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Trine | Moodle

FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 5, 2021, 8:28 AM
State	Finished
Completed on	Sunday, September 5, 2021, 8:41 AM
Time taken	13 mins 2 secs
Grade	10.00 out of 10.00 (100%)

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Question 1

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A firm had EBIT of $1,000, paid taxes of $225, expensed depreciation at $13, and its gross fixed assets increased by $25. What was the firm's operating cash flow?

Select one:

$737

$813

$788

$763

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The correct answer is: $788

Question 2

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Which of the below represents a cash outflow?

Select one:

A decline in inventories

An increase in accrued wages

Issuing more debt

A decline in accounts payable

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The correct answer is: A decline in accounts payable

Question 3

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ABC Inc. has $100 in cash on its balance sheet at the end of 2009. During 2010, the firm issued $450 in common stock, reduced its notes payable by $40, purchased fixed assets in the amount of $750, and had cash flows from operating activities of $315. How much cash did ABC Inc. have on its balance sheet at the end of 2010?

Select one:

$225

$140

-$25

$75

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The correct answer is: $75

Question 4

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Which of the following activities result in an increase in a firm's cash?

Select one:

Decrease accounts payable

Repurchase of common stock

Decrease fixed assets

Pay dividends

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The correct answer is: Decrease fixed assets

Question 5

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An income statement shows

Select one:

The financial position of a company.

The performance of a company over a period of time.

Specific information about the compensation of senior management.

How much is owed to bondholders.

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The correct answer is: The performance of a company over a period of time.

Question 6

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Which of the below IS NOT included in the calculation of operating income?

Select one:

Depreciation expense

Cost of goods sold

Sales

Interest expense

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The correct answer is: Interest expense

Question 7

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Financial statements of a corporation can be typically found in

Select one:

The proxy statement.

The articles of incorporation.

The prospectus.

The annual report.

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The correct answer is: The annual report.

Question 8

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All of the following are reasons that one should be cautious in interpreting financial statements EXCEPT:

Select one:

Firms can take steps to over- or understate earnings at various times.

All of these are reasons to be cautious in interpreting financial statements.

It is difficult to compare two firms that use different depreciation methods.

Financial managers have quite a bit of latitude in using accounting rules to manage their reported earnings.

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The correct answer is: All of these are reasons to be cautious in interpreting financial statements.

Question 9

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A balance sheet shows

Select one:

The financial position of the company.

Specific information about the compensation of senior management.

The performance of the company over a period of time.

The market value of company’s stock.

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The correct answer is: The financial position of the company.

Question 10

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Net Working Capital is computed as

Select one:

Current assets divided by current liabilities.

Total assets divided by total liabilities.

Current assets minus current liabilities.

Total assets minus total Liabilities.

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The correct answer is: Current assets minus current liabilities.

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Trine | Moodle

FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 5, 2021, 8:44 AM
State	Finished
Completed on	Sunday, September 5, 2021, 8:49 AM
Time taken	5 mins 3 secs
Points	5.00/5.00
Grade	10.00 out of 10.00 (100%)

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Question 1

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Assume that a company had a net income equal to $500,000, and paid out $200,000 in dividends. The balance in the retained earnings account at the beginning of the year was $800,000. What is the balance in the retained earnings account at the end of the year?

Select one:

$1,300,000

$1,500,000

$700,000

$1,100,000

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The correct answer is: $1,100,000

Question 2

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Blue Bayou, a fictitious advertising company, reported revenues of $50 million, total expenses of $35 million, and net income of $15 million in the most recent year. If accounts receivable decreased by $12 million, how much cash did the company receive from customers?

Select one:

$62 million

$15 million

$50 million

$38 million

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The correct answer is: $62 million

Question 3

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Income Statement You have been given the following information for Fina's Furniture Corp.:
Net sales = $25,500,000;
Cost of goods sold = $10,250,000;
Addition to retained earnings = $305,000;
Dividends paid to preferred and common stockholders = $500,000;
Interest expense = $2,000,000.
The firm's tax rate is 30 percent. What is the depreciation expense for Fina's Furniture Corp.?

Select one:

$12,400,000

$12,100,000

$14,100,000

$14,400,000

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The correct answer is: $12,100,000

Question 4

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Balance Sheet You are evaluating the balance sheet for Campus Corporation. From the balance sheet you find the following balances: cash and marketable securities = $400,000, accounts receivable = $200,000, inventory = $100,000, accrued wages and taxes = $10,000, accounts payable = $300,000, and notes payable = $600,000. What is Campus's net working capital?

Select one:

$1,610,000

$700,000

-$210,000

$910,000

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The correct answer is: -$210,000

Question 5

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Balance Sheet Harvey's Hamburger Stand has total assets of $3 million of which $1 million are current assets. Cash makes up 20 percent of the current assets and accounts receivable makes up another 5 percent of current assets. Harvey's gross plant and equipment has a book value of $1.5 million and other long-term assets have a book value of $1 million. Using this information, what is the balance of inventory and the balance of depreciation on Harvey's Hamburger Stand's balance sheet?

Select one:

$750,000, $500,000

$250,000, $500,000

$250,000, $1 million

$750,000, $1 million

Feedback

The correct answer is: $750,000, $500,000

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Trine | Moodle

FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 5, 2021, 8:52 AM
State	Finished
Completed on	Sunday, September 5, 2021, 9:05 AM
Time taken	13 mins 53 secs
Grade	9.00 out of 10.00 (90%)

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Question 1

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Firms with high PE ratios _________.

Select one:

usually are expected to experience rapid increases in future dividends and/or earnings growth

usually have lower credit ratings

usually have high debt ratios

usually are expected to experience a slower growth rate in sales

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The correct answer is: usually are expected to experience rapid increases in future dividends and/or earnings growth

Question 2

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Which of the following statements is correct?

Select one:

A low average payment period and a low accounts payable turnover are a sign of good management.

A high average payment period and a low accounts payable turnover are a sign of good management.

A high average payment period and a high accounts payable turnover are a sign of good management.

A low average payment period and a high accounts payable turnover are a sign of good management.

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The correct answer is: A high average payment period and a low accounts payable turnover are a sign of good management.

Question 3

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Which type of ratio measures the dollars of current assets available to pay each dollar of current liabilities?

Select one:

Current

Cross-section

Internal-growth

Quick or acid test

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The correct answer is: Current

Question 4

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All of the following are users of financial ratios EXCEPT:

Select one:

investors.

managers.

analysts.

auditors.

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The correct answer is: auditors.

Question 5

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Which of the following activities will increase a firm's current ratio?

Select one:

None of these statements will increase a firm's current ratio.

Accounts receivable are paid in cash.

Accrued wages and taxes increase.

Purchase inventory using cash.

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The correct answer is: None of these statements will increase a firm's current ratio.

Question 6

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If company A has a lower P/E ratio than company B we would conclude that

Select one:

Company A’s operating cost is likely smaller than company B’s operating cost.

