest expense of $230,000.What is the operating income?

Accepted Answer

A) $1,096,000 
B) $2,036,000 
C) $3,525,000 
D) $4,000,000 
E) $4,811,000 
A) $1,096,000 
B) $2,036,000 
C) $3,525,000 
D) $4,000,000 
E) $4,811,000

Question 6

Gold Jewelry,Inc.has annual sales of $4.5 million and a gross profit margin of 55 percent.The operating expenses are $540,750 and depreciation is $170,300.Interest expense is $95,000 and the tax rate is 35 percent.What is the net income?

Accepted Answer

A) $1,002,980 
B) $1,084,818 
C) $1,356,220 
D) $1,589,200 
E) $2,385,000 
A) $1,002,980 
B) $1,084,818 
C) $1,356,220 
D) $1,589,200 
E) $2,385,000

Question 7

Bay Marina,Inc.has net income of $53,700 and has 30,000 shares of stock outstanding.Similar firms have a price-earnings ratio of 20.Given this,what should the market price of Bay Marina,Inc.stock be per share?

Accepted Answer

A) $28.91 
B) $29.29 
C) $30.40 
D) $33.91 
E) $35.80 
A) $28.91 
B) $29.29 
C) $30.40 
D) $33.91 
E) $35.80

Question 8

Winter's Clothing has a loan payable to a bank which is due 18 months from now.How is this loan classified on the firm's financial statements?

Accepted Answer

A) fixed asset 
B) current liability 
C) long-term debt 
D) equity 
E) expense 
A) fixed asset 
B) current liability 
C) long-term debt 
D) equity 
E) expense

Question 9

A firm has a price-cash flow ratio of 12.5 and a price-book value ratio of 7.6.If the cash flow per share is $4.67,what is the book value per share?

Accepted Answer

A) $2.84 
B) $3.55 
C) $4.44 
D) $6.45 
E) $7.68 
A) $2.84 
B) $3.55 
C) $4.44 
D) $6.45 
E) $7.68

Question 10

You are interested in reviewing the information corporations file with the SEC.Which one of the following is the archive of these filings?

Accepted Answer

A) SAMSON 
B) REG FD 
C) EDGAR 
D) Nonpublic information files 
E) ROA filings 
A) SAMSON 
B) REG FD 
C) EDGAR 
D) Nonpublic information files 
E) ROA filings

Question 11

A company has net income of $65,430,a price-earnings ratio of 22.6,and 25,800 shares of stock outstanding.If the price-cash flow ratio is 20.4,what is the cash flow per share?

Accepted Answer

A) $2.05 
B) $2.34 
C) $2.50 
D) $2.81 
E) $3.14 
A) $2.05 
B) $2.34 
C) $2.50 
D) $2.81 
E) $3.14

Question 12

Which one of the following is defined as anything a firm owns that has value?

Accepted Answer

A) equity 
B) asset 
C) liability 
D) cash inflow 
E) cash outflow 
A) equity 
B) asset 
C) liability 
D) cash inflow 
E) cash outflow

Question 13

A firm has net income of $25,000 on sales of $210,000.Sales are expected to increase by 8 percent next year and the dividend payout ratio is 35 percent.The firm uses the percentage of sales approach when compiling pro forma statements.What amount is expected to be added to retained earnings next year?

Accepted Answer

A) $14,300 
B) $15,400 
C) $15,686 
D) $17,550 
E) $21,600 
A) $14,300 
B) $15,400 
C) $15,686 
D) $17,550 
E) $21,600

Question 14

A firm maintains a constant dividend payout ratio of .40.What must the plowback ratio be?

Accepted Answer

A) 1 + .40 
B) 1 - .40 
C) 1 × .40 
D) 1/.40 
E) .40 
A) 1 + .40 
B) 1 - .40 
C) 1 × .40 
D) 1/.40 
E) .40

Question 15

Sales minus cost of goods sold are equal to which one of the following?

Accepted Answer

A) net sales 
B) operating income 
C) gross profit 
D) pretax income 
E) net income 
A) net sales 
B) operating income 
C) gross profit 
D) pretax income 
E) net income

Question 16

Net income is equal to which one of the following?

Accepted Answer

A) operating income plus interest expense minus taxes 
B) gross profit minus depreciation and interest expense 
C) pretax income plus income taxes 
D) dividends plus the change in retained earnings 
E) pretax income minus taxes and dividends 
A) operating income plus interest expense minus taxes 
B) gross profit minus depreciation and interest expense 
C) pretax income plus income taxes 
D) dividends plus the change in retained earnings 
E) pretax income minus taxes and dividends

Question 17

A firm has $2,500 of cash,equipment worth $45,000,inventory of $16,300,$14,000 worth of patents,and $12,200 of accounts receivable.What is the value of the total current assets?

