Please help me answer these Multiple Choice:

QUESTION 1

A general partner:

has less legal liability than a limited partner.

is the term applied only to corporations which invest in partnerships.

cannot lose more than the amount of his/her equity investment.

can end the partnership by withdrawing.

faces double taxation of profits whereas a limited partner does not.

QUESTION 2

Which one of these is most apt to be an agency problem?

Selling an unprofitable division of the firm

Forsaking a profitable project because it involves some risk

Increasing the dividend payments to shareholders

Increasing the sales of a profitable division

Paying off debt in a timely manner

QUESTION 3

If a firm is currently profitable, then:

its cash flows are known with certainty.

its reported sales exceed its costs.

it will always have sufficient cash to pay its bills in a timely manner.

its current cash inflows must exceed its current cash outflows.

the timing of the related cash flows is irrelevant.

QUESTION 4

All else held constant, the earnings per share will decrease as the:

total revenue of the firm increases.

number of shares outstanding increases.

net income increases.

costs decrease.

tax rate decreases.

QUESTION 5

The book value of assets:

is always higher than the replacement cost of the assets.

is shown on the firm's income statement.

represents the true market value of those assets according to GAAP.

is determined under Generally Accepted Accounting Principles (GAAP) and is based on the cost of those assets.

is always the best measure of the company's value to an investor.

QUESTION 6

For a firm with long-term debt, net income must be equal to:

EBIT Taxes.

Dividends + Addition to retained earnings.

Operating income (1 Marginal tax rate).

Pretax income Interest expense Taxes.

Taxes + Addition to retained earnings.

QUESTION 7

The financial statement summarizing a firm's accounting performance over a period of time is the:

balance sheet.

statement of cash flows.

tax reconciliation statement.

statement of equity.

income statement.

QUESTION 8

Enterprise value is based on the:

market value of interest-bearing debt plus the market value of equity minus cash.

market value of equity plus the book value of total debt minus cash.

book value of debt plus the market value of equity.

book values of debt and equity less cash.

book values of debt and assets, other than cash.

QUESTION 9

The DuPont identity can be computed as:

Return on equity Profit margin Total asset turnover.

Profit margin 1/Capital intensity ratio (1 + Debt-equity ratio).

Net income Total asset turnover Equity multiplier.

Net income Profit margin (1 + Debt-equity ratio).

Profit margin Total asset turnover Debt-equity ratio.

QUESTION 10

Ratios that measure a firm's ability to pay its bills over the short run without undue stress are known as:

asset management ratios.

market value ratios.

liquidity measures.

long-term solvency measures.

profitability ratios.

QUESTION 11

Assume Juno's paid $368,060 in taxes on taxable income of $1,673,000 last year. This year, the firm paid $401,545 in taxes on taxable income of $1,818,586. Assume the tax rates were the same for both years. What are the marginal and average tax rates for this year?

21 percent; 21 percent

22 percent; 21 percent

23 percent; 22 percent

23 percent; 21 percent

22 percent; 22 percent

QUESTION 12

At the beginning of this year, Blauser Industries had net fixed assets of $21,506 and total assets of $32,687. At year's end, net fixed assets are $20,492 and total assets are $32,915. The annual depreciation expense is $1,520. What is net capital spending for this year?

$1,292

$506

$1,748

$850

$2,534

QUESTION 13

Upton Industries has revenues of $42,629, interest expense of $1,230, depreciation of $2,609, cost of goods sold of $23,704, dividends paid of $1,200, and administrative expenses of $7,040. Assume the tax rate is 22 percent. What is the addition to retained earnings?

$5,075.88

$3,766.67

$4,630.19

$4,903.18

$5,230.04

QUESTION 14

Western Wear has total sales of $642,100, EBIT of $93,900, net income of $50,800, current assets of $153,500, total assets of $658,000, current liabilities of $78,900, and total liabilities of $213,600. What are the values of the three components of the DuPont identity?

11.43 percent; 1.02; 1.48

7.91 percent; .98; 1.48

7.91 percent; 1.02; 1.48

11.43 percent; .98; .68

8.57 percent; 1.02; .68

QUESTION 15

Marcie's Mercantile wants to maintain its current dividend policy, which is a payout ratio of 35 percent. The firm does not want to increase its equity financing but is willing to maintain its current debt-equity ratio. Given these requirements, the maximum rate at which Marcie's can grow is equal to:

65 percent of the sustainable rate of growth.

65 percent of the internal rate of growth.

the sustainable rate of growth.

35 percent of the internal rate of growth.

the internal rate of growth.