Company A is likely not very liquid.

Company B is a better buy than company A.

Company A’s net income is expected to grow slower in the future than company B’s.

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The correct answer is: Company A’s net income is expected to grow slower in the future than company B’s.

Question 7

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A firm that is efficient in inventory management will have:

Select one:

a low inventory turnover ratio and a high days sales in inventory ratio.

a high inventory turnover ratio and a low days sales in inventory ratio.

a low inventory turnover ratio and a low days sales in inventory ratio.

a high inventory turnover ratio and a high days sales in inventory ratio.

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The correct answer is: a high inventory turnover ratio and a low days sales in inventory ratio.

Question 8

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Question text

Trend analysis

Select one:

Is used to identify new industry trends.

Is used to compare a company against its industry peers.

Is used to evaluate changes in a company’s performance over time.

Is used primarily to compute the probability a company will go bankrupt within a certain period of time.

Feedback

The correct answer is: Is used to evaluate changes in a company’s performance over time.

Question 9

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Which ratio measures how many days inventory is held before the final product is sold?

Select one:

Inventory turnover

Days' sales in inventory

Total asset turnover

Inventory intensity ratio

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The correct answer is: Days' sales in inventory

Question 10

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Question text

Which of these statements is true?

Select one:

A high inventory turnover ratio or a low days' sales in inventory is a sign of good inventory management.

A high inventory turnover ratio or a high days' sales in inventory is a sign of good inventory management.

A low inventory turnover ratio or a high days' sales in inventory is a sign of good inventory management.

A low inventory turnover ratio or a low days' sales in inventory is a sign of good inventory management.

Feedback

The correct answer is: A high inventory turnover ratio or a low days' sales in inventory is a sign of good inventory management.

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Trine | Moodle

FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 5, 2021, 9:07 AM
State	Finished
Completed on	Sunday, September 5, 2021, 9:11 AM
Time taken	4 mins 27 secs
Points	4.00/4.00
Grade	10.00 out of 10.00 (100%)

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Question 1

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Select one:

LotsofDebt: 10 percent, 10 times, 9 times, respectively; and LotsofEquity: 90 percent, 1.11 times, 0.1111 times, respectively.

LotsofDebt: 90 percent, 10 times, 9 times, respectively; and LotsofEquity: 10 percent, 1.11 times, 0.1111 times, respectively.

LotsofDebt: 10 percent, 1.11 times, 0.1111 times, respectively; and LotsofEquity: 90 percent, 10 times, 9 times, respectively.

LotsofDebt: 90 percent, 1.11 times, 0.1111 times, respectively; and LotsofEquity: 10 percent, 10 times, 9 times, respectively.

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The correct answer is: LotsofDebt: 90 percent, 10 times, 9 times, respectively; and LotsofEquity: 10 percent, 1.11 times, 0.1111 times, respectively.

Question 2

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Debt Management Ratios Zoe's Dog Toys, Inc. reported a debt to equity ratio of 0.5 times at the end of 2011. If the firm's total assets at year-end are $50 million, how much of their assets is financed with equity?

Select one:

$16.67m

$33.33m

$50m

$25m

Feedback

The correct answer is: $33.33m

Question 3

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Liquidity Ratios You are evaluating the balance sheet for Blue Jays Corporation. From the balance sheet you find the following balances: cash and marketable securities = $200,000, accounts receivable = $800,000, inventory = $1,000,000, accrued wages and taxes = $250,000, accounts payable = $400,000, and notes payable = $300,000. What are Blue Jays' current ratio, quick ratio, and cash ratio, respectively?

Select one:

2.10526, 1.05263, 0.21053

3.07692, 1.05263, 0.30769

1.05263, 1.05263, 0.21053

3.07692, 1.53846, 0.30769

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The correct answer is: 2.10526, 1.05263, 0.21053

Question 4

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Liquidity Ratios The top part of Mars, Inc.'s 2013 balance sheet is listed as follows (in millions of dollars).

What are Mars, Inc.'s current ratio, quick ratio, and cash ratio for 2013?

Select one:

0.1111, 0.5556, 0.2

10.5, 6.0, 1.0

2.3333, 0.5556, 0.1111

4.2, 1.0, 0.2

Feedback

The correct answer is: 2.3333, 0.5556, 0.1111

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Trine | Moodle

FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 5, 2021, 10:38 PM
State	Finished
Completed on	Sunday, September 5, 2021, 10:47 PM
Time taken	9 mins 2 secs
Grade	10.00 out of 10.00 (100%)

Top of Form

Question 1

Correct

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Question text

Net Working Capital is computed as

Select one:

Total assets minus total Liabilities.

Current assets minus current liabilities.

Total assets divided by total liabilities.

Current assets divided by current liabilities.

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The correct answer is: Current assets minus current liabilities.

Question 2

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All of the following are cash flows associated with financing activities EXCEPT:

Select one:

Issuing stock

Increase in accounts payable

Paying dividends

Stock Repurchases

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The correct answer is: Increase in accounts payable

Question 3

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Question text

Which financial statement reports a firm's assets, liabilities, and equity at a particular point in time?

Select one:

Statement of retained earnings

Income statement

Statement of cash flows

Balance sheet

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The correct answer is: Balance sheet

Question 4

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All of the following are reasons that one should be cautious in interpreting financial statements EXCEPT:

Select one:

Firms can take steps to over- or understate earnings at various times.

All of these are reasons to be cautious in interpreting financial statements.

Financial managers have quite a bit of latitude in using accounting rules to manage their reported earnings.

It is difficult to compare two firms that use different depreciation methods.

Feedback

The correct answer is: All of these are reasons to be cautious in interpreting financial statements.

Question 5

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Question text

An equity-financed firm will

Select one:

pay more in income taxes than an otherwise identical debt-financed firm.

pay the same in income taxes as an otherwise identical debt-finance firm.

pay more in interest payments than an otherwise identical debt-financed firm.

pay less in income taxes than an otherwise identical debt-financed firm.

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The correct answer is: pay more in income taxes than an otherwise identical debt-financed firm.

Question 6

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Which of the following activities result in an increase in a firm's cash?

Select one:

Repurchase of common stock

Decrease fixed assets

Decrease accounts payable

Pay dividends

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The correct answer is: Decrease fixed assets

Question 7

Correct

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Question text

A balance sheet shows

Select one:

The market value of company’s stock.

Specific information about the compensation of senior management.

The performance of the company over a period of time.

The financial position of the company.

Feedback

The correct answer is: The financial position of the company.

Question 8

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Select one:

$140

$75

$225

-$25

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The correct answer is: $75

Question 9

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Question text

Lemmon Inc. lists fixed assets of $100 on its balance sheet. The firm's fixed assets have recently been appraised at $140. The firm's balance sheet also lists current assets at $15. Current assets were appraised at $16.50. Current liabilities book and market values stand at $12 and the firm's long-term debt is $40. Calculate the market value of the firm's stockholders' equity.

