FIN 301/FIN 301 QUIZ 2 Group 1 2015 (A+++++ GUARANTEE) - 88517

Solution Posted by
anjis_devis

anjis_devis

Rating : (20)B
Solution Detail
Price: $28.00
  • From: Business, Finance
  • Posted on: Fri 20 Feb, 2015
  • Request id: None
  • Purchased: 0 time(s)
  • Average Rating: No rating
Request Description
1. Which of the following is true regarding balance sheets? A. They report, for a certain interval of time, the net assets generated, the net assets consumed, and the net income. B. They report, for a certain interval of time, the resources of a company, the obligations of acompany, and the equity of the owners. C. They report, for a certain interval of time, the amount of cash generated and consumed by a company. D. They report, as of a certain point in time, the resources of a company, the obligations of a company, and the equity of the owners. E. They report, as of a certain point in time, the resources and net income of a company. 2. Which of the following is true regarding income statements? A. They report, as of a certain point in time, the company’s assets, liabilities, and net income B. They report, for a certain interval of time, the net assets generated, the net assets consumed, and the net income C. They report, as of a certain point in time, the amount of cash and net income generated D. They report, as of a certain point in time, the net assets generated, the net assets consumed, and the net income E. They report, for a certain interval of time, the resources of a company, the obligations of a company, and the equity of the owners Group 2 3. The Matching Principle in GAAP: A. Matches sales to inventory shipments B. Matches the expenses related to a sale in the same period C. Matches ROE to a firm's capital investment D. Matches costs of goods sold with the inventory on the balance sheet E. Matches revenues with profits on the income statement 4. According to the Revenue Recognition Principle in GAAP: A. Dividends can be paid only after taxable income is positive B. Expenses can be realized when cash payment is made C. Companies can realize revenue only if the transaction is profitable D. Revenue is recognized when a good or service is provided, not when the money is received E. Companies can realize certain gains on their operating books, while omitting them from their tax books Group 3 5. Given the following data, identify the correct gross profit and operating profit. Assume no outside information other than that which is provided. Sales: $3200 Depreciation: $200 Interest Expense: $100 Cost of Goods Sold: $1500 SG&A: $400 Taxes: $200 A. Gross Profit = $1700, Operating Profit = $1100 B. Gross Profit = $1700, Operating Profit = $1000 C. Gross Profit = $1300, Operating Profit = $1100 D. Gross Profit = $1300, Operating Profit = $1000 E. Gross Profit = $1100, Operating Profit = $800 6. Given the following data, identify the correct gross profit and operating profit. Assume no outside information other than that which is provided. Sales: $1800 Depreciation: $100 Interest Expense: $200 Cost of Goods Sold: $600 SG&A: $500 Taxes: $100 A. Gross Profit = $1200, Operating Profit = $600 B. Gross Profit = $1200, Operating Profit = $400 C. Gross Profit = $700, Operating Profit = $600 D. Gross Profit = $700, Operating Profit = $400E. Gross Profit = $600, Operating Profit = $300 Group 4 7. Which of the following statements regarding the cash flow statement is true? A. Working capital changes are accounted for as cash flows from operating activities. B. Financing activities include ONLY long-term borrowings. C. A typical company has a positive cash flow from investing activities. D. The purchase of property, plant, and equipment is classified as a financing activity. E. Accounts Payable is classified as a cash flow from financing activities. 