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 current period will be higher B)Profit margins in the next period will be higher C)Total assets on the common size balance sheet will be higher D)Cash balances will be lower in the current period E)Shareholders Equity will be lower for the current period 23. Which of the following is true regarding capital budgeting? A)Capital budgeting is related to the composition of the companys liabilities and equity B)A company should always invest in projects with positive ROI C)The key metrics in evaluating capital budgeting decisions are ROI and cost of capital(WACC) D)A company should invest in new machinery if it will result in higher profit margins E)An investment to build inventory is an example of a capital budgeting decision 24. 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 3 is the least efficient at generating sales on its assets B)Company 3 is the most leveraged firm C)Company 1 is better at generating profits from its sales than Company 2 D)Company 1 is the worst at generating profits from its assets E)Company 2 is the least leveraged firm 25. Based on the following information about Company X, which is true? A/P Turnover: 30 Total Asset Turnover: 5 Days Payable Outstanding: 12 Times Interest Earned: 15 Debt/Equity: 3.2 A)Company X has more equity than debt B)Company X pays bills in 30 days C)Company X pays interest in 15 days D)Company X generates $5 in sales per dollar invested in assets E)Company X pays bills in 5 days 26. Which of the following is true regarding debt and equity financing? A)The primary trade-off in capital structure decisions is tax savings and fixed financing costs of equity B)Debt financing will dilute existing shareholders C)Dividends paid to equity investors in a company are tax deductible D)The goal of capital structure decisions is to minimize weighted average cost of capital (WACC) E)A company with an A debt rating will have a higher cost of debt than a company with a B debt rating 27. 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= 50, Cash Conversion Cycle = 80 C)Operating Cycle= 60, Cash Conversion Cycle = 50 D)Operating Cycle= 90, Cash Conversion Cycle = 70 E)Operating Cycle= 80, Cash Conversion Cycle = 50 28. 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)$150 B)$950 C)$550 D)$1450 E)$750 29. Given the following information, calculate WoolridgeCos P/E ratio. Revenue: $10,000,000 EBIT: $6,000,000 Net Income: $3,000,000 Earnings Per Share: 6.3 Stock Price: $36 A)5.7 B)3.3 C)2.0 D)1.3 E)2.5 30. Which of the following would result in a company having a HIGHER weighted average cost of capital (WACC)? A)Lower interest rate on debt B)Higher profit margins C)Higher tax rate D)Higher cost of equity E)Lower financial risk of a default on debt