MGT 181 Exam 1 Answers

MGT 181 Exam 1 - MGT181 Enterprise Finance Test 1 Question 1(40 Points Just like there is a CSI Crime Scene Investigations on TV maybe there should

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
MGT181 Enterprise Finance – Test 1 January 28, 2008 Question 1 (40 Points): Just like there is a CSI: Crime Scene Investigations on TV, maybe there should be a new show called FSI: Financial Statements Investigations. In the pilot, you are brought in as a key FSI investigator to reconstruct last year’s Balance Sheet for Bad Luck Enterprises after a horrific fire. Sifting through the debris, you have been able to ascertain from charred remnants that the Total Assets of the firm at the end of last year was $1,500 and the Cost of Goods Sold for the year was $800. Bad Luck’s banker tells you that the company’s Long Term Debt was $300 and that he happens to know that the Debt/Equity ration was 0.50. Bad Luck’s Operations head proudly tells you she was working with an Inventory Turns figure of 4.0. A key vendor also offers that during a credit check he had run a Quick Ratio of 2.0 for Bad Luck. Bad Luck’s book keeper remembers a Cash Ratio of 12.5%. With these pieces of information you feel you can confidently fill in the following Balance Sheet: Bad Luck Enterprises Balance Sheet as of 12-31-07 Cash $ 25 Current Liabilities $ 200 A/R 375 Inventory 200 Long Term Debt 300 Fixed Assets 900 Equity 1000 Total Assets $1500 Total Liab & Owners’ Equity $1500 Question 2 (5 points): Agency costs refer to: a. the total dividends paid to stockholders over the lifetime of a firm. b. the costs that result from default and bankruptcy of a firm.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This test prep was uploaded on 04/19/2008 for the course MGT 181 taught by Professor Jordan during the Spring '08 term at UCSD.

Page1 / 6

MGT 181 Exam 1 - MGT181 Enterprise Finance Test 1 Question 1(40 Points Just like there is a CSI Crime Scene Investigations on TV maybe there should

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online