Finance Exam 1

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 Finance Exam 1
Finance problem section.

  
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  • 1. 
    BHS Inc. determines that sales will rise from $300,000 to $500,000 next year. Spontaneous assets are 70% of slaes and spontaneous liabilities are 30% of sales. BHS has a 10% profit margin and a 40% divident payout ratio. What is the level of requied new funds?
    • A. 

      20,000

    • B. 

      100,000

    • C. 

      50,000

    • D. 

      75,000


  • 2. 
    A firm has forecasted sales of $3,000 in April, $4,500 in May, and $6,500 in June. All sales are on credit. 30% is collected the month of sale and the remainder the following month. What will be the balance in accounts receivable at the beginning of July?
    • A. 

      $4,550

    • B. 

      $1,950

    • C. 

      $6,500

    • D. 

      $5,100


  • 3. 
    Agency problems are least likely to arise in which organiztional form?
    • A. 

      Corporation

    • B. 

      Subchapter S corporation

    • C. 

      Sole Proprietorship

    • D. 

      Limited Partnership


  • 4. 
    The Sarbanes-Oxley Act was passed in an effort to
    • A. 

      Protect small business form large corporations dominating the market.

    • B. 

      Ensure that partnerships divide profits among partners in a fair manner.

    • C. 

      Guarantee outside auditors can contorl corporate accounting practices.

    • D. 

      Contorl corrupt corporate behavior


  • 5. 
    Allen Lumber Company had earnings after taxes of $580,000 in the year 2006 with 400,000 share outstanding. On January 1, 2007, the firm issued 35,000 new shares. Because of the proceeds form these new shares and other operating improvements, 2007 earnings was 25 percent higher than 2006. Earnings per share for the year 2007 was
    • A. 

      $1.67

    • B. 

      $1.45

    • C. 

      $1.81

    • D. 

      None of the above


  • 6. 
    The Bubba Corp. had a net income before taxes of $200,000 and sales of $2,000,000. If it is in the 50% tax bracket its after-tax profit margin in
    • A. 

      12%

    • B. 

      5%

    • C. 

      20%

    • D. 

      25%


  • 7. 
    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. 

      30%

    • C. 

      15%

    • D. 

      Not enough info.


  • 8. 
    XZY's receivables turnover is 10x. The accounts receivable at year-end are $600,000. The average collection period is 90 days (3months). What was the sales figure for the year?
    • A. 

      $60,000

    • B. 

      $6,000,000

    • C. 

      $24,000,000

    • D. 

      None of the above


  • 9. 
    What is the expected value of the total sales projection?Outcome     Probability     Units     PriceBad               .20             100        $20Normal          .50              180       $25Great            .30               210       $30
    • A. 

      $4,540

    • B. 

      $4,500

    • C. 

      $12,800

    • D. 

      $3,678


  • 10. 
    XZY Co. has forecasted June sales of 600 untis and July sales of 1000 unity. The company maintains ending inventory equal to 125% of next month's sales. June beginning invenotry reflects this policy. What is June's required production?
    • A. 

      400 units

    • B. 

      500 units

    • C. 

      0 units

    • D. 

      1100 units


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