Select one:

$112.50

$104.50

$156.50

$144.50

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The correct answer is: $104.50

Question 10

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What would be the most likely result of a company’s decision to use accelerated (as opposed to straight line) depreciation?

Select one:

It would result in a lower interest payment to the creditors.

It would make net income bigger.

It would shift some of the current and near future tax burden into later years.

It would result in a lower total tax burden over time.

Feedback

The correct answer is: It would shift some of the current and near future tax burden into later years.

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Trine | Moodle

FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 5, 2021, 10:49 PM
State	Finished
Completed on	Sunday, September 5, 2021, 11:09 PM
Time taken	20 mins 3 secs
Points	5.00/5.00
Grade	10.00 out of 10.00 (100%)

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Question 1

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Select one:

$14,400,000

$12,400,000

$12,100,000

$14,100,000

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The correct answer is: $12,100,000

Question 2

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Assume a company acquires a new building for the price of $7.5 million. Using straight line depreciation, and setting the useful life of the building to 30 years, the annual depreciation expense associated with the building will be equal to

Select one:

$1,500,000.

$500,000.

$750,000.

$250,000.

Feedback

The correct answer is: $250,000.

Question 3

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Free Cash Flow Catering Corp. reported free cash flows for 2013 of $8 million and investment in operating capital of $2 million. Catering listed $1 million in depreciation expense and $2 million in taxes on its 2008 income statement. What was Catering's 2013 EBIT?

Select one:

$7 million

$10 million

$13 million

$11 million

Feedback

The correct answer is: $11 million

Question 4

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Statement of Cash Flows Fina's Faucets, Inc. has net cash flows from operating activities for the last year of $17 million. The income statement shows that net income is $15 million and depreciation expense is $6 million. During the year, the change in inventory on the balance sheet was an increase of $4 million, change in accrued wages and taxes was an increase of $1 million and change in accounts payable was an increase of $1 million. At the beginning of the year the balance of accounts receivable was $5 million. What was the end of year balance for accounts receivable?

Select one:

$7 million

$2 million

$9 million

$3 million

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The correct answer is: $7 million

Question 5

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Question text

Select one:

$62 million

$15 million

$50 million

$38 million

Feedback

The correct answer is: $62 million

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Trine | Moodle

FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 5, 2021, 11:10 PM
State	Finished
Completed on	Sunday, September 5, 2021, 11:24 PM
Time taken	14 mins 28 secs
Grade	9.00 out of 10.00 (90%)

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Question 1

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Assume a company’s total asset turnover is equal to 4.75. What is the correct interpretation of this ratio?

Select one:

Total assets are kept on average for 47.5 years.

Total assets are kept on average for 4.75 years.

Total assets are kept on average for 4.75 days.

Each dollar of total assets generates $4.75 of sales.

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The correct answer is: Each dollar of total assets generates $4.75 of sales.

Question 2

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Question text

Firms with high PE ratios _________.

Select one:

usually are expected to experience rapid increases in future dividends and/or earnings growth

usually have lower credit ratings

usually have high debt ratios

usually are expected to experience a slower growth rate in sales

Feedback

The correct answer is: usually are expected to experience rapid increases in future dividends and/or earnings growth

Question 3

Correct

1.00 points out of 1.00

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Question text

Which ratio measures how many days inventory is held before the final product is sold?

Select one:

Inventory intensity ratio

Days' sales in inventory

Total asset turnover

Inventory turnover

Feedback

The correct answer is: Days' sales in inventory

Question 4

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Question text

Which type of ratio measures the dollars of current assets available to pay each dollar of current liabilities?

Select one:

Internal-growth

Quick or acid test

Cross-section

Current

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The correct answer is: Current

Question 5

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Question text

The difference between ROE and ROA is that

Select one:

ROA takes into account the impact of financial leverage.

ROE takes into account depreciation expense.

ROE takes into account the impact of financial leverage.

ROA takes into account depreciation expense.

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The correct answer is: ROE takes into account the impact of financial leverage.

Question 6

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Question text

Which of the following will increase a firm's quick ratio assuming no other accounts change?

Select one:

An increase in accounts receivable

An increase in marketable securities

A reduction in accounts payable

All of these statements will increase a firm's quick ratio

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The correct answer is: All of these statements will increase a firm's quick ratio

Question 7

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A firm has an average collection period of 13 days. The industry average ACP is 27 days. Which of the following statements is true given this information?

Select one:

The firm could probably increase its sales by relaxing its strict accounts receivable policy.

The firm has an excellent accounts receivable policy.

The firm is maximizing its net income by minimizing its losses in accounts receivable.

None of the statements are correct.

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The correct answer is: The firm could probably increase its sales by relaxing its strict accounts receivable policy.

Question 8

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Question text

Which of the statements below is correct?

Select one:

Financial leverage rises with a lower debt ratio.

Companies with lower debt ratios are more risky to shareholders.

Higher debt ratio is better for a company unless the industry is going through a recession.

Having a higher debt ratio is neither good nor bad.

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The correct answer is: Having a higher debt ratio is neither good nor bad.

Question 9

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Question text

A firm that is efficient in inventory management will have:

Select one:

a low inventory turnover ratio and a low days sales in inventory ratio.

a high inventory turnover ratio and a low days sales in inventory ratio.

a low inventory turnover ratio and a high days sales in inventory ratio.

a high inventory turnover ratio and a high days sales in inventory ratio.

Feedback

The correct answer is: a high inventory turnover ratio and a low days sales in inventory ratio.

Question 10

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Question text

Trend analysis

Select one:

Is used to compare a company against its industry peers.

Is used to identify new industry trends.

Is used to evaluate changes in a company’s performance over time.

Is used primarily to compute the probability a company will go bankrupt within a certain period of time.

Feedback

The correct answer is: Is used to evaluate changes in a company’s performance over time.

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Trine | Moodle

FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 5, 2021, 11:26 PM
State	Finished
Completed on	Sunday, September 5, 2021, 11:34 PM
Time taken	8 mins 4 secs
Points	4.00/4.00
Grade	10.00 out of 10.00 (100%)

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Question 1

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Question text

Select one:

$33.33m

$50m

$25m

$16.67m

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The correct answer is: $33.33m

Question 2

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Question text

Liquidity Ratios The top part of Mars, Inc.'s 2013 balance sheet is listed as follows (in millions of dollars).

What are Mars, Inc.'s current ratio, quick ratio, and cash ratio for 2013?

