NEW
Font size
WorksheetsMID TES PRINCIPAL OF FINANCE
Total questions: 80
Worksheet time: 2hrs 58mins
The money markets are concerned with
A) securities with a life of more than one year
B) short-term securities
C) securities such as common stock
D) none of the above
A profitability ratio is an example of which of the following?
A) Quick ratio
B) Average collection period
C) Return on equity
D) Times interest earned
55% is debt ratio of the company, this means ______ of the firm's assets are financed by equity financing.
A) 55%
B) 50%
C) 45%
D) not enough information to answer question
With the exception of the following, all of the following can cause issues with ratio analysis:
A) inflation
B) inventory accounting methods
C) disinflation
D) all of the above
Trend analysis allows a firm to compare its performance to:
A) other firms in the industry
B) other time periods within the firm
C) other industries
D) all of the above
Usually, firms with high price/earnings ratios are ____________ firms.
A) growth
B) declining
C) mature
D) none of the above
The ratio of net income to outstanding common shares is referred to as the net income-to-common-shares-outstanding ratio______________.
A) price/earnings ratio
B) earnings per share
C) dividends per share
D) none of the above
Bondholders receive _____________ from the business firm.
A) preferred dividend payments
B) common stock payments
C) interest payments
D) royalties
Except for one, all of the above expenses are tax deductible
A) interest expense
B) depreciation
C) common stock dividends
D) income taxes
The _______________ depicts the company's operating results through time.
A) Income Statement
B) Statement of Cash Flows
C) Balance Sheet
D) None of the above
All except one of these are included in the accounting statements that a company must file
A) Balance Sheet
B) Statement of Accounts Receivable
C) Income Statement
D) Statement of Cash Flows
The agency problem will occur in a business firm if the goals of ____________ and shareholders do not agree.
A) investors
B) the public
C) management
D) none of the above
Which of the following isn't a measure of efficiency?
A.Asset turnover
B. Stock Turnover
C. Debtor days
D. Interest cover
An asset is a
A. Source of fund
B. Use of fund
C. Inflow of funds
D. none of the above.
If a business issues bonus shares, the debt-to-equity ratio
A. Remain unaffected
B. Will be affected
C. Will improve
D. none of the above
The Gross Profit Ratio of a company stays the same, but the Net Profit Ratio falls. The following could be the cause of such behavior:
A.Increase in Costs of Goods Sold,
B. Increase in Expense,
C. Increase in Dividend,
D. Decrease in Sales.
Which of the following statements is correct?
A. A Higher Receivable Turnover is not desirable
B.nterest Coverage Ratio depends upon Tax Rate,
C.Increase in Net Profit Ratio means increase in Sales
D.Lower Debt-Equity Ratio means lower Financial Risk
Company UPH has Capital of $ 10,00,000; Sales of $ 5,00,000; Gross Profit of $ 2,00,000 and Expenses of $1,00,000. What is the Net Profit Ratio?
A. 20%
B. 50%
C. 10%
D. 40%
Sumatera Ltd. has earned 8% Return on Total Assets of $ 50,00,000 and has a Net Profit Ratio of 5%. Find out the Sales of the firm
A. $ 2,50,000
B. $ 83,33,333
C. $ 4,00,000
D. $ 80,00,000
What is the means A Current Ratio of Less One
A. Current Assets < Current Liabilities
B.Current Liabilities < Current Assets
C.Fixed Assets > Current Assets
D.Share Capital > Current Assets
Sullivan Ltd.'s current ratio is 1.5:1 and its net current assets are $ 5,00,000. What are the Current Assets?
A. $. 5,00,000
B..$ 10,00,000
C. $. 15,00,000
D. $. 25,00,000
Last year, Siloam Medical Supplies sold 2,000 units for $160 each. This year, the marketing manager anticipates a 25% rise in unit volume and a 10% price increase. Returns are expected to account for 5% of overall sales. What are your sales projections for this year in terms of net dollars?
A. $ 412.000
B. $ 418,000
C. $. 512.000
D. $ 413.000
Under three different economic scenarios, the Big Corp. aims to sell the following number of units of copper cables at the prices specified. Each outcome's likelihood is stated. What is the overall sales projection's estimated value?
A. $8,990
B. $8,980
C.$9,980
D. $8,880
What's the connection between average collection period and accounts receivable turnover?
A. Both ratios are expressed in number of days.
B. Both ratios are expressed in number of times receivables are collected per year.
C As average collection period increases (decreases) the accounts receivable turnover decreases (increases).
