uiz

Note: It is recommended that you save your response as you complete each question.

Question 1 (1 point)

Which of the following is NOT a correct way of calculating a liquidity ratio?

Question 1 options:

Current Ratio = Total Current Assets / Total Current Liabilities

Quick Ratio = (Current Asset - Inventories - Prepayments) / Current Liabilities

Liquidity Ratio = Liquid Assets / Short-term Liabilities

Operating Cash Flow Ratio = Current Liabilities / Operating Cash Flow

Save Question 2 (1 point)

Which of the following is NOT a way to calculate the debt to equity ratio?

Question 2 options:

Interest-Bearing Long-Term Debt / Equity

Debt / (Debt + Equity)

(Assets - Equity) / Debt

Debt / (Assets - Debt)

Save Question 3 (1 point)

Which of the following is NOT information used to calculate an asset's book value?

Question 3 options:

The costs associated with originally acquiring the asset, such as broker fees.

The total amount of depreciation, amortization, and impairment costs made against the asset.

The current market price of the asset.

The price of the asset when it was acquired.

Save Question 4 (1 point)

Which of the following is NOT an event that would be included in the investing section of a company's cash flow statement?

Question 4 options:

Paying interest to an investor who holds the company's debt.

Purchasing a new subsidiary with cash.

Receiving interest payments for debt owed to the company.

Selling some of the company's land.

Save Question 5 (1 point)

Which of the following transactions would be a financing activity on the statement of cash flows?

Question 5 options:

purchase of treasury stock

interest paid on convertible bonds

interest received

purchase of equipment financed by convertible bonds

Save Question 6 (1 point)

A company's retained earnings at the beginning of the year is $1 million. It paid $100,000 in dividends, had $250,000 in net income, and its goodwill increased by $10,000. What is its retained earnings as of the end of the year?

Question 6 options:

$1,250,000

$1,260,000

$1,160,00

$1,150,000

Save Question 7 (1 point)

A company has earnings before income tax of $2 million and a 15% tax rate. It had $250,000 in depreciation expenses with a $50,000 increase in working capital. It had another $100,00 in capital expenditures. What is its free cash flow.

Question 7 options:

$1,700,000

$1,950,000

$1,800,000

$1,850,000

Save Question 8 (1 point)

Assume a businesses's return on investment capital is 8%,its weighted average cost of capital is 4%, and its economic capital employed is $1,000,000. What is its EVA?

Question 8 options:

$40,000

$120,000

$400,000

$60,000

Save Question 9 (1 point)

A business has $1,250,000 in accounts receivable. Its annual sales for the fiscal year is $30,000,000. What is its days sales outstanding ratio?

Question 9 options:

0.041

24

8760

15.208

Save Question 10 (1 point)

A business begins its fiscal year with $10,000,000 in total assets. During the year it has net sales revenue of $45,000,000. At the end of the year it has $8,000,000 in total assets. What is its total assets turnover ratio?

Question 10 options:

5

4.5

5.62518

2.5

Save Question 11 (1 point)

Which of the following is NOT a benefit associated with using the DuPont Equation?

Question 11 options:

The DuPont equation is very useful in analyzing any business regardless of industry.

The DuPont equation can show whether a high level of leverage is risky or necessary for a company.

Analysts can use the DuPont equation to understand the fluctuations of a company's Return on Equity.

Analysts can determine which factor is dominant in determining a company's return on equity.

Save Question 12 (1 point)

A company wants to have $5 million in sales with $1 million in profit. It will have fixed costs of $3 million. Each unit of its product sells for $20. How much contribution per unit must the company have to meet its goals?

Question 12 options:

$16

$8

$1.60

$0.79

Save Question 13 (1 point)

Balance analysis is primarily based on ratios. Which of the following statements regarding ratio analysis associated with balance sheets is correct?

Question 13 options:

All of these answers.

Liquidity analysis analyzes whether a firm can recover from a loss or losses.

Solvency analysis analyzes whether a firm can meet its financial obligations.

Profitability analysis concerns return on capital: risk analysis concerns credit risk.

Save Question 14 (1 point)

What is the future value in 30 years of $100,000 invested today in a savings account earning a 1% compound interest rate every year (rounded up to the nearest dollar)?

Question 14 options:

130000

30000

134785

More than $134785

Save Question 15 (1 point)

An annuity pays $1500 at the beginning of every month for five years. The interest rate of the annuity is 4%. What is this annuity's future value?

Question 15 options:

$101,280

$99,780

$99,448

$97,948

Save Question 16 (1 point)

A security offers to pay the holder $1000 at the end of every month for five years. What type of annuity is this?