Select one:

2.3333, 0.5556, 0.1111

10.5, 6.0, 1.0

4.2, 1.0, 0.2

0.1111, 0.5556, 0.2

Feedback

The correct answer is: 2.3333, 0.5556, 0.1111

Question 3

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Question text

Select one:

Firm A: 10 times; Firm B: 1.11 times

Firm A: 10 times; Firm B: 9.99 times

Firm A: 15 times; Firm B: 1.00 times

Firm A: 20 times; Firm B: 1.11 times

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The correct answer is: Firm A: 10 times; Firm B: 1.11 times

Question 4

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Question text

A firm has a profit margin of 12 percent; total asset turnover of 0.55 and an equity multiplier of 2.2. What is the firm's ROA and ROE?

Select one:

ROA = 9.5 percent; ROE = 20.9 percent

ROA = 8.1 percent; ROE = 17.82 percent

ROA = 6.6 percent; ROE = 14.52 percent

ROA = 7.2 percent; ROE = 15.84 percent

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The correct answer is: ROA = 6.6 percent; ROE = 14.52 percent

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Trine | Moodle

FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 12, 2021, 3:59 AM
State	Finished
Completed on	Sunday, September 12, 2021, 4:21 AM
Time taken	21 mins 54 secs
Grade	19.00 out of 20.00 (95%)

Top of Form

Question 1

Correct

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Question text

Which of the following statements is incorrect with respect to time lines?

Select one:

A helpful tool for organizing our analysis is the time line.

Cash flows we pay out are called outflows and designated with a negative number.

Cash flows we receive are called inflows and denoted with a positive number.

Interest rates are not included on our time lines.

Feedback

The correct answer is: Interest rates are not included on our time lines.

Question 2

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Question text

Which of the following will increase the present value of an annuity?

Select one:

The final payment diminishes.

The discount rate decreases.

The number of periods the annuity is received decreases.

The discount rate increases.

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The correct answer is: The discount rate decreases.

Question 3

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Which of the following will not increase a present value?

Select one:

Decrease the number of periods

None of these answers is correct

Increase the future value

Increase the interest rate

Feedback

The correct answer is: Increase the interest rate

Question 4

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Question text

Consider a series of uneven cash flows received over a period of time in the future. The present value of these cash flows will most likely be

Select one:

Larger than the sum of the cash flows.

Smaller than the sum of the cash flows.

Equal to the sum of the cash flows.

Either larger or smaller than the sum of the cash flows.

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The correct answer is: Smaller than the sum of the cash flows.

Question 5

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Question text

Assume a company’s total asset turnover is equal to 4.75. What is the correct interpretation of this ratio?

Select one:

Total assets are kept on average for 4.75 days.

Total assets are kept on average for 47.5 years.

Each dollar of total assets generates $4.75 of sales.

Total assets are kept on average for 4.75 years.

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The correct answer is: Each dollar of total assets generates $4.75 of sales.

Question 6

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This sub-area of finance looks at firm decisions in acquiring and utilizing cash received from investors or from retained earnings.

Select one:

treasury management

investments

None of these

financial management

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The correct answer is: financial management

Question 7

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Question text

present values affected by changes in interest rates?

Select one:

Present values are not affected by changes in interest rates.

The lower the interest rate, the larger the present value will be.

The higher the interest rate, the larger the present value will be.

One would need to know the future value in order to determine the impact.

Feedback

The correct answer is: The lower the interest rate, the larger the present value will be.

Question 8

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Question text

Which of the following statements is correct?

Select one:

Financial managers double-check the accountant's statements.

Financial managers are focused on what happened in the past.

Accountants are focused on what happened in the past.

Both accountants and financial managers use total quality management systems to standardize data.

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The correct answer is: Accountants are focused on what happened in the past.

Question 9

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The present value of annuity payments made far into the future is:

Select one:

worth very little today.

valued as worthless as their value is not determinable.

worth much more today.

valued as having no time value of money.

Feedback

The correct answer is: worth very little today.

Question 10

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Which type of ratio measures a firm's ability to pay off short-term obligations without relying on inventory sales?

Select one:

Current

Internal-growth

Cash

Quick or acid test

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The correct answer is: Quick or acid test

Question 11

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Common Equity consists of the following accounts

Select one:

Common stock only

Preferred stock, common stock, and retained earnings

Preferred stock and common stock

Common stock and retained earnings

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The correct answer is: Common stock and retained earnings

Question 12

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Which of the following is a use of cash?

Select one:

The firm sells some of its fixed assets.

The firm takes its depreciation expense.

The firm decreases its accrued wages and taxes.

The firm issues more long-term debt.

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The correct answer is: The firm decreases its accrued wages and taxes.

Question 13

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Assume that for year 2015 company A has a current ratio equal to 1.5, while company B has a current ratio equal to 2.5. Based on this information we would most likely conclude that

Select one:

Company A has a better liquidity position than company B.

Company B is more profitable than company A.

Company A is more profitable than company B.

Company B has a better liquidity position than company A.

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The correct answer is: Company B has a better liquidity position than company A.

Question 14

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These are cash inflows and outflows associated with buying and selling of fixed or other long-term assets.

Select one:

Cash flows from operations

Cash flows from financing activities

Cash flows from investing activities

Net change in cash and cash equivalents

Feedback

The correct answer is: Cash flows from investing activities

Question 15

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Question text

Compounding monthly versus annually causes the interest rate to be effectively __________ , and thus the future value

Select one:

Higher; is also higher.

Smaller; is higher.

Higher; is smaller.

Smaller; is also smaller.

Feedback

The correct answer is: Higher; is also higher.

Question 16

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Question text

Financial management involves decisions about which of the following?

Select one:

What type of capital should be raised

How to minimize taxation

All of these

Which projects to fund

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The correct answer is: All of these

Question 17

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This is a general term for securities like stocks, bonds, and other assets that represent ownership in a cash flow.

Select one:

financial markets

financial asset

real asset

investment

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The correct answer is: financial asset

Question 18

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Which of the below IS NOT included in the calculation of operating income?

Select one:

Depreciation expense

Cost of goods sold

Sales

Interest expense

Feedback

The correct answer is: Interest expense

Question 19

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Question text

To move a cash flow in time from period 4 to period 6 we would need to

Select one:

Divide the cash flow by a number greater than one.

Cut the cash flow in half.

Multiply the cash flow by a number greater than one.

Square the cash flow.

Feedback

The correct answer is: Multiply the cash flow by a number greater than one.

Question 20

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Question text

Firms with high PE ratios _________.

Select one:

usually have lower credit ratings

usually are expected to experience rapid increases in future dividends and/or earnings growth

usually have high debt ratios

usually are expected to experience a slower growth rate in sales

Feedback

The correct answer is: usually are expected to experience rapid increases in future dividends and/or earnings growth

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Trine | Moodle

FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 12, 2021, 2:59 AM
State	Finished
Completed on	Sunday, September 12, 2021, 3:23 AM
Time taken	24 mins 29 secs
Points	5.00/5.00
Grade	10.00 out of 10.00 (100%)

Question 1

Complete

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Question text

Question text

What is the present value of a $500 payment in one year when the discount rate is 5 percent?

