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Finance
Practice Exam
| Question | Answer |
|---|---|
| being in charge of all fixed asset purchases | capital budgeting |
| Which type of business is it if both have full personal liability for the firm's debts | general partnership |
| What do Corporate shareholders do | have the ability to change the corporation's bylaws |
| What is the goal of financial management for a partnership | maximize the market value of the equity |
| retained earnings balance | NI = (reported sales-costs-depreciation- interest paid)*(1-rate) Ending RE = beginning RE+NI-dividends |
| An increase in which one of the following will increase operating cash flow for a profitable, tax-paying firm? | Depreciation |
| An increase in which one of the following will increase net income | Revenue |
| Depreciation does which one of the following for a profitable fir | Lowers taxes |
| How to calculate taxes | Total tax = (1st bracket*rate)+(2nd bracket + rate) etc... |
| How to find EBIT | OFC = EBIT + depreciation - tax EBIT = OFC - (depreciation - tax) |
| How to find the common-size percentage for the net fixed assets | NFA common-size % = net FA/(cash+AR+total E+invenory+net FA) |
| How to find current ratio | (total A-fixed A)/(total debt-long-term debt) |
| If a firm has debt and positive profits... | ROE is larger than ROA |
| Given the DuPont framework, the smaller the equity multiplier (all other things equal)... | the smaller ROE is (+/-) |
| Kelso's Pharmacy generates $2 in sales for every $1 the firm has invested in total assets. Which one of the following ratios would reflect this relationship? | Receivables turnover (sales/AR) |
| The Rainbow Company has total sales of $713,200 and a profit margin of 8.5 percent. Currently, the firm has 12,500 shares outstanding. What are the earnings per share? | Equity multiplier (TA/SE) |
| NI/Revenue | profit margin |
| NI/Average TA | return on assets |
| net sales/average TA | total asset turnover |
| how to find earnings per share | Earnings per share = (rate*total sales)/outstanding shares |
| By definition, a bank that pays simple interest on a savings account will pay interest: | Only on the principle amount originally invested |
| Which of the following will increase the future value of a lump sum investment | increasing the interest rate increasing the time period |
| Which of the following will decrease the future value of a lump sum investment made today assuming that all interest is reinvested? | decrease the lump sum amount decrease the investment time period |
| how to find what something is WORTH today | PV formula on excel |
| how to find when something is worth ____ | NPER formula on excel |
| how to find how much you would have to PAY today | PMT formula on excel |
| What is the maximum initial purchase that _____ can make given this credit approval? | Present value formula on Excel |
| how to find how much something is worth in ____ amount of time | FV formula on Excel |
| how to find the RATE of something | RATE formula on Excel |
| future value | what something is worth in ______ years |
| how to find the monthly mortgage payment | PMT forumla on Excel |
| how to find annual loan payment | PMT Fomula on Excel |
Created by:
szander