FINC400 I004 quiz 3
FINC400 I004 Sum 13
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A lower price for the firm's product will reduce the firm's breakeven point.
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uestion 2 of 25 | 4.0 Points |
(point) Profit is generally adequate to finance significant growth.
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Question 5 of 25 | 4.0 Points |
The degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.
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Question 6 of 25 | 4.0 Points |
If fixed costs rise while other variables stay constant
A.the breakeven point rises. | |
B.degree of operating leverage increases. | |
C.total profit declines. | |
D.all of these |
Question 7 of 25 | 4.0 Points |
Operating leverage emphasizes the impact of using fixed assets in the business.
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Question 8 of 25 | 4.0 Points |
(point) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced
A.is higher. | |
B.is lower. | |
C.is the same. | |
D.can be either higher or lower. |
The contribution margin is equal to price per unit minus total costs per unit.
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Question 10 of 25 | 4.0 Points |
(point) Which of the following is most likely to increase the final number for notes payable in the pro forma balance sheet?
A.decrease in inventory. | |
B.increase in retained earnings. | |
C.decrease in accounts payable. | |
D.decrease in accounts receivable. |
estion 11 of 25 | 4.0 Points |
An increase in sales and profits generates the necessary cash required for economic growth.
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Question 12 of 25 | 4.0 Points |
The percent-of-sales forecast is likely to be most accurate when used with cyclical companies.
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Question 13 of 25 | 4.0 Points |
Pro forma financial statements are
A.the most comprehensive means of financial forecasting. | |
B.often required by prospective creditors. | |
C.projections of financial statements for a future period. | |
D.all of these. |
Question 14 of 25 | 4.0 Points |
(point) When the cost of raw materials is increasing, FIFO accounting
A.yields higher ending inventory values than LIFO. | |
B.produces higher unit sales than using LIFO. | |
C.yields higher cost of goods sold than LIFO. | |
D.All of these. |
Question 15 of 25 | 4.0 Points |
(point) If sales volume exceeds the break-even point, the firm will experience
A.an operating loss. | |
B.an operating profit. | |
C.an increase in plant and equipment. | |
D.an increase in stock price. |
Question 16 of 25 | 4.0 Points |
The value of ending inventory should be equal to beginning inventory plus total production costs minus cost of goods sold.
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Question 17 of 25 | 4.0 Points |
(point) Leverage works best when volume is increasing.
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Question 18 of 25 | 4.0 Points |
(point) The percent-of-sales method would be more accurate under a steady sales assumption than cyclical sales.
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Question 19 of 25 | 4.0 Points |
If the price per unit decreases because of competition but the cost structure remains the same
A.the breakeven point rises. | |
B.the degree of combined leverage declines. | |
C.the degree of financial leverage declines. | |
D.All of these |
Question 20 of 25 | 4.0 Points |
Sales (100,000 units) | $ 1,000,000 |
Variable costs | 300,000 |
Contribution margin | 700,000 |
Fixed manufacturing costs | 200,000 |
Operating income | 500,000 |
Interest | 75,000 |
Earnings before taxes | 425,000 |
Taxes (30%) | 127,500 |
Net Income | $ 297,500 |
Refer to the figure above. The Degree of Operating Leverage is
A.1.40x | |
B.1.56x | |
C.3.33x | |
D.2.22x |
Question 21 of 25 | 4.0 Points |
(point) The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales.
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Question 22 of 25 | 4.0 Points |
(point) As the contribution margin rises, the breakeven point goes down.
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Question 23 of 25 | 4.0 Points |
(point) In the percent-of-sales method, an increase in dividends
A.will increase required new funds. | |
B.will decrease required new funds. | |
C.has no effect on required new funds. | |
D.more information is needed. |
uestion 24 of 25 | 4.0 Points |
Which of the following is not true about leverage?
A.operating leverage influences the top half of the income statement, determining EBIT. | |
B.financial leverage deals with the bottom half of the income statement, determining EPS | |
C.combined leverage utilizes the entire income statement, showing the impact of change in volume on EBIT. | |
D.none of these |
Question 25 of 25 | 4.0 Points |
The finance department should work independently without the input of other departments because there may be significant biases when creating proformas.
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Rating:
5/
Solution: FINC400 I004 quiz 3