Midterm%20I%20-%20Sample

# Midterm I Sa - BUAD 306 FALL 2008 Business Finance Midterm I Sample INSTRUCTIONS You have one hour and fifty minutes to complete this exam There

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1. A conflict of interest between the stockholders and company management is called: A. corporate activism. B. the agency problem. C. stockholders' liability. D. corporate breakdown. E. legal liability. 2. Which of the following are advantages of the corporate form of business ownership? I. limited liability for firm debt II. double taxation III. ability to raise capital IV. unlimited firm life A. I and II only B. II, III, and IV only C. III and IV only D. I, III, and IV only E. I, II, and III only 3. A firm has \$680 in inventory, \$2,320 in fixed assets, \$280 in accounts receivables, \$490 in accounts payable, and \$130 in cash. What is the amount of the current assets? A. \$410 B. \$2,920 C. \$3,410 D. \$960 E. \$1,090 4. Given the tax rates as shown, what is the average tax rate for a firm with taxable income of \$218,740? A. 39.00 percent B. 30.67 percent C. 28.43 percent D. 31.34 percent E. 25.38 percent
5. At the beginning of the year, long-term debt of a firm is \$68,700 and total debt is \$71,425. At the end of the year, long-term debt is \$92,460 and total debt is \$95,609. The interest paid is \$5,412. What is the amount of the cash flow to creditors? A. \$2,414 B. \$23,760 C. \$29,172 D. \$12,936 E. \$18,348 6. What is The Chocolate Candy Compa ny’s operating cash flow for 2007? A. \$823 B. \$367 C. \$541 D. \$226 E. \$682

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7. Ratios that measure a firm's financial leverage are known as _____ ratios. A. book value B. asset management C. short-term solvency D. profitability E. long-term solvency 8. The three parts of the Du Pont identity can be described as: A. financial leverage, operating efficiency, and profitability. B. the return on assets, the profit margin, and the equity multiplier.
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## This note was uploaded on 03/13/2009 for the course BUAD 306 taught by Professor Selvili during the Fall '07 term at USC.

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Midterm I Sa - BUAD 306 FALL 2008 Business Finance Midterm I Sample INSTRUCTIONS You have one hour and fifty minutes to complete this exam There

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