Test Bank for Corporate Finance 3rd Edition Megginson, Smart, Graham complete A+ graded.
3 views 0 purchase
Course
DSFS SDF (DSFSSDF)
Institution
University Of California, Davis
Test Bank for Corporate Finance 3rd Edition Megginson, Smart, Graham
1. A company's balance sheet shows the value of assets, liabilities, and stockholders' equity:
a. at the end of the fiscal year
b. for any given period of time
c. at a specific point in time
d. over an annual period
e....
test bank for corporate finance 3rd edition meggin
a companys balance sheet shows the value of asse
on a balance sheet retained earnings are not uns
Written for
University Of California, Davis
DSFS SDF (DSFSSDF)
All documents for this subject (9)
Seller
Follow
docguru
Reviews received
Content preview
Test Bank for Corporate Finance 3rd Edition Megginson, Smart,
Graham
1. A company's balance sheet shows the value of assets, liabilities, and stockholders' equity:
a. at the end of the fiscal year
b. for any given period of time
c. at a specific point in time
d. over an annual period
e. at the end of the calendar year
ANS: C PTS: 1 REF: 2.1 OBJ: TYPE: fact retention
2. On a balance sheet, retained earnings are not "unspent cash" because:
a. they have been paid out to common stockholders
b. they have an arbitrarily assigned value
c. they are always changing
d. they have been used to finance the firm's assets
e. they are an estimate of future inflows
ANS: D PTS: 1 REF: 2.1 OBJ: TYPE: fact retention
3. For both managers and external financial analysts, is the single most important
accounting number found on the income statement.
a. net income (net profit after tax)
b. earnings before interest and taxes (EBIT)
c. earnings available for common stockholders
d. operating profit
e. gross margin
ANS: A PTS: 1 REF: 2.1 OBJ: TYPE: fact retention
4. Earnings per share (EPS) is calculated by:
a. dividing pretax income by the number of shares of common stock outstanding
b. dividing the dividends paid by the number of shares of common stock outstanding
c. dividing earnings available for common stockholders by the number of shares of
common stock outstanding
d. dividing net profits after tax by the total number of preferred and common stock
shares outstanding
e. none of the above
ANS: C PTS: 1 REF: 2.1 OBJ: TYPE: fact retention
5. Pennywise, Inc. had a great year. Sales reached an all-time high of $25 million, with a gross margin of
$7.5 million. Depreciation was recorded at $800000. Earnings before interest and taxes were $3
million, interest was $1.5 million, and total taxes were $700000. The firm's operating cash flow (OCF)
was:
a. $3400000
b. $950000
c. $3100000
d. $2150000
e. $7100000
, ANS: C
OCF=EBIT- taxes + depreciation
= 3 M – 0.7 M + 0.8 M =
$3100000
PTS: 1 REF: 2.2 OBJ: TYPE: application of concepts
6. In May, GoGreen, Inc. increased its inventory of home composting kits, expecting sales to spike
with warmer weather. This decision resulted in for the firm.
a. a decrease in depreciation expense
b. an increase in depreciation expense
c. an inflow of cash
d. an outflow of cash
e. a decrease in earnings
ANS: D PTS: 1 REF: 2.2
OBJ: TYPE: application of concepts
7. While examining her firm's Statement of Cash Flows, Amy discovered an unusually large increase in
accounts receivable. This might occur if:
a. the firm was holding more inventory
b. the firm had softened its credit requirements
c. sales had increased significantly
d. a & b
e. b & c
ANS: E PTS: 1 REF: 2.2
OBJ: TYPE: application of concepts
8. Net working capital:
a. is a measure of a firm's overall liquidity
b. is defined as total assets minus current liabilities
c. reflects decreasing firm solvency as it increases
d. all of the above
e. none of the above
ANS: A PTS: 1 REF: 2.2 OBJ: TYPE: fact retention
9. When evaluating financial ratios, analysts typically examine a firm's ratio values:
a. compared to firms in other industries
b. compared to the firm's previous years' ratios
c. compared to regional averages
d. compared to firms with similar net profit margins
e. all of the above
ANS: B PTS: 1 REF: 2.3 OBJ: TYPE: fact retention
10. Why is the quick ratio a more appropriate measure of liquidity than the current ratio for a
large- airplane manufacturer?
a. It recognizes the contribution of all assets so that analysts can see how "quickly" a firm
can satisfy its short-term obligations.
b. It recognizes that parts can be quickly converted to cash.
c. It provides a better measure of overall liquidity when a firm has highly liquid inventory.
d. It is not more appropriate. The current ratio would provide better information in
this situation.
, e. It excludes inventory from the numerator of the ratio because it is difficult to
convert inventory to cash and most sales are made on a credit basis.
ANS: E PTS: 1 REF: 2.3
OBJ: TYPE: application of concepts
11. ratios would provide the best information regarding total return to common stockholders.
a. Profitability
b. Activity
c. Liquidity
d. Market
e. Debt
ANS: A PTS: 1 REF: 2.3 OBJ: TYPE: fact retention
12. Jane's Foods, Inc., a retail grocery chain, has an inventory turnover ratio of 18.7. The industry
average is 16.8. The difference in these ratios shows that Jane's Foods, Inc.:
a. carries larger inventories than the industry average.
b. has lower sales than the average firm in the industry.
c. sells its goods at a slower rate than the industry average.
d. sells its goods more quickly than the industry average.
e. invests more in inventory per dollar of sales than the industry average.
ANS: D PTS: 1 REF: 2.3
OBJ: TYPE: application of concepts
13. The one fixed asset that is not depreciated is .
a. cash
b. inventories
c. plant
d. land
e. equipment
ANS: D PTS: 1 REF: 2.1 OBJ: TYPE: fact retention
14. A expresses all income statement entries as a percentage of sales.
a. ratio income statement
b. statement of retained earnings
c. common-size income statement
d. common-size balance sheet
e. cash flow analysis
ANS: C PTS: 1 REF: 2.1 OBJ: TYPE: fact retention
NOT: Common-size income statements are mentioned only in a footnote.
15. Noncash charges, such as , are expenses that appear on the income statement but do
not involve an actual outlay of cash.
a. investment flows, operating flows, financing flows
b. NOPAT
c. free cash flows
d. depreciation, amortization, and depletion allowance
e. All of the above
ANS: D PTS: 1 REF: 2.2 OBJ: TYPE: fact retention
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller docguru. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $13.99. You're not tied to anything after your purchase.