8. Which of the following statements regarding the cash flow statement is true? A. Changes in accounts receivables is a financing activity B. The disposal or acquisition of plant, property & equipment is classified as an investing activity. C. Depreciation is classified as an investing activity. D. Investing activities are the main source of a company’s positive cash flow. E. Changes in cash flow perfectly match with a company’s net income. Group 5 9. In order to calculate the amount of cost of goods sold on a common size income statement you would do the following: A. Cost of Goods Sold/Operating Expenses B. Net Income/Cost of Goods Sold C. Cost of Goods Sold/Net Income D. Net Sales/Cost of Goods Sold E. Cost of Goods Sold/Net Sales 10. In order to calculate the amount of cash on a common size balance sheet you would do the following: A. Total Assets/Cash B. Cash/Total Assets C. Cash/Net SalesD. Cash/ (Assets+Liabilities+Stockholders Equity) E. (Assets+Liabilities+Stockholders Equity)/Cash Group 6 11. Which current asset is omitted when calculating the Quick Ratio? A. Cash B. Accounts Receivable C. Inventory D. Short Term Investments E. Property, Plant & Equipment Group 7 12. Which of the following is a measure of profitability? A. Operating Margin B. Days Sales Outstanding C. Days Payables Outstanding D. Fixed Asset Turnover E. Current Ratio 13. Which of the following is a measure of company’s liquidity? A. Fixed Assets Turnover B. Profit Margin C. Return on Equity D. Quick Ratio E. Return on Assets Group 8 14. On the income statement, which of the following line-items represents the amount the company’s suppliers receive? A. Revenue B. Selling, general, and administrative expenses C. Interest expense D. Cost of goods sold E. Taxes 15. On the income statement, which of the following line-items represents the amount the company’s creditors receive? A. Selling, general, and administrative expenses B. Interest expense C. Cost of goods sold D. Profit before taxes E. Taxes Group 9 16. If lenders want to assess the likelihood of borrowers being able to make interest payments, they would most likely look at which ratios? A. Activity ratios B. Liquidity ratios C. Inventory ratios D. Profitability ratios E. Receivables ratios 17. If investors want to assess how efficient a company is at using its productive resources, they would most likely look at which ratios? A. Activity ratios B. Leverage ratios C. Liquidity ratios D. Profitability ratios E. Inventory ratios Group 10 18. Given the following information from OfficeStar, Inc’s Balance Sheet, calculate its Shareholder’s Equity. Current Assets = $150,000 Fixed Assets = $900,000 Long-term debt = $525,000Current Liabilities = $100,000 A. $225,000 B. $50,000 C. $950,000 D. $400,000 E. $425,000 19. Given the following information from Falken Corporation’s Balance Sheet, calculate its Fixed Assets. Current Liabilities = $300,000 Current Assets = $400,000 Long-term debt = $200,000 Shareholder’s equity = $500,000 A. $100,000 B. $300,000 C. $500,000 D. $600,000 E. $1,000,000 Group 11 20. Which of the following is TRUE regarding Mostoller Consulting given the following information? Current Assets = $85,000,000; Fixed Assets = $185,000,000; Current Liabilities = $50,000,000; Long Term Debt = $100,000,000; Sales = $610,000,000; Net Income = $25,000,000 A. Shareholder Equity = $95,000,000 B. Current Ratio = 1.43 C. Asset Turnover = 6 D. Debt to Equity Ratio = 0.83 E. Return on Equity = 15% 21. Which of the following is TRUE regarding Hart Consulting given the following information? Current Assets = $90,000,000; Fixed Assets = $190,000,000; Current Liabilities = $65,000,000; Long Term Debt = $115,000,000; Sales = $490,000,000; Net Income = $20,000,000 A. Shareholder Equity = $90,000,000 B. Current Ratio = .72 C. Asset Turnover = 3 D. Debt to Equity Ratio = 1.33 E. Return on Equity = 20% Group 12 22. On the Balance Sheet, what reflects the owners’ residual interest in the firm? A. Current Assets B. Fixed Assets C. Current