1

1. On a Cash Flow Statement, Operating activities include:

   A.	Establishing a line of credit.
   B.	Decreasing Accounts Payable.
   C.	Short Term Debt repayment.
   D.	Purchasing a company.

2 points

Question 2

1. The Indirect Method of calculating Cash Flow:

   A.	Begins with Net Income.
   B.	Begins with Revenue.
   C.	Shows cash collections from customers.
   D.	Is used much less frequently than the Direct Method.

2 points

Question 3

1. Which of the following is an "Auction" market:

   A.	NASDAQ NMS.
   B.	OTC Bulletin Board.
   C.	American Stock Exchange.
   D.	Pink Sheets.

2 points

Question 4

1. On December 31, 2011, Inventory for Company X was $30,000. On December 31, 2012 the Inventory amount was $15,000. During 2012, the change in Inventory represented:

   A.	A $15,000 Operating Outflow.
   B.	A $15,000 Operating Inflow.
   C.	A $45,000 Operating Inflow.
   D.	A $45,000 Operating Outflow.

2 points

Question 5

1. The "Float" of a company's stock represents:

   A.	Total shares not held by Officers and Directors.
   B.	Total shares outstanding and available for trading by the public.
   C.	Total shares outstanding and held by Institutions.
   D.	The average daily volume of trading in a company's common shares.

2 points

Question 6

1. The current ratio of Company X is 3.0 times. Company X has working capital of $20,000. Total Current Assets for Company X are:

   A.	$6,667
   B.	$10,000
   C.	$30,000
   D.	$60,000

2 points

Question 7

1. Company X reports $200,000 in sales of Widgets in 2012. The Costs of Goods sold for these Widgets is $90,000. All other operating expenses (SG&A, R&D, Depreciation, Other, etc.) are $50,000. Which of the following is the correct representation of the profitability ratios:

   A.	Gross Profit Margin 45%, Operating Margin 30%.
   B.	Gross Profit Margin 55%, Operating Margin 30%.
   C.	Gross Profit Margin 45%, Operating Margin 20%.
   D.	Gross Profit Margin 55%, Operating Margin 20%.

2 points

Question 8

1. Sales for Company Y are $100,000 in 2012 and the net profit margin is 9.0%. The Return on Equity is 20%. What is the dollar value of Equity.

   A.	$ 18,000
   B.	$ 45,000
   C.	$ 90,000
   D.	$ 444,444

2 points

Question 9

1. If the Cost of Sales for Company Z is $912,500 for the 2012 year, and the Days Inventory Held is 25. The value of the Inventory at the end of 2012 is:

   A.	$ 62,500
   B.	$ 36,500
   C.	$ 3,042
   D.	$ 2,500

2 points

Question 10

1. The Chief Financial Officer of Company X decides to purchase 1000 units of a key component for the companys core Widget line for $1.0 million in cash. The purchase is recorded as the final entry at the close of business on the last working day of Fiscal Year 2012. As a result....

   A.	The Gross Margin declines.
   B.	The Payables Turnover ratio increases.
   C.	The Return on Equity increases.
   D.	The Cash Flow Margin declines.

2 points

Question 11

1. Which of the following is likely to cause the largest Cash Outflow:

   A.	Sale of a 30 Story Office building owned by the company for $120 million.
   B.	Purchase a $20,000 copy machine.
   C.	Establishinga $50,000 line of credit.
   D.	An acquisition of a competitor for $1.0 million in stock.

2 points

Question 12

1. Which of the following would not be an appropriate reason for a firm to repurchase its stock:

   A.	As an investment if management believes the market has undervalued the stock price.
   B.	In order to have sufficient shares to cover employee stock programs.
   C.	Solely to boost Earnings Per Share.
   D.	Both A and B.

2 points

Question 13

1. A company comparing the use of Straight Line Depreciation (SLD) and Accelerated Depreciation (DDB) in the first year subsequent to the purchase of a capital asset would find:

   A.	The Fixed Asset Turnover ratio is highest using SLD.
   B.	The Fixed Asset Turnover ratio is highest using DDB.
   C.	No difference in the Fixed Asset Turnover ratio.
   D.	The Total Asset Turnover ratio is highest using SLD.

2 points

Question 14

1. Assuming net income and shareholders equity are positive, and at least $1 in liabilities, the Return on Investment is:

   A.	Always higher than the Return on Equity.
   B.	Always equal to the Return on Equity.
   C.	Sometimes equal to the Return on Equity.
   D.	Always lower than the Return on Equity.

2 points

Question 15

1. The P/E ratio is useful in .... :

   A.	Comparing the premium that the market places on the total dollar value of earnings among competitors.
   B.	Comparing the premium that the market places on the total dollar value of earnings per share among competitors.
   C.	Comparing the return on earnings among competitors.
   D.	Forecasting the future earnings of a company.

2 points

Question 16

1. Company ABC has a market capitalization of $750 million, Book Value (Shareholders Equity) Per share of $15 and net income of $25 million. If the stock is currently trading at $30. The Return on Equity is:

   A.	3.3%
   B.	6.7%
   C.	9.3%
   D.	50.0%