FINC 322 - Exam #1 Additional Practice Problems

FINC 322 - Exam #1 Additional Practice Problems - Practice...

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FINC 322 Financial Management 1 * If you find any wrong answer, please let me know. 1 1. A firm has a debt to equity ratio of 50%, debt of \$300,000, and net income of \$90,000. The return on equity is A) 60% B) 15% C) 30% D) not enough information Answer: B Difficulty: Hard Type: Application AACSB Analytic 2. A firm has a debt to asset ratio of 75%, \$240,000 in debt, and net income of \$48,000. Calculate return on equity. A) 60% B) 20% C) 26% D) not enough information Answer: A Difficulty: Hard Type: Application AACSB Analytic 3. For a given level of profitability as measured by profit margin, the firm's return on equity will A) increase as its debt-to-assets ratio decreases. B) decrease as its current ratio increases. C) increase as its debt-to assets ratio increases. D) decrease as its times-interest-earned ratio decreases. Answer: C Difficulty: Medium Type: Application AACSB Analytic 4. ABC Co. has an average collection period of 60 days. Total credit sales for the year were \$3,000,000. What is the balance in accounts receivable at year-end? A) \$50,000 B) \$100,000 C) \$500,000 D) \$80,000 Answer: C Difficulty: Medium Type: Application AACSB Analytic 5. A decreasing average collection period could be associated with (select the one best answer) A) increasing sales. B) decreasing sales. C)

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FINC 322 - Exam #1 Additional Practice Problems - Practice...

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