310 exam 1 - View Attempt 1 of 1 Title: EXAM 1 Started:...

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Unformatted text preview: View Attempt 1 of 1 Title: EXAM 1 Started: February 19, 2010 9:28 PM Submitted: February 19, 2010 10:24 PM Time spent: 00:56:10 Total score: 45/50 = 90% Total score adjusted by 0.0 Maximum possible score: 50 1. The use of debt in the firm's capital structure will increase ROE if the firm: Stud ent Resp onse Valu e Corr ect Ans wer Feed back A. has more debt than equit y. 0% B. pays less in taxes than in inter est. 2. Which of the following is correct? Stud ent Resp onse Valu e Corr ect Ans wer Feed back A. "Mar ket value adde d" meas ures the differ ence betw een the mark et value of the firm's equit y and its book value 3. What is the market price of a share of stock for a firm with 100,000 shares outstanding, a book value of equity of $3,000,000, and a market/book ratio of 3.0? Stud ent Resp onse Valu e Corr ect Ans wer Feed back A. $8.5 7 B. $30. 00 C. $90. 00 100 % 4. Net Corp. has an ROE of 30% and would like to see earnings grow at a 18% annual rate. What percent of earnings can they afford to pay out as dividends? Stud ent Resp onse Valu e Corr ect Ans wer Feed back A. 13.3 3% B. 25.0 0% C. 40.0 0% 100 % 5. A firm reports a net profit margin of 10.0% on sales of $3 million when ignoring the effects of financing. If taxes are $200,000, how much is EBIT? Stud ent Resp onse Valu e Corr ect Ans wer Feed back A. $100 ,000 B. $300 ,000 C. $500 ,000 100 % 6. How would you interpret an inventory turnover ratio of 10.7? Stud ent Resp onse Valu e Corr ect Ans wer Feed back A. It takes 50 days on aver age to colle ct recei vable s. B. Inven tory is 7. The Net Income figure on an income statement is calculated before deducting: Stud ent Resp onse Valu e Corr ect Ans wer Feed back A. inter est expe nse. B. depr eciati on expe nse. C. 8. Calculate the EBIT for a firm with $4 million total revenues, $3.5 million cost of goods sold, $500,000 depreciation expense, and $120,000 interest expense. Stud ent Resp onse Valu e Corr ect Ans wer Feed back A. $500, 000 B. $380, 000 C. $0 9. Which of the following expense categories is subtracted from total revenues to arrive at a firm's EBIT? Stud ent Resp onse Valu e Corr ect Ans wer Feed back A. Cash divid ends B. Depr eciati on expe nse 100 % C. 10. Perhaps the best method for estimating the market value of shareholders' equity is to: Stud ent Resp onse Valu e Corr ect Ans wer Feed back A. read from the firm's balan ce sheet ....
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310 exam 1 - View Attempt 1 of 1 Title: EXAM 1 Started:...

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