general quiz data bank
Which of the following is considered a hybrid organizational
form?
sole proprietorship
partnership
limited liability partnership
corporation
Which of the following is a principal within the agency relationship?
the board of directors
a shareholder
a company engineer
the CEO of the firm
Which of the following presents a summary of the changes in a firm’s balance
sheet from the beginning of an accounting period to the end of that accounting
period?
The statement of retained earnings.
The statement of net worth.
The statement of working capital.
The statement of cash flows.
Gateway Corp. has an inventory turnover ratio of 5.6. What is the firm's days's
sales in inventory?
65.2 days
64.3 days
61.7 days
57.9 days
Your firm has an equity multiplier of 2.47. What is its debttoequity ratio?
0
1.47
0.60
1.74
Which of the following is not a method of “benchmarking”?
Identify a group of firms that compete with the company being analyzed.
Evaluating a single firm’s performance over time.
Conduct an industry group analysis.
Utilize the DuPont system to analyze a firm’s performance
Jack Robbins is saving for a new car. He needs to have $ 21,000 for the car in
three years. How much will he have to invest today in an account paying 8
percent annually to achieve his target? (Round to nearest dollar.)
$26,454
$16,670
$22,680
$19,444
Ferris, Inc., has borrowed from their bank at a rate of 8 percent and will
repay the loan with interest over the next five years. Their scheduled
payments, starting at the end of the year are as follows—$450,000, $560,000,
$750,000, $875,000, and $1,000,000. What is the present value of these
payments? (Round to the nearest dollar.)
$2,735,200
$2,815,885
$2,615,432
$2,431,224
Ajax Corp. is expecting the following cash flows—$79,000, $112,000, $164,000,
$84,000, and $242,000—over the next five years. If the company's opportunity
cost is 15 percent, what is the present value of these cash flows? (Round to
the nearest dollar.)
$429,560
$414,322
$480,906
$477,235
Jayadev Athreya has started on his first job. He plans to start saving for retirement
early. He will invest $5,000 at the end of each year for the next 45 years in a
fund that will earn a return of 10 percent. How much will Jayadev have at the
end of 45 years? (Round to the nearest dollar.)
$5,233,442
$2,667,904
$1,745,600
$3,594,524
Serox stock was selling for $20 two years ago. The stock sold for $25 one year
ago, and it is currently selling for $28. Serox pays a $1.10 dividend per year.
What was the rate of return for owning Serox in the most recent year? (Round to
the nearest percent.)
40%
16%
12%
32%
Regatta, Inc., has sixyear bonds outstanding that pay a 8.25 percent coupon
rate. Investors buying the bond today can expect to earn a yield to maturity of
6.875 percent. What should the company's bonds be priced at today? Assume annual
coupon payments. (Round to the nearest dollar.)
$923
$1,014
$972
$1,066
Next year Jenkins Traders will pay a dividend of $3.00. It expects to increase
its dividend by $0.25 in each of the following three years. If their required
rate of return is 14 percent, what is the present value of their dividends over
the next four years?
$12.50
$11.63
$13.50
$9.72
TuleTime Comics is considering a new show that will generate annual cash flows
of $100,000 into the infinite future. If the initial outlay for such a
production is $1,500,000 and the appropriate discount rate is 6 percent for the
cash flows, then what is the profitability index for the project?
0.90
1.90
0.11
1.11
What decision criteria should managers use in selecting projects when there is
not enough capital to invest in all available positive NPV projects?
The discounted payback.
The profitability index.
The internal rate of return.
The modified internal rate of return
The WACC for a firm is 13.00 percent. You know that the firm's cost of debt
capital is 10 percent and the cost of equity capital is 20%. What proportion of
the firm is financed with debt?
33%
50%
70%
30%
Gangland Water Guns, Inc., is expected to pay a dividend of $2.10 one year from
today. If the firm's growth in dividends is expected to remain at a flat 3
percent forever, then what is the cost of equity capital for Gangland if the
price of its common shares is currently $17.50?
15.36%
15.00%
12.00%
14.65%
If a company's weighted average cost of capital is less than the required
return on equity, then the firm:
Must have preferred stock in its capital structure
Is financed with more than 50% debt
Has debt in its capital structure
Is perceived to be safe
A firm's capital structure is the mix of financial securities
used to finance its activities and can include all of the following except
stock.
bonds.
equity options.
preferred stock
Dynamo Corp. produces annual cash flows of $150 and is expected to exist
forever. The company is currently financed with 75 percent equity and 25
percent debt. Your analysis tells you that the appropriate discount rates are
10 percent for the cash flows, and 7 percent for the debt. You currently own 10
percent of the stock.
If Dynamo wishes to change its capital structure from 75 percent to 60 percent
equity and use the debt proceeds to pay a special dividend to shareholders, how
much debt should they issue?
$375
$600
$321
$225
Turnbull Corp. had an EBIT of $247 million in the last fiscal year. Its
depreciation and amortization expenses amounted to $84 million. The firm has
135 million shares outstanding and a share price of $12.80. A competing firm
that is very similar to Turnbull has an enterprise value/EBITDA multiple of
5.40.
What is the enterprise value of Turnbull Corp.? Round to the nearest million
dollars.
$1,334 million
$1,787 million
$453.6 million
$1,315 million
Jockey Company has total assets worth $4,417,665. At yearend it will have net
income of $2,771,342 and pay out 60 percent as dividends. If the firm wants no
external financing, what is the growth rate it can support?
30.3%
25.1%
27.3%
32.9%
Which of the following cannot be engaged in managing the business?
a limited partner
a sole proprietor
a general partner
none of these
Which of the following does maximizing shareholder wealth not usually account
for?
Risk.
Amount of Cash flows.
Government regulation.
The timing of cash flows.
The strategic plan does NOT identify
working capital strategies.
the lines of business a firm will compete in.
major areas of investment in real assets.
future mergers, alliances, and divestitures
Firms that achieve higher growth rates without seeking external financing
none of these.
have a low plowback ratio.
are highly leveraged.
have less equity and/or are able to generate high net income leading to a high
ROE.
Drekker, Inc., has revenues of $312,766, costs of $220,222, interest payment of
$31,477, and a tax rate of 34 percent. It paid dividends of $34,125 to
shareholders. Find the firm's dividend payout ratio and retention ratio.
15%, 85%
55%, 45%
45%, 55%
85%, 15%
The cash conversion cycle
shows how long the firm keeps its inventory before selling it.
estimates how long it takes on average for the firm to collect its outstanding
accounts receivable balance.
begins when the firm invests cash to purchase the raw materials that would be
used to produce the goods that the firm manufactures.
begins when the firm uses its cash to purchase raw materials and ends when the
firm collects cash payments on its credit sales.
You are provided the following working capital information for the Ridge
Company:
Ridge Company
Account
$
Inventory
$12,890
Accounts receivable
12,800
Accounts payable
12,670
Net sales
$124,589
Cost of goods sold
99,630
Cash conversion cycle: What is the cash conversion cycle for Ridge Company?
83.5 days
38.3 days
129.9 days
46.4 days

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Solution: general quiz data bank