Liabilities D. Long Term Debt E. Shareholder Equity 23. On the Income Statement, what is the difference between revenues and cost of goods sold during a particular accounting period? A. Gross Margin B. Net Income C. Income Tax Expense D. Non-Operating Expense E. Operating Margin (EBIT) Group 13 24. Calculate the ROE using the DuPont Model for a company with the following data: Profit margin= 15% Total Asset Turnover= 1.2 Inventory Turnover= 1.8 Equity Multiplier=1.1 Current Ratio = 1.6 A. 20% B. 32% C. 54% D. 40% E. 12% 25. Calculate the ROE using the DuPont Model for a company with the following data: Profit margin= 5% Total Asset Turnover= 2.8 Inventory Turnover= 2.5 Equity Multiplier=1.4 Current Ratio = .75 A. 10% B. 26% C. 20% D. 38% E. 46% Group 14 26. Calculate cash flows from operations for Company ABC during 2010 given the following information (all values in millions): Revenue: $900 Cost of Goods Sold: $350 Gross Profit: $550 Sales, General & Administrative Expense (SG&A): $125 Depreciation: $75 Operating Profit: $350 Taxes: $140 Net Income: $210 A. $140 mil B. $180 mil C. $210 mil D. $285 mil E. $350 mil 27. Calculate cash flows from operations for Company XYZ during 2010 given the following information (all values in millions): Revenue: $800 Cost of Goods Sold: $425 Gross Profit: $375 Sales, General & Administrative Expense (SG&A): $175 Depreciation: $50 Operating Profit: $150 Taxes: $60 Net Income: $90 A. $60 mil B. $90 mil C. $115 mil D. $140 mil E. $210 mil Group 15 28. Which of the following activities is classified as Operating Activities on the Statement of Cash Flows? A. Dividends Received B. Sale of Plant C. Proceeds from Stock Issuance D. Sale of Long-Term Assets E. Dividend Payments to Shareholders 29. Which of the following activities is classified as Investing Activities on the Statement of Cash Flows? A. Dividends Received B. Payments to Suppliers C. Proceeds from Stock Issuance D. Sale of Long-Term Assets E. Dividend Payments to Shareholders Group 16 30. The annual report publicly traded companies must file with the SEC is the _______ A. 10Q B. 8K C. 4C D. 10K E. 401K 31. The quarterly report publicly traded companies must file with the SEC is the _______ A. 10Q B. 8K C. 4C D. 10K E. 401K Group 1732. Calculate the Times Interest Earned ratio for a company with the following data: Sales: $1,800,000 EBIT: $600,000 Net Income: $150,000 Interest expense: $250,000 Tax expense: $150,000 A. 0.6 B. 2.4 C. 2.0 D. 4.8 E. 7.2 33. Calculate the Times Interest Earned ratio for a company with the following data: Sales: $6,000,000 EBIT: $2,800,000 Net Income: $900,000 Interest expense: $800,000 Tax expense: $900,000 A. 0.8 B. 1.1 C. 3.5 D. 4.2 E. 7.5 Group 18 34. Given the following information, which company is the most liquid? CNP Bank: Current Ratio = 2.9; Asset Turnover = 1.5; Debt/Equity Ratio = 1.3 Wells Dakota: Current Ratio = 2.4; Asset Turnover = 2.2; Debt/Equity Ratio = 1.8 MetroBank: Current Ratio = 0.8; Asset Turnover = 3.1; Debt/Equity Ratio = 2.1 PJWebb Chase: Current Ratio = 1.2; Asset Turnover = 0.5; Debt/Equity Ratio = 0.7 Bank of the States: Current Ratio = 1.5; Asset Turnover = 3.2; Debt/Equity Ratio = 2.8 A. CNP Bank B. Wells Dakota C. MetroBank D. PJWebb Chase E. Bank of the States 35. Given the following information, which company is the best at generating revenue from its assets? CNP Bank: Current Ratio = 2.9; Asset Turnover = 1.5; Debt/Equity Ratio = 1.3 Wells Dakota: Current Ratio = 2.4; Asset Turnover = 2.2; Debt/Equity Ratio = 1.8 MetroBank: Current Ratio = 0.8; Asset Turnover = 3.1; Debt/Equity Ratio = 2.1 PJWebb Chase: Current Ratio = 1.2; Asset Turnover = 0.5; Debt/Equity Ratio = 0.7 Bank of the States: Current Ratio = 1.5; Asset Turnover = 3.2; Debt/Equity Ratio = 2.8 A. CNP Bank B. Wells Dakota C. MetroBank D. PJWebb Chase E. Bank of the States Group 19 36. Using the following data, calculate the gross