Select one:

$525.00

$476.19

$500.00

$475.00

Feedback

The correct answer is: $476.19

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Trine | Moodle

FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 12, 2021, 3:44 AM
State	Finished
Completed on	Sunday, September 12, 2021, 3:58 AM
Time taken	13 mins 12 secs
Points	5.00/5.00
Grade	10.00 out of 10.00 (100%)

Question 1

Complete

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Question text

If you start making $115 monthly contributions today and continue them for six years, what is their present value if the compounding rate is 12 percent APR? What is the present value of this annuity?

Select one:

$5,941.12

$5,633.10

$5,882.30

$5,512.90

Feedback

The correct answer is: $5,941.12

Question 2

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Question text

What is the present value, when interest rates are 6.5 percent, of a $100 payment made every year forever?

Select one:

$6.50

$1,538.46

$650.00

$1,000.00

Feedback

The correct answer is: $1,538.46

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Trine | Moodle

FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 12, 2021, 1:17 AM
State	Finished
Completed on	Sunday, September 12, 2021, 1:37 AM
Time taken	20 mins 2 secs
Grade	9.00 out of 10.00 (90%)

Top of Form

Question 1

Complete

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Question text

How are future values affected by changes in interest rates?

Select one:

Future values are not affected by changes in interest rates.

The higher the interest rate, the larger the future value will be.

One would need to know the present value in order to determine the impact.

The lower the interest rate, the larger the future value will be.

Feedback

The correct answer is: The higher the interest rate, the larger the future value will be.

Question 2

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Question text

Time value of money concepts can be used by:

Select one:

individuals doing personal financial planning.

All of these are users of time value of money concepts.

investors calculating a return on an investment.

CFOs and CEOs to make business decisions.

Feedback

The correct answer is: All of these are users of time value of money concepts.

Question 3

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Question text

How are present values affected by changes in interest rates?

Select one:

Present values are not affected by changes in interest rates.

The higher the interest rate, the larger the present value will be.

One would need to know the future value in order to determine the impact.

The lower the interest rate, the larger the present value will be.

Feedback

The correct answer is: The lower the interest rate, the larger the present value will be.

Question 4

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All of the below are correct EXCEPT:

Select one:

Each individual has his/her own rate of time preference.

$1 today is more valuable than $1 tomorrow

Needing to assign correct values to future cash flows of companies is why we need to be able to adjust for the rate of time preference.

People that value future consumption less than most of the other people will most likely end up being net lenders in the market.

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The correct answer is: People that value future consumption less than most of the other people will most likely end up being net lenders in the market.

Question 5

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Which of the following is NOT true when developing a time line?

Select one:

Cash inflows are designated with a positive number.

Cash outflows are designated with a positive number.

The time line shows the magnitude of cash flows at different points in time.

The cost is known as the interest rate.

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The correct answer is: Cash outflows are designated with a positive number.

Question 6

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The process of figuring out how much an amount that you expect to receive in the future is worth today is called:

Select one:

multiplying.

computing.

discounting.

compounding.

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The correct answer is: discounting.

Question 7

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Which of the following will not increase a present value?

Select one:

None of these answers is correct

Decrease the number of periods

Increase the future value

Increase the interest rate

Feedback

The correct answer is: Increase the interest rate

Question 8

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Question text

Assume we want to move a cash flow from period 7 to period 5. The calculation of the new amount of the cash flow would include

Select one:

Adding the interest rate to number one and raising the result to the power of 2.

Raising the interest rate to the power of 2.

Raising the interest rate to the power of 5.

Adding the interest rate to number one and raising the result to the power of 5.

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The correct answer is: Adding the interest rate to number one and raising the result to the power of 2.

Question 9

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Question text

Which of the following statements is incorrect with respect to time lines?

Select one:

A helpful tool for organizing our analysis is the time line.

Cash flows we receive are called inflows and denoted with a positive number.

Interest rates are not included on our time lines.

Cash flows we pay out are called outflows and designated with a negative number.

Feedback

The correct answer is: Interest rates are not included on our time lines.

Question 10

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Question text

Select one:

Your friend is getting a compound interest while you are getting a simple interest.

One of the two banks made a mistake in calculating the interest payment.

Your friend earned a higher rate of interest than you.

Your friend earned a lower rate of interest than you.

Feedback

The correct answer is: Your friend earned a lower rate of interest than you.

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Trine | Moodle

FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 12, 2021, 2:59 AM
State	Finished
Completed on	Sunday, September 12, 2021, 3:23 AM
Time taken	24 mins 29 secs
Points	5.00/5.00
Grade	10.00 out of 10.00 (100%)

Question 1

Complete

1.00 points out of 1.00

Flag question

What is the present value of a $500 payment in one year when the discount rate is 5 percent?

Select one:

$525.00

$476.19

$500.00

$475.00

Feedback

The correct answer is: $476.19

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Trine | Moodle

FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 12, 2021, 3:28 AM
State	Finished
Completed on	Sunday, September 12, 2021, 3:42 AM
Time taken	14 mins
Grade	9.00 out of 10.00 (90%)

Top of Form

Question 1

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The effective annual rate

Select one:

Can never be equal to the annual periodic rate.

Will never be greater than the annual periodic rate.

Will always be smaller than the annual periodic rate.

Will always be at least as large as the annual periodic rate.

Feedback

The correct answer is: Will always be at least as large as the annual periodic rate.

Question 2

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You are deciding among several different bank accounts. Which of the following will generate the highest effective annual rate (EAR)?

Select one:

A 6 percent rate with quarterly compounding

A 6 percent rate with monthly compounding

A 6 percent rate with annual compounding

A 5.98 percent rate with annual compounding

Feedback

The correct answer is: A 6 percent rate with monthly compounding

Question 3

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The simple form of an annualized interest rate is called the annual percentage rate (APR). The effective annual rate (EAR) is a:

Select one:

less accurate measure of the interest rate paid for monthly compounding.

more accurate measure of the interest rate paid for monthly compounding.

measure that only applies to mortgages.

concept that is only used because the law requires it, and is of no use to a borrower.

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The correct answer is: more accurate measure of the interest rate paid for monthly compounding.

Question 4

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When computing the rate of return from selling an investment, the number of years between the present and future cash flows is an important factor in determining:

Select one:

the annual payments required.

the annual rate earned.

whether the present value or the future value is a cash inflow.

whether the present value or the future value is a cash outflow.

Feedback

The correct answer is: the annual rate earned.

Question 5

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When you get your credit card bill, if you make a payment larger than the minimum payment:

Select one:

you will not affect the payoff time.

you will reduce the payoff time.

you are wasting your current consumption and making TVM not work for you.

you will increase the payoff time.

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The correct answer is: you will reduce the payoff time.

Question 6

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The present value of annuity payments made far into the future is:

Select one:

valued as having no time value of money.

worth very little today.

valued as worthless as their value is not determinable.

worth much more today.