Question 16 options:

Annuity-due.

Regular annuity.

Ordinary annuity.

Perpetuity.

Save Question 17 (1 point)

A bond currently valued at $100,000 has a quarterly interest rate of 5%. The bond matures in 3 years. What is its future value?

Question 17 options:

$1,157,625

$1,160,755

$1,219,391

$1,050,945

Save Question 18 (1 point)

A sinking fund is used by firms to retire some of its outstanding debt every year. Which of the following is a way that a sinking fund may operate?

Question 18 options:

The firm may buy the bonds at a special call price stipulated in the bond's sinking fund provision.

The firm may repurchase the bonds in the open market.

All of these answers

The firm may repurchase the bonds at the current market price or the call price, whichever is lower.

Save Question 19 (1 point)

A company issues a bond with a coupon rate of 5%. Since the bond was issued, market interest rates have decreased. What effect will this decrease have on the bond's market price and its current yield?

Question 19 options:

The bond will trade below par and its current yield will increase.

The bond will trade above par and its current yield will increase.

The bond will trade below par and its current yield will decrease.

The bond will trade above par and its current yield will decrease.

Save Question 20 (1 point)

A zero-coupon bond has a face value of $1000 and a market value of $800. The bond will mature in 5 years. What is its yield to maturity?

Question 20 options:

-4.37%

205.17%

4.56%

104.56%

Save Question 21 (1 point)

An annuity has an interest rate of 7% and makes a quarterly payment of $2000. The annuity is to last for 5 years. What is the present value of the annuity.

Question 21 options:

$21,188.03

$8,200.40

$32,801.58

$2,118.80

Save Question 22 (1 point)

A company a constant growth rate of 3%. The company's risk adjusted discount rate is 5%. The company has a $2 dividend. What is the per share value of the stock?

Question 22 options:

$105

$51.50

$103

$52.50

Save Question 23 (1 point)

A company has cost of equity of 8% and a dividend growth rate of 3%. Its dividends for next year is $2.20 per share. What should the stock's price be?

Question 23 options:

$4.40

$44.00

$0.22

$27.00

Save Question 24 (1 point)

The adequately diversify your portfolio, you need to do more than just own a variety of securities. Which of the following is a necessary component of a well-diversified portfolio that has a low variance?

Question 24 options:

The component securities have small or negative correlation coefficients.

The portfolio's components are in a variety of asset classes, such as commodities and derivatives.

All of these answers.

The portfolio is reviewed and rebalanced based on updated projections and new information.

Save Question 25 (1 point)

A portfolio is composed of 30% stock, 20% bonds, and 50% mutual funds. The stock is expected to have a 10% return, the bonds a 5% return and the mutual funds a 7% return. What is the expected return of the portfolio?

Question 25 options:

7.3%

7%

8.1%

7.5%

Save Question 26 (1 point)

A company has a risk free rate of 3% and a risk premium of 6%. Its tax rate is 35%. What is the company's cost of debt?

Question 26 options:

5.85%

2.1%

3.9%

3.15%

Save Question 27 (1 point)

A company has issued preferred stock that are valued at $75 a share. The preferred dividend is $5. The company's growth rate is 5%. What is the cost of the company's preferred stock?

Question 27 options:

1.67%

6.67%

5%

11.67%

Save Question 28 (1 point)

A company makes an initial $10,000 investment in a project. This project is projected to earn $8000 in year one, $10,000 in year 2, $12,000 in year 3, and $20,000 in year 4. If the interest rate is 5%, what is the project's present value?

Question 28 options:

$40,000

$43,509

$37,619

$33,509

Save Question 29 (1 point)

Suppose that a company has total financing where 10% comes from bonds, 10% from a loan, and 80% from shareholders equity. The bonds pay on average a 10% interest rate, the loan has a 10% interest rate, and shareholders require a 10% return. The interest payment on the loan is tax deductible and the tax rate is 20%. What is the simple average cost of capital equal to?

Question 29 options:

0.0733

0.0333

0.0933

0.1

Save Question 30 (1 point)

A company is considering a project that has a discount rate of 5%. In the first year, it will have -$100,000 in cash flows. In year 2, it will have cash flows of $100,000, and in year 3 the project will generate $200,000. What is the project's NPV?

Question 30 options:

$358,708

$190,476

$168,232

$193,204

Save Question 31 (1 point)

Under the present value concept, a lottery winner would rather receive:

Question 31 options:

$10,000 per year for the next 5 years than receive $40,000 today.

