Finance Exam 1

10 Questions
Finance Exam 1

Finance problem section.

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Questions and Answers
  • 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. 
    • 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