margin: Sales: $800,000 Cost of Goods Sold: $420,000 Interest Expense: $20,000 Operating Expenses: $130,000 Tax expense: $105,000 A. 16% B. 31% C. 22% D. 37% E. 48% 37. Using the following data, calculate the gross margin: Sales: $600,000 Cost of goods sold: $440,000 Interest expense: $10,000 Operating Expenses: $65,000 Tax expense: $20,000 A. 11% B. 16% C. 27% D. 64% E. 89% Group 20 38. If a company has 44 days sales outstanding and the industry average is 32, which of the following is CERTAINLY true about the company relative to the industry? A. It is less efficient in collecting cash from its customers. B. It does not manage inventory as well. C. It is more profitable. D. It pays its suppliers more slowly. E. It is more highly leveraged. 39. If a company has 56 days payable outstanding and the industry average is 41, which of the following is CERTAINLY true about the company relative to the industry? A. It is less efficient in collecting cash from its customers. B. It does not manage inventory as well. C. It is more profitable. D. It pays its suppliers more slowly. E. It is more highly leveraged. Group 21 40. Given the following information for PSU Credit Union, calculate its Total Assets Turnover Net Sales = $60,000,000 Net Profit = $25,000,000 Total Assets = $115,000,000 Shareholder’s equity = $35,000,000 A. 0.22 B. 1.33 C. 0.52 D. 1.71 E. 2.24 41. Given the following information for Bistro 797, calculate its Total Assets Turnover Net Sales = $85,000,000 Net Profit = $30,000,000 Total Assets = $50,000,000 Shareholder’s equity = $25,000,000 A. 0.2 B. 0.6 C. 1.2 D. 1.7 E. 3.4 Group 22 42. The managerial defense mechanism that occurs when a company is targeted for hostile takeover and responds by selling new shares to friendly shareholders, thereby increasing the cost to the hostile acquirer is referred to as______. A. The Pac-Man defense B. Greenmail C. Crown Jewels D. Poison Pill E. Golden Parachutes 43. In which managerial defense does the target company sell off some of its major assets in order to discourage the takeover company from purchasing it? A. Greenmail B. The White Knight C. Crown Jewels D. Golden Parachutes E. Poison Pill Group 23 44. Which of the following events will increase Earnings per share? A. Increase in cost of goods sold B. Increase in number of shares outstanding C. Share repurchase D. Decrease in net income E. Increased tax obligation 45. Which of the following events will decrease Earnings per share? A. Decrease in cost of goods sold B. Decrease in number of shares outstanding C. Issuance of new shares D. Increase in net income E. Decreased tax obligation Group 24 46. How was corporate governance in 1990s different from corporate governance in 1980s? A. The role of Board of Directors was removed in the 1990sB. Institutional investors were more active in the 1980s than in the 1990s C. The 1990s involved more managerial stock ownership than the 1980s D. There was no diffusion of stock ownership in the 1980s E. The hostile takeovers increased in the 1990s from the 1980s 47. Which of the following describes the trend in corporate governance from 1980s to present? A. Increased importance placed on stock price and management performance. B. More emphasis placed on future earnings than present earnings, allowing management more time to show improvements in earnings. C. Less government regulations on audit procedures. D. Increased popularity of flat pay structure, decrease in stock based compensation. E. CEOs staying in place longer. Group 25 48. Which of the following is an element of the Sarbanes Oxley Act of 2002? A. It is meant to protect the interests of management of the company. B. It does not apply to publicly traded companies. C. CEOs must sign off on financial statements. D. Directors are encouraged to take loans from the company. E. Companies do not have to make financial statements publicly available. Group 26 49. Which of the following is true about the corporate governance model in the US? A. Majority owner manages the company. B. Equity is not publicly sold. C. The Board of Directors represents shareholders’ interests. D. Investment is restricted to the managers of the firm. E. Government has representation in every company’s board. 