Lep 3 Question 1 (1 point) The Closet Shoppe has total sales of $713,200 and a profit margin of 5.8 percent. Currently, the firm has 12,500 shares outstanding. What are the earnings per share? 6 $3.89 9 $3.31 $2.98 12 $3.56 15 18 Question 2 (1 point) The sustainable growth rate is defined as the maximum rate at which a firm can grow given which of the following conditions? 21 No new debt but additional external equity equal to the increase in retained earnings 3 24 O New debt and external equity, provided the debt-equity ratio remains constant No new equity and a constant debt-equity ratio imit: 1:20:00 Time Left:1:18:40 Karen Umutoni: Attempt 1 1: Question 3 (1 point) When the return on equity is decomposed into three parts, it is referred to as the: 2 3 ! Du Pont identity. 5 6 ! leverage breakdown 8 9 return analysis. 11 12 efficiency breakdown. 14 15 Question 4 (1 point) Which one of the following statements related to the income statement is correct? 17 18 Depreciation has no effect on taxes. 20 21 Net income is distributed either to dividends or retained earnings. Interest paid is a noncash item. 23 24 Question 5 (1 point) Tim has been promoted and is now in charge of all fixed asset purchases. In other words, Tim is in charge of: 1:20:00 Time Left:1:18:16 Karen Umutoni: Attempt 1 Question 5 (1 point) Tim has been promoted and is now in charge of all fixed asset purchases. In other words, Tim is in charge of: 3 O capital structure management. 6 capital budgeting. 9 O risk management 12 working capital management. 15 18 Question 6 (1 point) A firm has adopted a policy whereby it will not seek any additional external financing. Given this, what is the maximum growth rate for the firm if it has net income of $12,100, total equity of $94,000, total assets of $156,000, and a 40 percent dividend payout ratio? 21 7.67 percent 24 5.11 percent 4.88 percent TIC: 1:20UU Time Left:1:18:04 Karen Umutoni: Attempt 1 Question 7 (1 point) Ratios that measure how efficiently a firm uses its assets to generate sales are known 2 3 as: 5 6 Long-term solvency ratios. 8 9 O Profitability ratios. Asset management ratios. 11 12 Short-term solvency ratios. 14 15 Question 8 (1 point) A firm has total assets of $523,100, current assets of $186,500, current liabilities of $141,000, and total debt of $215,000. What is the debt-equity ratio? 17 18 20 21 0.70 0.48 23 24 1.43 01.10 Page 1: 1 2 3 Question 9 (1 point) The balance sheet of a firm shows beginning net fixed assets of $348,200 and ending net fixed assets of $371,920. The depreciation expense for the year is $46,080. What is the amount of the net capital spending? 1 4 5 6 $58,340 7 00 9 -$4,780 $69,800 10 11 12 -$22,360 13 14 15 16 17 18 Question 10 (1 point) Freedom Health Centers has total equity of $861,300, sales of $1.48 million, and a profit margin of 5.2 percent. What is the return on equity? 19 20 21 8.68 percent 22 23 24 7.18 percent 8.94 percent 6.49 percent HULUN Atempt 1 Page 1: Question 11 (1 point) If a firm has a negative cash flow from assets every year for several years, the firm: 1 2 3 O may be continually increasing in size. 4 5 6 -- is operating at a high level of efficiency. 7 8 9 is repaying debt every year. 10 11 12 must also have a negative cash flow from operations each year. 13 14 15 Question 12 (1 point) Stadford, Inc. is financed with 40 percent debt and 60 percent equity. This mixture of debt and equity is referred to as the firm's: 16 17 18 capital structure. 19 20 21 asset allocation. 22 23 24 capital budget working capital. Page 1: 1 2 Question 13 (1 point) Last year, Blakely's Fashions earned net income of $68,400 and had 12,000 shares of stock outstanding. The dividends per share were $2.20. What is the dividend payout ratio? 