Which of the following items is NOT included in current assets?

Question 1 options:

A)	Short-term, highly liquid, marketable securities.

B)	Accounts receivable.

C)	Inventory.

D)

Bonds.

E)

Cash.

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Question 2 (2.5 points)

Which of the following items cannot be found on a firm's balance sheet under current liabilities?

Question 2 options:

A)	Accrued payroll taxes.

B)	Accounts payable.

C)	Short-term notes payable to the bank.

D)	Accrued wages.

E)	Cost of goods sold.

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Question 3 (2.5 points)

Which of the following statements is CORRECT?

Question 3 options:

A)	The statement of cash flows shows how much the firm's cash-the total of currency, bank deposits, and short-term liquid securities (or cash equivalents)-increased or decreased during a given year.

B)	The statement of cash flows reflects cash flows from operations, but it does not reflect the effects of buying or selling fixed assets.

C)	The statement of cash flows shows where the firm's cash is located; indeed, it provides a listing of all banks and brokerage houses where cash is on deposit

D)	The statement of cash flows reflects cash flows from continuing operations, but it does not reflect the effects of changes in working capital.

E)	The statement of cash flows reflects cash flows from operations and from borrowings, but it does not reflect cash obtained by selling new common stock

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Question 4 (2.5 points)

Which of the following statements is CORRECT?

Question 4 options:

A)	Net cash flow (NCF) is defined as follows: NCF = Net income - Depreciation and Amortization.

B)	Changes in working capital have no effect on free cash flow.

C)	Free cash flow (FCF) is defined as follows: FCF = EBIT(1 T) + Depreciation and Amortization Capital expenditures required to sustain operations Required changes in net operating working capital.

D)	Free cash flow (FCF) is defined as follows: FCF = EBIT(1 T)+ Depreciation and Amortization + Capital expenditures.

E)	Net cash flow is the same as free cash flow (FCF).

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Question 5 (2.5 points)

Tucker Electronic System's current balance sheet shows total common equity of $3,125,000. The company has 125,000 shares of stock outstanding, and they sell at a price of $52.50 per share. By how much do the firm's market and book values per share differ?

Question 5 options:

A)

$27.50

B)

$28.88

C)

$30.32

D)

$31.83

E)

$33.43

Hunter Manufacturing Inc.'s December 31, 2014 balance sheet showed total common equity of $2,050,000 and 100,000 shares of stock outstanding. During 2015, Hunter had $250,000 of net income, and it paid out $100,000 as dividends. What was the book value per share at 12/31/2015, assuming that Hunter neither issued nor retired any common stock during 2015?

Question 6 options:

A)

$20.90

B)

$22.00

C)

$23.10

D)

$24.26

E)

$25.47

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Question 7 (2.5 points)

Companies generate income from their "regular" operations and from other sources like interest earned on the securities they hold, which is called non-operating income. Lindley Textiles recently reported $12,500 of sales, $7,250 of operating costs other than depreciation, and $1,000 of depreciation. The company had no amortization charges and no non-operating income. It had $8,000 of bonds outstanding that carry a 7.5% interest rate, and its federal-plus-state income tax rate was 40%. How much was Lindley's operating income, or EBIT?

Question 7 options:

A)

$3,462

B)

$3,644

C)

$3,836

D)

$4,038

E)

$4,250

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Question 8 (2.5 points)

Arshadi Corp.'s sales last year were $52,000, and its total assets were $22,000. What was its total assets turnover ratio (TATO)?

Question 8 options:

A)

2.03

B)

2.13

C)

2.25

D)

2.36

E)

2.48

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Question 9 (2.5 points)

Hutchinson Corporation has zero debtit is financed only with common equity. Its total assets are $410,000. The new CFO wants to employ enough debt to bring the debt/assets ratio to 40%, using the proceeds from the borrowing to buy back common stock at its book value. How much must the firm borrow to achieve the target debt ratio?

Question 9 options:

A)

$155,800

B)

$164,000

C)

$172,200

D)

$180,810

E)

$189,851

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Question 10 (2.5 points)

Orono Corp.'s sales last year were $435,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's times interest earned (TIE) ratio?

Question 10 options:

A)

4.72

B)

4.97

C)

5.23

D)

5.51

E)

5.80

Which of the following statements is CORRECT?

Question 11 options:

A)	Two firms with the same expected dividend and growth rates must also have the same stock price.

B)	It is appropriate to use the constant growth model to estimate a stock's value even if its growth rate is never expected to become constant.

C)	If a stock has a required rate of return rs = 12%, and if its dividend is expected to grow at a constant rate of 5%, this implies that the stock's dividend yield is also 5%.

D)	The price of a stock is the present value of all expected future dividends, discounted at the dividend growth rate.

E)	The constant growth model takes into consideration the capital gains investors expect to earn on a stock.

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Question 12 (2.5 points)

Companies can issue different classes of common stock. Which of the following statements concerning stock classes is CORRECT?

Question 12 options:

A)	All common stocks, regardless of class, must have the same voting rights.

B)	All firms have several classes of common stock.

C)	All common stock, regardless of class, must pay the same dividend.

D)	Some class or classes of common stock are entitled to more votes per share than other classes.

E)	All common stocks fall into one of three classes: A, B, and C.

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Question 13 (2.5 points)

You, in analyzing a stock, find that its expected return exceeds its required return. This suggests that you think

Question 13 options:

A)	the stock should be sold.

B)	the stock is a good buy.

C)	management is probably not trying to maximize the price per share.

D)	dividends are not likely to be declared.

E)	the stock is experiencing supernormal growth.

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Question 14 (2.5 points)

If a firm's expected growth rate increased then its required rate of return would

Question 14 options:

A)

decrease.

B)	fluctuate less than before.

C)	fluctuate more than before.

D)	possibly increase, possibly decrease, or possibly remain constant.

E)

increase.

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Question 15 (2.5 points)

Which of the following statements is CORRECT?

Question 15 options:

A)	If a stock has a required rate of return rs = 12% and its dividend is expected to grow at a constant rate of 5%, this implies that the stock's dividend yield is also 5%.

B)	The stock valuation model, P0 = D1/(rs g), can be used to value firms whose dividends are expected to decline at a constant rate, i.e., to grow at a negative rate.

C)	The price of a stock is the present value of all expected future dividends, discounted at the dividend growth rate.

D)	The constant growth model cannot be used for a zero growth stock, where the dividend is expected to remain constant over time.

E)	The constant growth model is often appropriate for evaluating start-up companies that do not have a stable history of growth but are expected to reach stable growth within the next few years.