50. Which of the following is true about the Rest of the World model of corporate governance? A. The majority owner manages the company. B. Equity is not publicly sold. C. The Board of Directors represents shareholders’ interests. D. Customer satisfaction is not a goal for companies. E. Government is never involved in management issues. Group 27 51. Which statement is the most accurate given the following table: A B C Current Ratio 2.2 0.9 1.0 Inventory Turnover 5.1 6.3 6.4 Days Sales Outstanding 93.1 12.5 167.9 Total Asset Turnover 0.64 0.54 0.74 Profit Margin 28.4% 7.1% 1.7% Return on Assets 18.0% 4.0% 1.0% Return on Equity 31.4% 8.1% 7.0% Debt/Equity 0.17 0.21 1.22 Price/Earnings Ratio 23.3 18.9 10.2 A. Company C manages its inventories best B. Company A uses more debt than company B C. Company B is expected to grow faster than A or C D. Company C has better overall performance than company B E. Company C collects payments for goods sold faster than A or B 52. Which statement is the most accurate given the following table: A B C Current Ratio 2.2 0.9 1.0 Inventory Turnover 5.1 6.3 6.4 Days Sales Outstanding 93.1 12.5 167.9 Total Asset Turnover 0.64 0.54 0.74 Profit Margin 28.4% 7.1% 1.7% Return on Assets 18.0% 4.0% 1.0% Return on Equity 31.4% 8.1% 7.0% Debt/Equity 0.17 0.21 1.22 Price/Earnings Ratio 23.3 18.9 10.2 A. Company A manages its inventories best B. Company B uses more debt than company C C. Company A generates the least income for every dollar of assets D. Company A is expected to grow faster than B or C E. Company A collects payments for goods sold faster than Company B Group 28 53. Which statement is the most accurate given the following table: A B C Current Ratio 2.2 0.9 1.0 Inventory Turnover 5.1 6.3 6.4 Days Sales Outstanding 93.1 12.5 167.9 Total Asset Turnover 0.64 0.54 0.74 Profit Margin 28.4% 7.1% 1.7% Return on Assets 18.0% 4.0% 1.0% Return on Equity 31.4% 8.1% 7.0% Debt/Equity 0.17 0.21 1.22 Price/Earnings Ratio 23.3 18.9 10.2 A. Company C has the highest profitability B. Company A has the highest liquidity C. Company A is the best at managing inventory D. Company C is the best at collecting its accounts receivables E. Company C is the best at generating Income from its assets 54. Which statement is the most accurate given the following table: A B C Current Ratio 2.2 0.9 1.0 Inventory Turnover 5.1 6.3 6.4 Days Sales Outstanding 93.1 12.5 167.9 Total Asset Turnover 0.64 0.54 0.74 Profit Margin 28.4% 7.1% 1.7% Return on Assets 18.0% 4.0% 1.0%Return on Equity 31.4% 8.1% 7.0% Debt/Equity 0.17 0.21 1.22 Price/Earnings Ratio 23.3 18.9 10.2 A. Company A has the lowest profitability B. Company B has the highest liquidity C. Company A is the best at managing inventory D. Company B is the best at collecting its accounts receivables E. Company C is the worst at generating Sales from its assets `Group 29 55. Why did Bernard Madoff’s Ponzi scheme fall apart? A. Too many new investors wanted him to manage their money. B. His accountants turned him in. C. Too many people wanted their money back too quickly. D. He lacked the name recognition to attract investors. E. The SEC investigation revealed his scheme. 56. Bernard Madoff told his investors he had $50B in his fund but he really only had $15B. Why? A. He paid out higher returns than he earned. B. He had made a series of bad investments that lost money. C. He paid bribes to his accountants to falsify the books. D. He spent a lot trying to attract new investors. E. Currency fluctuations decreased the value of his international investments.
Solution Description

