PracticeExam - AEM220 Introduction to Business Management...

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AEM220 Spring 2008 Introduction to Business Management Pedro David Pérez Prelim #2 PRACTICE PRELIM 1. Which of the following is not an example of a current asset? a. Accounts receivable b. Cash c. Inventory d. Retained earnings e. All of the above are examples of current assets 2. The acid-test / quick ratio’s purpose is to: a. measure how quickly a firm converts non-assets into assets b. measure the ability of the company to use liquid assets to extinguish current liabilities c. measure the ability to pay long-term debt d. measure the amount of assets a company has relative to its equity Are the following a) assets, b) liabilities, or c) equity? 3. Accounts receivable 4. Accrued taxes 5. Building depreciation 6. Notes payable 7. Retained earnings Match definition and concept 8. Financial Statements prepared for the use of individuals within the organization 9. Financial Statements prepared for the use of outside entities a. Financial accounting b. Managerial accounting 10. Which of the following deprecation methods would have a higher expense during the first period? a. Accelerated b. Straight-line 11. A companies current ratio is a better indicator of its ability to pay off short-term debt obligations than its acid-test ratio a. True b. False 12. One of the reasons why a firm would use both FIFO and LIFO is that even when prices of the inventory change, both measures yield almost the same values a. True b. False 13. One of the advantages of calculating the current ratio of a firm is that you know it should be 2:1 regardless of the industry the firm is operating in. a. True b. False
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Find below the summarized income statement and balance sheets of Nike for 2006. Answer the questions below (NOTE: try NOT to use a calculator) Income Statement (in millions) Nike, Inc. Balance Sheet (in millions) – Nike, Inc. Assets Liabilities and Owner’s Equity Net Sales 14954.9 Cash 2303.0 Short-term debt 255.3 Cost of Goods Sold 8367.9 Net receivables 2979.3 Current liabilities 2623.3 Gross Profit Inventories 2076.7 Long-term debt General expenses 4186.9 Total current assets Total liabilities 3584.1 Depreciation 290.9 Operating Income Total assets 9869.6 Total equity Due interest and taxes Total net income 1392.0 Shares outstanding (millions) 192.1 EPS Match the appropriate values with the missing values for the income statement of Nike 14. Gross profit 15. Operating income 16. Due interest and taxes a. 717.2 b. 1008.1 c. 2109.2 d. 2400.1 e. 6587 Match the appropriate values with the missing values for the balance sheet of Nike 17. Long-term liabilities 18. Current assets 19. Equity a. 7359 b. 960.8 c. 6285.5 d. 3774.9 e. 7423.5 Match the appropriate values for the liquidity ratios for Nike 20. Current ratio 21. Quick ratio 22. Debt to equity ratio a. 0.15 b. 0.19 c. 0.57 d. 2.01 e. 2.81
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Match the appropriate values for the profitability and activity ratios for Nike 23. Return on sales 24. Return on equity 25. Earnings per share 26. Inventory turnover a. 0.09
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PracticeExam - AEM220 Introduction to Business Management...

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