5 6 7 8 9 34.00 percent 38.60 percent 10 11 12 32.98 percent 13 14 15 40.21 percent -- 16 17 18 Question 14 (1 point) Which of the basic financial statements is best used to answer the question, "How profitable is the business?" 19 20 21 Statement of cash flows 22 23 24 Balance sheet Income statement Unton! Attempt 1 Page 1 1 2 3 Question 15 (1 point) Which one of the following indicates that a firm has generated sufficient internal cash flow to finance its entire operations for the period? 4 5 6 Negative net capital spending 7 8 9 Positive cash flow to stockholders Positive cash flow from assets 10 11 12 Positive operating cash flow 13 14 15 -- 16 17 18 Question 16 (1 point) Donovan Brothers, Inc. would like to increase its internal rate of growth. Decreasing which one of the following will help the firm achieve its goal? 19 20 21 Retention ratio 22 23 24 Return on assets Dividend payout ratio Net income Page 1 1 N 3 Question 17 (1 point) Depreciation does which one of the following for a profitable form? 4 5 6 Lowers taxes - Has no effect on net income 7 8 9 Increases net income 10 11 12 Decreases net working capital 13 14 15 -- Question 18 (1 point) Andre's Dog House had current assets of $67,200 and current liabilities of $71,100 last year. This year, the current assets are $82,600 and the current liabilities are $85,100. What is the amount of the change in net working capital? 16 17 18 19 20 21 $2,100 $2,800 22 23 24 -$1,400 $1,400 Time Limit: 1:20:00 Time Left:1:17:09 Karen Umutoni: Attempt 1 Page 1: Question 19 (1 point) Net working capital is defined as: 1 N 3 the value of a firm's current assets. 5 6 current assets minus current liabilities. 8 9 total assets minus total liabilities. 1 10 11 12 available cash minus current liabilities. 13 14 15 Question 20 (1 point) Which one of the following is most apt to create a situation where an agency conflict could arise? 16 17 18 -- Reducing both management and non-management salaries 19 20 21 Downsizing a firm 17 22 23 24 Decreasing employee turnover Separating management from ownership Limit: 1:20:00 Time Left:1:17:01 Karen Umutoni: Attempt 1 1: which one of the following is most apt to create a situation where an agency contlict could arise? 2 3 Reducing both management and non-management salaries 5 6 Downsizing a firm Decreasing employee turnover 8 9 Separating management from ownership 11 12 14 15 Question 21 (1 point) Russell's Hardware has inventory of $218,000, equity of $421,800, total assets of $647,700, and sales of $587,200. What is the common-size percentage for the inventory account? 17 18 33.66 percent 20 21 37.12 percent 23 24 49.09 percent 26.81 percent Time Limit: 1:20:00 Time Left:1:16:51 Karen Umutoni: Attempt 1 Page 1: Question 22 (1 point) The primary goal of financial management is to: 1 2 3 Maximize the current value per share of the existing stock. 5 6 o od Maximize current sales. 7 8 9 Minimize operational costs. 10 11 12 Avoid financial distress. -- 13 14 15 Question 23 (1 point) Which one of the following is an equity account? 16 17 18 Patent 19 20 21 Bonds payable Paid in surplus 22 23 24 Depreciation dan Time Limit: 1:20:00 Time Left:1:16:43 Karen Umutoni: Attempt 1 Page 1: 1 2 3 Question 24 (1 point) The Pretzel Factory has net sales of $821,300 and costs of $698,500. The depreciation expense is $28,400 and the interest paid is $8,400. What is the amount of the firm's operating cash flow if the tax rate is 34 percent? 4 5 6 $93,560 7 8 9 $91,220 10 11 12 $89,540 $87,620 13 14 15 16 17 18 Question 25 (1 point) Who own(s) the net income of a public firm? 19 20 21 Shareholders Both stockholders and debt holders 22 23 24 Debt holders The IRS