1. Which of the following is true regarding balance sheets?

A. They report, for a certain interval of time, the net assets generated, the net assets consumed, and the net income.

B.  They report, for a certain interval of time, the resources of a company, the obligations of acompany, and the equity of the owners.

C.  They report, for a certain interval of time, the amount of cash generated and consumed by a company.

D.  They report, as of a certain point in time, the resources of a company, the obligations of a company, and the equity of the owners.

E.  They report, as of a certain point in time, the resources and net income of a company.

2. Which of the following is true regarding income statements?

A. They report, as of a certain point in time, the company’s assets, liabilities, and net income

B. They report, for a certain interval of time, the net assets generated, the net assets consumed, and

the net income

C. They report, as of a certain point in time, the amount of cash and net income generated

D. They report, as of a certain point in time, the net assets generated, the net assets consumed, and the

net income

E. They report, for a certain interval of time, the resources of a company, the obligations of a

company, and the equity of the owners

Group 2

3. The Matching Principle in GAAP:

A. Matches sales to inventory shipments

B. Matches the expenses related to a sale in the same period

C. Matches ROE to a firm's capital investment

D. Matches costs of goods sold with the inventory on the balance sheet

E. Matches revenues with profits on the income statement

4. According to the Revenue Recognition Principle in GAAP:

A. Dividends can be paid only after taxable income is positive

B. Expenses can be realized when cash payment is made

C. Companies can realize revenue only if the transaction is profitable

D. Revenue is recognized when a good or service is provided, not when the money is received

E. Companies can realize certain gains on their operating books, while omitting them from their tax

books

Group 3

5. Given the following data, identify the correct gross profit and operating profit. Assume no outside

information other than that which is provided.

Sales: $3200

Depreciation: $200

Interest Expense: $100

Cost of Goods Sold: $1500

SG&A: $400

Taxes: $200

A. Gross Profit = $1700, Operating Profit = $1100

B. Gross Profit = $1700, Operating Profit = $1000

C. Gross Profit = $1300, Operating Profit = $1100

D. Gross Profit = $1300, Operating Profit = $1000

E. Gross Profit = $1100, Operating Profit = $800

6. Given the following data, identify the correct gross profit and operating profit. Assume no outside

information other than that which is provided.

Sales: $1800

Depreciation: $100

Interest Expense: $200

Cost of Goods Sold: $600

SG&A: $500

Taxes: $100

A. Gross Profit = $1200, Operating Profit = $600

B. Gross Profit = $1200, Operating Profit = $400

C. Gross Profit = $700, Operating Profit = $600

D. Gross Profit = $700, Operating Profit = $400E. Gross Profit = $600, Operating Profit = $300

Group 4

7. Which of the following statements regarding the cash flow statement is true?

A. Working capital changes are accounted for as cash flows from operating activities.

B. Financing activities include ONLY long-term borrowings.

C. A typical company has a positive cash flow from investing activities.

D. The purchase of property, plant, and equipment is classified as a financing activity.

E. Accounts Payable is classified as a cash flow from financing activities.

8. Which of the following statements regarding the cash flow statement is true?

A. Changes in accounts receivables is a financing activity

B. The disposal or acquisition of plant, property & equipment is classified as an investing activity.

C. Depreciation is classified as an investing activity.

D. Investing activities are the main source of a company’s positive cash flow.

E. Changes in cash flow perfectly match with a company’s net income.

Group 5

9. In order to calculate the amount of cost of goods sold on a common size income statement you would

do the following:

A. Cost of Goods Sold/Operating Expenses

B. Net Income/Cost of Goods Sold

C. Cost of Goods Sold/Net Income

D. Net Sales/Cost of Goods Sold

E. Cost of Goods Sold/Net Sales

10. In order to calculate the amount of cash on a common size balance sheet you would do the following:

A. Total Assets/Cash

B. Cash/Total Assets

C. Cash/Net SalesD. Cash/ (Assets+Liabilities+Stockholders Equity)

E. (Assets+Liabilities+Stockholders Equity)/Cash

Group 6

Attachments
FIN_301_QUIZ_2_Group_1_2015.docx
FIN_301_QUIZ_2_...