Exam 1 answers

Exam 1 answers - FINC 330 Business Finance Exam Chapters...

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FINC 330 Business Finance Exam Chapters 1-3, 14, 15 Multiple Choice – 2 points each 1) Under which of the following legal forms of organization, is ownership readily transferable? A) limited partnerships B) partnerships C) sole proprietorships D) corporations 2) Agency costs include all of the following EXCEPT A) cost of goods sold. B) monitoring expenditures. C) bonding and structuring expenses. D) opportunity costs. 3) By definition, the money market involves the buying and selling of A) stocks and bonds. B) flows of funds. C) funds that mature in more than one year. D) short-term funds. 4) In a corporation, the members of the board of directors are elected by the A) creditors. B) employees. C) chief executive officer. D) stockholders. 5) The primary goal of the financial manager is A) minimizing risk. B) maximizing profit. C) minimizing return. D) maximizing wealth. 6) Congress allows corporations to exclude from taxes 70 to 100 percent of dividends received from other corporations. Congress did this to A) avoid double taxation on dividends. B) encourage corporations to invest in each other. C) avoid triple taxation on dividends. D) lower the cost of equity financing for corporations. 7) Operating profits are defined as A) sales revenue minus cost of goods sold. B) gross profits minus operating expenses. C) sales revenue minus depreciation expense. D) earnings before depreciation and taxes.
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8) Candy Corporation has pretax profits of $1.2 million, an average tax rate of 34 percent, and it pays preferred dividends of $50,000. There are 100,000 shares outstanding and no interest expenses. What is Candy Corporation's earnings per share? A) $7.59 B) $7.42 C) $3.91 D) $4.52 FIGURE 2.1 Balance Sheet Cole Eagan Enterprises December 31, 2008 ___________________________________________________________________ Cash $4,500 Accounts Payable $10,000 Accounts Receivable Notes Payable Inventories Accruals 1,000 Total Current Assets Total Current Liab. Net Fixed Assets Long-Term Debt Total Assets Stockholders' Equity Information (2008 values) 1. Sales totaled $110,000 2. The gross profit margin was 25 percent. 3. Inventory turnover was 3.0. 4. There are 360 days in the year. 5. The average collection period was 65 days. 6. The current ratio was 2.40. 7. The total asset turnover was 1.13. 8. The debt ratio was 53.8 percent. 9) Total liabilities and stockholders’ equity for CEE in 2008 were __________. (See Figure 2.1.) A) $45,895 B) $97,345 C) $58,603 D) $124,300 10) A firm with an operating profit margin which meets industry standard and a gross profit margin which is below industry standard must have excessive A) principal payments. B) general and administrative expenses.
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This note was uploaded on 07/18/2011 for the course FINANCE 330 taught by Professor Nichols during the Summer '11 term at Maryland.

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Exam 1 answers - FINC 330 Business Finance Exam Chapters...

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