Feedback

The correct answer is: worth very little today.

Question 7

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Assume the present value of a series of cash flows is equal to $100,000. Which of the below would be a possible interpretation of this result?

Select one:

$100,000 is the sum of the cash flows adjusted for inflation.

The sum of the cash flows is equal to $100,000.

If you keep depositing the cash flows in a bank they will grow to $100,000 over time.

$100,000 is the maximum we should be willing to pay for this series of cash flows.

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The correct answer is: $100,000 is the maximum we should be willing to pay for this series of cash flows.

Question 8

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We should expect all of these to be true EXCEPT:

Select one:

Larger present value with a smaller number of time periods

Future value larger than present value

Higher future value with a lower rate of interest

APR equal to or smaller than EAR

Feedback

The correct answer is: Higher future value with a lower rate of interest

Question 9

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Which of the following will increase the future value of an annuity?

Select one:

The interest rate increases.

The number of periods increases.

The amount of the annuity increases.

All of these will increase the future value of an annuity.

Feedback

The correct answer is: All of these will increase the future value of an annuity.

Question 10

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Question text

Consider a series of uneven cash flows received over a period of time in the future. The present value of these cash flows will most likely be

Select one:

Smaller than the sum of the cash flows.

Equal to the sum of the cash flows.

Either larger or smaller than the sum of the cash flows.

Larger than the sum of the cash flows.

Feedback

The correct answer is: Smaller than the sum of the cash flows.

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Trine | Moodle

FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 12, 2021, 4:34 AM
State	Finished
Completed on	Sunday, September 12, 2021, 4:47 AM
Time taken	13 mins 23 secs
Grade	7.00 out of 8.00 (88%)

Top of Form

Question 1

Correct

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Question

Select one:

Firm A: 9 times; Firm B: 0.11 times

Firm A: 19 times; Firm B: 1.11 times

Firm A: 19 times; Firm B: 0.11 times

Firm A: 9 times; Firm B: 1.11 times

Feedback

The correct answer is: Firm A: 9 times; Firm B: 0.11 times

Question 2

Correct

1.00 points out of 1.00

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Question text

What is the present value of a $500 payment in one year when the discount rate is 5 percent?

Select one:

$475.00

$476.19

$500.00

$525.00

Feedback

The correct answer is: $476.19

Question 3

Correct

1.00 points out of 1.00

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Select one:

There is not enough information to calculate 2013 taxes.

$815,000

$330,000

$245,000

Feedback

The correct answer is: $245,000

Question 4

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Select one:

LotsofDebt: 10 percent, 1.11 times, 0.1111 times, respectively; and LotsofEquity: 90 percent, 10 times, 9 times, respectively.

LotsofDebt: 10 percent, 10 times, 9 times, respectively; and LotsofEquity: 90 percent, 1.11 times, 0.1111 times, respectively.

LotsofDebt: 90 percent, 10 times, 9 times, respectively; and LotsofEquity: 10 percent, 1.11 times, 0.1111 times, respectively.

LotsofDebt: 90 percent, 1.11 times, 0.1111 times, respectively; and LotsofEquity: 10 percent, 10 times, 9 times, respectively.

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The correct answer is: LotsofDebt: 90 percent, 10 times, 9 times, respectively; and LotsofEquity: 10 percent, 1.11 times, 0.1111 times, respectively.

Question 5

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Question text

Select one:

Borrowing $200,000 at 9.67%

Borrowing $200,000 at 8.67%

Borrowing $200,000 at 10.67%

Borrowing $200,000 at 7.67%

Feedback

The correct answer is: Borrowing $200,000 at 10.67%

Question 6

Correct

1.00 points out of 1.00

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Question text

If you start making $115 monthly contributions today and continue them for six years, what is their present value if the compounding rate is 12 percent APR? What is the present value of this annuity?

Select one:

$5,941.12

$5,512.90

$5,633.10

$5,882.30

Feedback

The correct answer is: $5,941.12

Question 7

Correct

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Question text

Select one:

$25 million

$15 million

$20 million

$35 million

Feedback

The correct answer is: $25 million

Question 8

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Question text

What is the present value of a $500 deposit in year 1 and another $100 deposit at the end of year 4 if interest rates are 5 percent?

Select one:

$493.62

$480.00

$582.27

$558.46

Feedback

The correct answer is: $558.46

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Trine | Moodle

FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 12, 2021, 5:52 AM
State	Finished
Completed on	Sunday, September 12, 2021, 6:00 AM
Time taken	7 mins 30 secs
Grade	10.00 out of 10.00 (100%)

Top of Form

Question 1

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Question text

To move a cash flow in time from period 4 to period 6 we would need to

Select one:

Square the cash flow.

Cut the cash flow in half.

Divide the cash flow by a number greater than one.

Multiply the cash flow by a number greater than one.

Feedback

The correct answer is: Multiply the cash flow by a number greater than one.

Question 2

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Question text

Time value of money concepts can be used by:

Select one:

All of these are users of time value of money concepts.

CFOs and CEOs to make business decisions.

investors calculating a return on an investment.

individuals doing personal financial planning.

Feedback

The correct answer is: All of these are users of time value of money concepts.

Question 3

Complete

1.00 points out of 1.00

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Question text

How are present values affected by changes in interest rates?

Select one:

Present values are not affected by changes in interest rates.

The higher the interest rate, the larger the present value will be.

One would need to know the future value in order to determine the impact.

The lower the interest rate, the larger the present value will be.

Feedback

The correct answer is: The lower the interest rate, the larger the present value will be.

Question 4

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Question text

A dollar paid (or received) in the future is

Select one:

not worth as much as a dollar paid (or received) today.

worth as much as a dollar paid (or received) today.

worth more than a dollar paid (or received) today.

not comparable to a dollar paid (or received) today.

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The correct answer is: not worth as much as a dollar paid (or received) today.

Question 5

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Tracy invested $1,000 five years ago and earns 4 percent interest on her investment. By leaving her interest earnings in her account, she increases the amount of interest she earns each year. The way she is handling her interest income is referred to as which one of the following?

Select one:

aggregation

accumulation

compounding

simplifying

Feedback

The correct answer is: compounding

Question 6

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Question text

Which of the following statements is incorrect with respect to time lines?

Select one:

Interest rates are not included on our time lines.

Cash flows we pay out are called outflows and designated with a negative number.

Cash flows we receive are called inflows and denoted with a positive number.

A helpful tool for organizing our analysis is the time line.

Feedback

The correct answer is: Interest rates are not included on our time lines.

Question 7

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Question text

Sue and Neal are twins. Sue invests $5,000 at 7 percent when she is 25 years old. Neal invests $5,000 at 7 percent when he is 30 years old. Both Sue and Neal retire at age 60. Which one of the following statements is correct assuming that neither Sue nor Neal has withdrawn any money from their accounts?

