Fin 200 Final Exam. 48 MCQs.

1) Maximization of shareholder wealth is a concept in which2) Regarding risk levels, financial managers should3) One of the major disadvantages of a sole proprietorship is4) The statement of cash flows does NOT include which of the following sections?5) Which account represents the cumulative earnings of the firm since its formation, minus dividends paid?6) Which of the following would represent a use of funds and, indirectly, a reduction in cash balances?7) Which of the following is not considered to be a profitability ratio?8) If a firm has both interest expense and lease payments,9) In examining the liquidity ratios, the primary emphasis is the firm’s10) 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 is11) Refer to the figure above. Megaframe’s current ratio is12) TEW Company, Refer to the figure above. The firm’s inventory turnover ratio is13) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced14) The percent-of-sales method of financial forecasting15) The need for an increase or decrease in short-term borrowing can be predicted by16) 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)?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:18) A firm utilizing LIFO inventory accounting would, in calculating gross profits, assume that19) When a firm employs no debt20) The degree of operating leverage is computed as21) The concept of operating leverage involves the use of __________ to magnify returns at high levels of operation.22) In break-even analysis, the contribution margin is defined as23) Refer to the figure above. This firm’s break-even point is24) If TechCor has fixed costs of $80,000, variable costs of $1.20/unit, sales price/unit of $6, and depreciation expense of $25,000, what is their cash breakeven in units?25) Kuznets Rental Center requires $1,000,000 in financing over the next two years. Kuznets can borrow long-term at 9 percent interest per year for two years. Alternatively, Kuznets can borrow short-term and pay 7 percent interest in the first year. Then, Kuznets projects paying 10 percent interest in the second year. Assuming Kuznets pays off the accrued interest at the end of each year, which of the following statements is true?26) The theory of the term structure of interest rates which suggests that long-term rates are determined by the average of short-term rates expected over the time that a long-term bond is outstanding is the27) Normally, permanent current assets should be financed by28) Which of the following is not a condition under which a prudent manager would accept some risk in financing?29) An aggressive working capital policy would have which of following characteristics?30) Which of the following combinations of asset structures and financing patterns is likely to create the most volatile earnings?31) The system whereby funds are moved between computer terminals without use of checks is32) The difference between the amount of cash on the firm’s books and the amount credited to it by the bank is33) ”Float” takes place because34) Dun & Bradstreet is known for providing35) The three primary policy variables to consider when extending credit include all of the following except36) When developing a credit scoring report, many variables would be considered. Which of the following best represent the major factors Dun & Bradstreet would examine?37) Which of the following is not a true statement about commercial paper?38) Commercial paper that is sold without going through a broker or dealer is known as39) Which of the following is not a method for lenders to control pledged inventory?40) From the banker’s point of view, short-term bank credit is an excellent way of financing41) Firms exposed to the risk of interest rate changes may reduce that risk by42) Trade credit may be used to finance a major part of the firm’s working capital when43) In determining the future value of a single amount, one measures44) As the discount rate becomes higher and higher, the present value of inflows approaches45) As the compounding rate becomes lower and lower, the future value of inflows approaches46) Ali Shah sets aside 2,000 each year for 5 years. He then withdraws the funds on an equal annual basis for the next 4 years. If Ali wishes to determine the amount of the annuity to be withdrawn each year, he should use the following two tables in this order:47) If you were to put $1,000 in the bank at 6% interest each year for the next ten years, which table would you use to find the ending balance in your account?48) John Doeber borrowed $125,000 to buy a house. His loan cost was 11% and he promised to repay the loan in 15 equal annual payments. How much are the annual payments?