$10,000 per year for the next 5 years than receive $50,000 today.

$10,000 per year for the next 5 years than receive $30,000 today.

None of these, as the best answer depends on the interest rate that the lottery winner faces.

Save Question 32 (1 point)

Which of the following criteria is NOT taken into consideration when analyzing a possible replacement project?

Question 32 options:

The sunk cost associated with the original project.

The discounted cash flows from the old and potential replacement investment.

The depreciation associated with the old and potential replacement investment.

The cashflows the current project has generated in the past.

Save Question 33 (1 point)

A company made $10 million in revenue. It is interested in pursuing a new project that costs $2 million, but will make them $7 million in the long run. How much should the company pay in dividends under the Residual Dividend Model?

Question 33 options:

$3 million

$10 million

$8 million

The company should not pay dividends.

Save Question 34 (1 point)

Which of the following is a benefit shareholders can obtain by repurchasing its shares?

Question 34 options:

All of these answers.

Shareholders have a higher percent ownership in the company at a higher per share price.

Share repurchases can deter hostile takeovers.

Share repurchases can boost EPS, which can in turn increase management compensation.

Save Question 35 (1 point)

Which of the following accurately describes how a stock dividend differs from a stock split?

Question 35 options:

A stock dividend is paid using already issued shares; a split requires new shares to be issued.

All of these answers.

A stock dividend increases the shareholder's percentage ownership in the company; a split does not.

A stock dividend causes the stock's price to fall; a stock split does not.

Save Question 36 (1 point)

A company has $350,000 in accounts receivable, $100,000 in current inventory, and $125,000 in accounts payable. What is its working capital?

Question 36 options:

$450,000

$375,000

$225,000

$325,000

Save Question 37 (1 point)

Which of the following correctly defines one of the four main areas of variability that must be considered during working capital management?

Question 37 options:

Inventory management ensures uninterrupted production while minimizing investment in raw materials.

Cash management balances having enough cash for expenses while minimizing cash holding costs.

Debtors management finds the appropriate credit policy.

All of these answers.

Save Question 38 (1 point)

Which of the following should a company ALWAYS do with regards to its collection policy?

Question 38 options:

Demand upfront payment when the good or service is delivered.

Set up lock box banking for its customers' convenience.

Require a deposit from all customers for large purchases.

Tailor its collection policy based on each customer's needs and importance.

Save Question 39 (1 point)

A customer has 45 days from the date of invoice to pay a bill in full, but if he pays within 15 days of the invoice, he gets a 10% discount. Which of the following describes these terms of trade?

Question 39 options:

10/45, net 15.

10/15, net 45.

15/10, net 45.

15/45, net 10.

Save Question 40 (1 point)

If a company has yet to receive payment for its goods, which of the following describes a situation when it can recognize revenue from the sale?

Question 40 options:

All of these answers.

Once the company has sustained a portion of the costs associated with providing the good or service.

When the goods have been delivered and the title has been transferred to the buyer.

Once the company has performed a portion of the services to be provided.

Save Question 41 (1 point)

Which of the following correctly describes a method companies can use to analyze their collections?

Question 41 options:

The account receivable days is the average number of days it takes a firm to collect on its sales.

An aging schedule categorizes accounts by the number of days they have been on the books.

All of these answers.

The receivable turnover ratio measures the number of times, on average, receivables are collected.

Save Question 42 (1 point)

One of the most underestimated challenges encountered by companies when entering a new global region is recognition. For example, Best Buy failed in China as a direct result of not localizing their brand and product offerings. This is a failure of:

Question 42 options:

Leadership

Ethics

Organizational structure

Public relations

Save Question 43 (1 point)

A company is concerned that the value of its accounts receivable from overseas will decrease due to a shift in exchange rate. What type of exchange exposure is the company concerned about?

Question 43 options:

Short-run exposure.

Long-run exposure.

Economic exposure.

Translation exposure.

Save Question 44 (1 point)

Frank is goining on vacation to Italy, so he will have purchase some euros (e). How many euros will he get for $375 if the exchange rate is $1 = 1.2769 euros? Give your answer to the nearest euro.

Question 44 options:

294 euros

293 euros

478 euros

479 euros

Save Question 45 (1 point)

You have just arrived in the US from your vacation in Switzerland. While unpacking your luggage you find you have 250 Swiss francs (CHF). How many USD are your Swiss francs worth? The exchange rate is $1 = CHF 1.5347. Give your answer to the nearest dollar.

Question 45 options:

$383

$162

$384

$163

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