1-On a common size balance sheet, Long-Term debt is expressed as a percentage of what value?

A)Total Liabilities & Shareholders Equity

B)Total Liabilities

C)Shareholders Equity

D)Cost of Goods Sold (COGS)

E)Revenue

2-Calculate the ROE using the DuPont Model (strategic profit model) for a company with the following data:, Profit margin = 10% Total Asset Turnover = 1.4 Inventory Turnover = 0.9 Equity Multiplier = 1.6 Current Ratio = 1.2 A)13% B)14% C)17% D)19% E)11%

3-Company X signs a long term contract and recognizes the full amount of the contract as revenue at signing. This is an example of which unethical behavior

A) recording revenue too soon

B) income smoothing

C) shift expenses to a later period

D) recording too much revenue

E) boosting income with one-time gain

4-Given the following, calculate WACC for company XYZ:

Debt:$900

Equity:$600M

Cost on Debt: 6%

Cost on Equity: 13.0%

Tax Rate: 40.0%

A) 9.1%

B) 7.4%

C) 6.6%

D) 9.2%

E) 8.8%

5- If a company shifts current costs to a future period (which is a financial shenanigan), what will be the effect on financial ratios (assuming all else is constant)?

A) Profit margins in the next period will be higher

B) Cash balances will be lower in the current period

C) Profit margins in the current period will be higher

D) Shareholders Equity will be lower for the current period

E) Total assets on the common size balance sheet will be higher

6-Based on the following, which is true?

Company 1 - Return on Assets: 7%, Net Profit Margin: 4.6%, Debt / Equity: 1.2x

Company 2 - Return on Assets: 10%, Net Profit Margin: 6.2%, Debt / Equity: 1.9x

Company 3 - Return on Assets: 12%, Net Profit Margin: 5.1%, Debt / Equity: 1.3x

A)Company 1 is better at generating profits from its sales than Company 2

B)Company 3 is the most leveraged firm

C)Company 1 is the worst at generating profits from its assets

D)Company 3 is the least efficient at generating sales on its assets

E)Company 2 is the least leveraged firm

7-Given the following information calculate Operating Cycle and Cash Conversion Cycle for MBA Inc.

Days Sales Outstanding: 20

Days Payable Outstanding: 30

Day Sales in Inventory: 60

A)Operating Cycle= 50, Cash Conversion Cycle = 60

B)Operating Cycle= 60, Cash Conversion Cycle = 50

C)Operating Cycle= 90, Cash Conversion Cycle = 70

D)Operating Cycle= 80, Cash Conversion Cycle = 50

E)Operating Cycle= 50, Cash Conversion Cycle = 80

8- Given the following information, calculate the Cash Flow for M&A Inc.

Net Income: $800

Depreciation: $200

Increase in Accounts Receivable: $150

Capital Expenditure: $250

Common stock repurchase: $50

A)$950

B)$1450

C)$950

D)$550

E)$150

9-Which of the following would result in a company having a LOWER weighted average cost of capital (WACC)?

A)Lower interest rate on debt

B)Lower profit margins

C)Lower tax rate

D)Higher cost of equity

E)Higher financial risk of a default on debt