Select one:

If both Sue and Neal wait to age 70 to retire, then they will have equal amounts of savings.

Neal will earn more interest on interest than Sue.

Sue will have more money than Neal as long as they retire at the same time.

Sue will have less money when she retires than Neal.

Feedback

The correct answer is: Sue will have more money than Neal as long as they retire at the same time.

Question 8

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Which of the following is NOT true when developing a time line?

Select one:

Cash outflows are designated with a positive number.

Cash inflows are designated with a positive number.

The time line shows the magnitude of cash flows at different points in time.

The cost is known as the interest rate.

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The correct answer is: Cash outflows are designated with a positive number.

Question 9

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All of the below are correct EXCEPT:

Select one:

People that value future consumption less than most of the other people will most likely end up being net lenders in the market.

Each individual has his/her own rate of time preference.

Needing to assign correct values to future cash flows of companies is why we need to be able to adjust for the rate of time preference.

$1 today is more valuable than $1 tomorrow

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The correct answer is: People that value future consumption less than most of the other people will most likely end up being net lenders in the market.

Question 10

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Compounding interest means the following:

Select one:

The interest rate is determined by the borrower, not the lender.

Two different interest rates are used for the same loan.

Dividing the interest into components.

Interest is earned not only on the initial balance, but also on previously received interest payments.

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The correct answer is: Interest is earned not only on the initial balance, but also on previously received interest payments.

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FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 12, 2021, 6:05 AM
State	Finished
Completed on	Sunday, September 12, 2021, 6:11 AM
Time taken	6 mins 11 secs
Grade	10.00 out of 10.00 (100%)

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Question 1

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Compounding monthly versus annually causes the interest rate to be effectively __________ , and thus the future value

Select one:

Higher; is also higher.

Smaller; is also smaller.

Smaller; is higher.

Higher; is smaller.

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The correct answer is: Higher; is also higher.

Question 2

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When moving from the left to the right of a time line, we are using:

Select one:

compound interest to calculate future values.

only payments to calculate future values.

simple interest to calculate future values.

discounted cash flows to calculate present values.

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The correct answer is: compound interest to calculate future values.

Question 3

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Assume the present value of a series of cash flows is equal to $100,000. Which of the below would be a possible interpretation of this result?

Select one:

The sum of the cash flows is equal to $100,000.

$100,000 is the sum of the cash flows adjusted for inflation.

$100,000 is the maximum we should be willing to pay for this series of cash flows.

If you keep depositing the cash flows in a bank they will grow to $100,000 over time.

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The correct answer is: $100,000 is the maximum we should be willing to pay for this series of cash flows.

Question 4

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You are deciding among several different bank accounts. Which of the following will generate the highest effective annual rate (EAR)?

Select one:

A 5.98 percent rate with annual compounding

A 6 percent rate with monthly compounding

A 6 percent rate with quarterly compounding

A 6 percent rate with annual compounding

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The correct answer is: A 6 percent rate with monthly compounding

Question 5

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Which of the following will increase the future value of an annuity?

Select one:

The interest rate increases.

The number of periods increases.

All of these will increase the future value of an annuity.

The amount of the annuity increases.

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The correct answer is: All of these will increase the future value of an annuity.

Question 6

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When you get your credit card bill, if you make a payment larger than the minimum payment:

Select one:

you will increase the payoff time.

you will reduce the payoff time.

you will not affect the payoff time.

you are wasting your current consumption and making TVM not work for you.

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The correct answer is: you will reduce the payoff time.

Question 7

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The effective annual rate

Select one:

Will always be at least as large as the annual periodic rate.

Will always be smaller than the annual periodic rate.

Will never be greater than the annual periodic rate.

Can never be equal to the annual periodic rate.

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The correct answer is: Will always be at least as large as the annual periodic rate.

Question 8

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When saving for future expenditures, we can add the ________ of contributions over time to see what the total will be worth at some point in time.

Select one:

payment

present value

future value

time value to money

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The correct answer is: future value

Question 9

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A perpetuity, a special form of annuity, pays cash flows:

Select one:

continuously for one year.

that do not have time value of money implications.

periodically forever.

and is not effected by interest rate changes.

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The correct answer is: periodically forever.

Question 10

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Consider a series of uneven cash flows received over a period of time in the future. The present value of these cash flows will most likely be

Select one:

Smaller than the sum of the cash flows.

Either larger or smaller than the sum of the cash flows.

Larger than the sum of the cash flows.

Equal to the sum of the cash flows.

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The correct answer is: Smaller than the sum of the cash flows.

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FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 12, 2021, 6:11 AM
State	Finished
Completed on	Sunday, September 12, 2021, 6:23 AM
Time taken	11 mins 22 secs
Points	4.00/5.00
Grade	8.00 out of 10.00 (80%)

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Question 1

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What is the future value of an $800 annuity payment over 15 years if the interest rates are 6 percent?

Select one:

$12,720.00

$7,002.99

$18,620.78

$1,917.25

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The correct answer is: $18,620.78

Question 2

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Assume you deposit $400 in an account, and that in 7 years you have $700. Assuming monthly compounding frequency what is the quoted annual interest rate associated with the account?

Select one:

8.32%

8.02%

10.71%

42.86%

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The correct answer is: 8.02%

Question 3

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You wish to buy a $30,000 car. The dealer offers you a 5-year loan with a 9 percent APR. What are the monthly payments? What is the monthly payment if you paid interest only?

Select one:

$701.23; $291.23

$659.41; $291.23

$712.03; $271.19

$622.75; $225.00

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The correct answer is: $622.75; $225.00

Question 4

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You wish to buy a $20,000 car. The dealer offers you a 5-year loan with an 8 percent APR. What are the monthly payments?

Select one:

$4,080.35

$272.19

$333.33

$405.53

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The correct answer is: $405.53

Question 5

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What is the present value of a $300 annuity payment over 5 years if interest rates are 8 percent?

Select one:

$440.80

$1,197.81

$204.17

$1,938.96

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The correct answer is: $1,197.81

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FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 12, 2021, 6:24 AM
State	Finished
Completed on	Sunday, September 12, 2021, 6:28 AM
Time taken	3 mins 50 secs
Points	5.00/5.00
Grade	10.00 out of 10.00 (100%)

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Question 1

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If you start making $115 monthly contributions today and continue them for six years, what is their present value if the compounding rate is 12 percent APR? What is the present value of this annuity?

Select one:

$5,633.10

$5,882.30

$5,941.12

$5,512.90

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The correct answer is: $5,941.12

Question 2

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What is the present value, when interest rates are 6.5 percent, of a $100 payment made every year forever?

Select one:

$1,000.00

$6.50

$1,538.46

$650.00

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The correct answer is: $1,538.46

Question 3

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Monica has decided that she wants to build enough retirement wealth that, if invested at 7 percent per year, will provide her with $3,000 monthly income for 30 years. To date, she has saved nothing, but she still has 20 years until she retires. How much money does she need to contribute per month to reach her goal?