D. There is a direct and proportional relationship.
Prepare an income statement for Nike Slim Wear that is in good shape. Carry on with your calculations until you arrive at the figure for earnings per share. ( Find EPS)
$ 1.20
$ 3.30
$ 2.30
$ 1.30
In March, Medantech, Inc., sold 6,000 units laptops. In April, a 50% increase is projected. In April, the corporation would keep 5% of estimated unit sales in ending inventories. For April, the starting inventory was 200 units. In April, how many units should the company produce?
A. 8,250
B. 9,250
C. 9,150
D. 8,350
For the fourth quarter of the year, Korea's Clothiers expects credit sales to be (above) :
September (actual)............................ $70,000
Fourth Quarter
October............................................. $60,000
November......................................... 55,000
December.......................................... 80,000
How much Cash was Receipt in October, November, December respectively
$42,000; $52,500; $57,000
$42,000; $36,000; $33,000
$60,000; $52,500; $57,000
$600,000; $525,500; $570,000
For the first seven months of the year, the Tzu Chi Corporation has forecasted the following sales: (data above)
Monthly material purchases are fixed at 20% of anticipated sales for the following month. 40% of the total material expenses are paid in the month of purchase, with the remaining 60% paid the following month. Monthly labor expenditures will be $6,000, and fixed overhead will be $3,000 per month. Both March and June will see interest payments of $4,500 on the debt. Finally, during the first six months of the year, Tzu Chi salesforce will be paid a 3% commission on total sales, which will be paid on June 30.
Prepare a six-month cash payment summary for the months of January through June. . (Note: Compute prior December purchases to help get total material payments for January.)
What is the number of total payments on April, May, and June respectively
A. $11,840; $12,040 ; $20,720
A. $12,840; $13,040 ; $20,720
A. $12,840; $12,040 ; $21,720
A. $12,840; $12,040 ; $20,720
In the balance sheet amount of total assets is $ 10 , current liabilities $ 5 & capital & reserves are $.2 .What is the debt equity ratio?
A. 1;1
B. 1.5:1
C. 2:1
D. none of the above
Which of the following would be added to net income using the indirect method?
A. An increase in accounts receivable
B. An increase in prepaid expenses
C. Depreciation expense
D. A decrease in accounts payable
Cash receipts from interest and dividends are classified as
A. financing activities
B investing activities.
C. operating activities
D. either financing or investing activities
If a corporation has both a cash inflow and outflow connected to property, plant, and equipment, the
A. two cash effects can be netted and presented as one item in the investing activities section.
B. cash inflow and cash outflow should be reported separately in the investing activities section
C. two cash effects can be netted and presented as one item in the financing activities section
D. cash inflow and cash outflow should be reported separately in the financing activities section
The statement of cash flows
A. must be prepared on a daily basis
B. summarizes the operating, financing, and investing activities of an entity
C. is another name for the income statement
D. is a special section of the income statement
A source of funds is a:
A. Decrease in a current asset
B Decrease in a current liability
C Increase in a current liability
D a and c above
Financial leverage means
A. Use of more debt capital to increase profit
B. High degree of solvency
C Low bank finance
D None of the above
H&M Stores, Inc., owns $5,000,000 in assets and turns over its assets 1.2 times per year. Return on assets is 8 percent. What is the firm’s profit margin (return on sales)?
A. 6.16%
B. 6.76%
C. 6.67 %
D. 6.68%
The profit Margin of Company A is 6,7%. With Total Liabilities and Equity is $ 1.600.000. What is the value of ROA if the total Sale of that company is $ 4.000.000?
A. 12,5%
B. 8,4%
C. 16,75%
D. 15,75%
Financial Data of Crown Ltd is as follows :
- ROA 12,5 %
- Total Debt $ 1.200.000
- Net Income $ 400.000
- Total Sales $ 8.000.000
What is the value of ROE?
A. 10%
B. 20%
C. 15%
D. 25%
Financial Data Information is taken from ATF Ltd.
- Common shares outstanding 400.000 shares
- Total Liabilities $ 1.200.000
- Preferred stock obligation $ 200.000
- Total Assets $ 4.000.000
What is book value, per share?
A. $ 6.2
B. $ 5.5
C. $ 5.6
D. $ 6,5
Which of the following does not help to increase Current Ratio?