Accepted Answer

A) $1,500 
B) $14,700 
C) $16,700 
D) $31,000 
E) $72,900 
A) $1,500 
B) $14,700 
C) $16,700 
D) $31,000 
E) $72,900

Question 18

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 19

Which one of the following is an analysis of a firm's sources and uses of cash over a period of time?

Accepted Answer

A) income statement 
B) pro-forma income statement 
C) cash flow statement 
D) tax return 
E) balance sheet 
A) income statement 
B) pro-forma income statement 
C) cash flow statement 
D) tax return 
E) balance sheet

Question 20

Which one of the following is used to pay dividends or kept as retained earnings by a firm?

Accepted Answer

A) equity 
B) net cash flow 
C) revenue 
D) net income 
E) expense 
A) equity 
B) net cash flow 
C) revenue 
D) net income 
E) expense

Which one of the following statements is correct?

Income and expense items NOT realized in cash form are called which one of the following?

Smith's Corner Market had annual sales of $425,300 and total assets of $366,000.What is the return on assets if the profit margin is 11 percent?

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?

Behrend Corporation has annual sales of $4.5 million,depreciation of $425,000,operating expenses of $679,000,cost of goods sold of $2.3 million,and interest expense of $230,000.What is the operating income?

Gold Jewelry,Inc.has annual sales of $4.5 million and a gross profit margin of 55 percent.The operating expenses are $540,750 and depreciation is $170,300.Interest expense is $95,000 and the tax rate is 35 percent.What is the net income?

Bay Marina,Inc.has net income of $53,700 and has 30,000 shares of stock outstanding.Similar firms have a price-earnings ratio of 20.Given this,what should the market price of Bay Marina,Inc.stock be per share?

Winter's Clothing has a loan payable to a bank which is due 18 months from now.How is this loan classified on the firm's financial statements?

A firm has a price-cash flow ratio of 12.5 and a price-book value ratio of 7.6.If the cash flow per share is $4.67,what is the book value per share?

You are interested in reviewing the information corporations file with the SEC.Which one of the following is the archive of these filings?

A company has net income of $65,430,a price-earnings ratio of 22.6,and 25,800 shares of stock outstanding.If the price-cash flow ratio is 20.4,what is the cash flow per share?

Which one of the following is defined as anything a firm owns that has value?

A firm maintains a constant dividend payout ratio of .40.What must the plowback ratio be?

Sales minus cost of goods sold are equal to which one of the following?

Net income is equal to which one of the following?

A firm has $2,500 of cash,equipment worth $45,000,inventory of $16,300,$14,000 worth of patents,and $12,200 of accounts receivable.What is the value of the total current assets?

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

Which one of the following is an analysis of a firm's sources and uses of cash over a period of time?

Which one of the following is used to pay dividends or kept as retained earnings by a firm?

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

Exam 17: Projecting Cash Flow and Earnings

Which one of the following statements is correct?

Income and expense items NOT realized in cash form are called which one of the following?

Smith's Corner Market had annual sales of $425,300 and total assets of $366,000.What is the return on assets if the profit margin is 11 percent?

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?

Behrend Corporation has annual sales of $4.5 million,depreciation of $425,000,operating expenses of $679,000,cost of goods sold of $2.3 million,and interest expense of $230,000.What is the operating income?

Gold Jewelry,Inc.has annual sales of $4.5 million and a gross profit margin of 55 percent.The operating expenses are $540,750 and depreciation is $170,300.Interest expense is $95,000 and the tax rate is 35 percent.What is the net income?

Bay Marina,Inc.has net income of $53,700 and has 30,000 shares of stock outstanding.Similar firms have a price-earnings ratio of 20.Given this,what should the market price of Bay Marina,Inc.stock be per share?

Winter's Clothing has a loan payable to a bank which is due 18 months from now.How is this loan classified on the firm's financial statements?

A firm has a price-cash flow ratio of 12.5 and a price-book value ratio of 7.6.If the cash flow per share is $4.67,what is the book value per share?

You are interested in reviewing the information corporations file with the SEC.Which one of the following is the archive of these filings?

A company has net income of $65,430,a price-earnings ratio of 22.6,and 25,800 shares of stock outstanding.If the price-cash flow ratio is 20.4,what is the cash flow per share?

Which one of the following is defined as anything a firm owns that has value?

A firm maintains a constant dividend payout ratio of .40.What must the plowback ratio be?

Sales minus cost of goods sold are equal to which one of the following?

Net income is equal to which one of the following?

A firm has $2,500 of cash,equipment worth $45,000,inventory of $16,300,$14,000 worth of patents,and $12,200 of accounts receivable.What is the value of the total current assets?

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

Which one of the following is an analysis of a firm's sources and uses of cash over a period of time?

Which one of the following is used to pay dividends or kept as retained earnings by a firm?

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