Select one:

$671.78

$7,025.77

$3,000.00

$865.62

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The correct answer is: $865.62

Question 4

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Compute the future value in year 10 of a $1,000 deposit in year 1 and another $1,500 deposit at the end of year 4 using an 8 percent interest rate.

Select one:

$3,120.73

$4,500.00

$5,397.31

$4,379.31

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The correct answer is: $4,379.31

Question 5

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What is the interest rate of a 4-year, annual $1,000 annuity with present value of $3,500?

Select one:

5.56 percent

9.70 percent

3.85 percent

8.84 percent

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The correct answer is: 5.56 percent

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FIN--5063-OL1--OL-FA-2021 - Corporate Finance

Started on	Sunday, September 12, 2021, 6:28 AM
State	Finished
Completed on	Sunday, September 12, 2021, 6:49 AM
Time taken	20 mins 29 secs
Grade	19.00 out of 20.00 (95%)

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Question 1

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We call the process of earning interest on both the original deposit and on the earlier interest payments:

Select one:

simple interest.

future value.

discounting.

compounding.

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The correct answer is: compounding.

Question 2

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Which of the following is an example of aligning managers' personal interests with those of the owners?

Select one:

Allow the managers to have as many perks as they request.

Pay the managers high salaries.

Offer the managers shares of common stock of the firm.

Trust the managers' actions as they will always act in the owners' best interest.

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The correct answer is: Offer the managers shares of common stock of the firm.

Question 3

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Items on the balance sheet are usually listed

Select one:

In the order of liquidity.

Arranged from the largest dollar value to the lowest dollar value.

In alphabetical order.

With revenues on the top and net income at the bottom.

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The correct answer is: In the order of liquidity.

Question 4

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Which of the following statements is correct?

Select one:

A low average payment period and a high accounts payable turnover are a sign of good management.

A high average payment period and a high accounts payable turnover are a sign of good management.

A low average payment period and a low accounts payable turnover are a sign of good management.

A high average payment period and a low accounts payable turnover are a sign of good management.

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The correct answer is: A high average payment period and a low accounts payable turnover are a sign of good management.

Question 5

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All of the following are advantages to organizing as a corporation except ____.

Select one:

Limited liability

Double taxation

Easy to transfer ownership

Easy access to capital

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The correct answer is: Double taxation

Question 6

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Assume that company X had accounts receivable turnover equal to 12 in 2014, and equal to 14 in 2015. Further assume that the relevant industry average for this ratio is 20. Based on this information we would most likely conclude that company X

Select one:

Should be more careful with awarding credit to its customers, or should improve its collecting of accounts receivable.

Should cut the cost of its materials in production in order to improve its profitability.

Should increase its gross profit margin by raising the price of the product it sells.

Should repay some of its debt in order to lower its interest expense.

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The correct answer is: Should be more careful with awarding credit to its customers, or should improve its collecting of accounts receivable.

Question 7

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All of the below are correct EXCEPT:

Select one:

$1 today is more valuable than $1 tomorrow

Needing to assign correct values to future cash flows of companies is why we need to be able to adjust for the rate of time preference.

Each individual has his/her own rate of time preference.

People that value future consumption less than most of the other people will most likely end up being net lenders in the market.

Feedback

The correct answer is: People that value future consumption less than most of the other people will most likely end up being net lenders in the market.

Question 8

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Assume $500 to be received in year 3 has a present value equal to $400. If we keep the same interest rate assumption, but instead assume that the $500 is received in year 2 we know that the resulting present value must be

Select one:

Equal to $400.

Smaller than $400.

Larger than $400.

Larger than $500.

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The correct answer is: Larger than $400.

Question 9

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The portion of a company's profits that are kept by the company rather than distributed to the stockholders as cash dividends is referred to as _______________.

Select one:

Restricted earnings

Retained earnings

Venture capital

Institutional investment

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The correct answer is: Retained earnings

Question 10

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GW Inc. had $800 million in retained earnings at the beginning of the year. During the year, the firm paid $0.75 per share dividend and generated $1.92 earnings per share. The firm has 100 million shares outstanding. At the end of year, what was the level of retained earnings for GW?

Select one:

$807 million

$917 million

$882 million

$725 million

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The correct answer is: $917 million

Question 11

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Which of the following refer to ratios that measure the relationship between a firm's liquid (or current) assets and its current liabilities?

Select one:

Internal growth

Liquidity

Market value

Cross-section

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The correct answer is: Liquidity

Question 12

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When you get your credit card bill, if you make a payment larger than the minimum payment:

Select one:

you will reduce the payoff time.

you will not affect the payoff time.

you will increase the payoff time.

you are wasting your current consumption and making TVM not work for you.

Feedback

The correct answer is: you will reduce the payoff time.

Question 13

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Which of the following statements is correct?

Select one:

It is relatively easy for sole proprietorships to raise money.

Sole proprietorships are difficult to start.

Profits from the sole proprietorship are subject to double taxation.

If the sole proprietorship gets sued, the owner is liable.

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The correct answer is: If the sole proprietorship gets sued, the owner is liable.

Question 14

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Select one:

simplifying

aggregation

accumulation

compounding

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The correct answer is: compounding

Question 15

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Financial management involves decisions about which of the following?

Select one:

All of these

How to minimize taxation

What type of capital should be raised

Which projects to fund

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The correct answer is: All of these

Question 16

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Compounding monthly versus annually causes the interest rate to be effectively __________ , and thus the future value

Select one:

Higher; is smaller.

Smaller; is also smaller.

Smaller; is higher.

Higher; is also higher.

Feedback

The correct answer is: Higher; is also higher.

Question 17

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The difference between ROE and ROA is that

Select one:

ROE takes into account depreciation expense.

ROA takes into account depreciation expense.

ROE takes into account the impact of financial leverage.

ROA takes into account the impact of financial leverage.

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The correct answer is: ROE takes into account the impact of financial leverage.

Question 18

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An equity-financed firm will

Select one:

pay less in income taxes than an otherwise identical debt-financed firm.

pay more in income taxes than an otherwise identical debt-financed firm.

pay more in interest payments than an otherwise identical debt-financed firm.

pay the same in income taxes as an otherwise identical debt-finance firm.

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The correct answer is: pay more in income taxes than an otherwise identical debt-financed firm.

Question 19

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Which of the following will increase the present value of an annuity?

Select one:

The discount rate decreases.

The discount rate increases.

The final payment diminishes.

The number of periods the annuity is received decreases.

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The correct answer is: The discount rate decreases.

Question 20

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When computing the rate of return from selling an investment, the number of years between the present and future cash flows is an important factor in determining:

Select one:

the annual payments required.

whether the present value or the future value is a cash outflow.

whether the present value or the future value is a cash inflow.

the annual rate earned.

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The correct answer is: the annual rate earned.

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