A. Issue of Debentures to buy Stock,
B. Issue of Debentures to pay Creditors
C. Sale of Investment to pay Creditors
D. Avail Bank Overdraft to buy Machine.
Ratio of Net Income to Number of Equity Shares known as:
A. Price Earnings Ratio,
B. Net Profit Ratio,
C. Earnings per Share,
D. Dividend per Share
Suppliers and Creditors of a firm are interested in
A. Profitability Position
B. Liquidity Position
C. Market Share Position,
D. Debt Position.
Debt to Total Assets of a firm is 0.2. The Debt to Equity ratio would be:
A. 0.80
B. 0.25
C. 1.00
D. 0.75
This statement which is not true is
A. DCL = 1 means the firm has no fixed costs and no debt.
B. DCL can be less than 1
C. DCL or DTL = DOL x DFL
D. TC = VC + FC
Which of the following statements is false regarding Leverage :
A. Companies that use leverage with the aim that the profits obtained are greater than fixed costs (fixed expenses)
B. Business risk is the risk of uncertainty about the level of EBIT that will be obtained.
C. Leverage is using fixed costs to magnify the potential return to a firm
D. fixed operating costs = interest costs from debt
Maxwell's Software is a well-known software company with a lot of upfront development and marketing costs. The cost per unit for John is $0.08, and his fixed costs are $780,000, which goes towards developer salaries. The company plans to sell 300,000 devices at a cost of $25 apiece. Because the software industry is involved in the creation, marketing, and sales of software, it encompasses a wide range of applications, ranging from network systems and operating management tools to specialized software for businesses.
Based on the company’s sales, fixed costs, and variable cost per unit, its operating leverage is calculated :
A. 110%
B. 112 %
C. 115%
D. 116%
Which of the following statements is not true:
A. Financial Leverage measures the sensitivity of a firm’s earnings per share to a Change in operating income
B. DCL = DOL x DFL
C. DFL = 2.00 means:
Every 1% change (increase) in SALES will result in a 2% change (increase) in EPS in the same direction or every 10% change in EBIT will result in a 20% change in EPS in
D. One of the factors that influence business risk is the degree of operating leverage (DOL).
EBIT = $ 1.000.000
I = $ 250.000
Tax = 40%
Dp = $ 150.000
What is the value of DFL on EBIT of $ 1,000,000
A. 3
B. 5
C. 4
D. 2
Which of the following statements is not true:
A. Combination of leverage occurs when a company has both DOL and DFL in an attempt to increase the profits of common shareholders.
B. DFL = 2.00 means:
Every 1% change (increase) in EBIT will result in a 2% change (increase) in EPS in the same direction or every 10% change in EBIT will result in a 20% change in EPS in the same direction.
C. DOL = 2.00 means
Every 10% increase in sales will result in a 20% increase in EBIT
D. DCL = 2 means
Every 1% increase in sales will result in a 4% increase in EBIT.
Base on the information above, what is the number of DCL
A. 3
B. 6
C. 4
D. 5
Financial management involves decisions about which of the following:
A. Which projects to fund
B. How to minimize taxation
C. What type of capital should be raised
D. All of these.
Which of the following statement is considered as the accountant’s snapshot of the firm’s accounting value as of a particular date?
A. Retained Earnings Statement
B. Income Statement
C. Balance Sheet
D. Cash Flow Statement
The most important item that can be extracted from financial statements is the actual ________ of the firm.
A. Net Working Capital
B. Cash Flow
C. Net Present Value
D. None of the given options
Who of the following makes broader use of accounting information?
A. Accountants
B. Auditors
C. Marketers
D. Financial Analysts
The authorised capital of a company is $.5.000.000, 40% of it is paid up. Loss incurred
during the year is $.50,000. The accumulated loss carried from last year is $.2.000.000 . The company has a Tangible Net Worth of
A . (-) $ 50,000
B. Nill
C. $ 1.000.000
D. $ 2.500.000
Covid19, Inc. plans to make $2 million in sales next year. To accommodate this sales level, inventory and accounts receivable will be increased by $430,000. The corporation maintains a 12 percent profit margin and pays out a 25% dividend. How much money will the company need to borrow from outside sources? Assume there will be no further increases in liabilities than those associated with the external funding.
A. $ 250.000
B. $ 1.000.000
C. $ 300.000
D. $ 100.000
Current ratio of a concern is 1,its net working capital will be
A. Positive
B. Negative
C. Nil
D. None of the above
The current ratio is 4:1.Net Working Capital is $ 30,000.Find the number of current Assets.
A. $ 10.000
B. $ 40.000
C. $ 24.000
D. $ 6.000
If Current ratio is 2:5.Current liability is $ .30.000.The Net working capital is
A. $ 18.000
B. $ 45.000
C. - $45.000
D. - $ 18.000
Financial leverage means
A. Use of more debt capital to increase profit
B. High degree of solvency
C. Low bank finance
D. None of the above
Creditors would not be interested in which group of ratios ?
A. Solvency
B. Shareholder
C. Profitability
D. Capital Structure
Planning for future growth is called :
A. Capital Budgeting
B. Working Capital Management
C. Financial Forecasting
D. None of the above
Working capital management involves the financing and management of the assets of the firm.
A. Fixed
B. Total
C. Current
D. None of the above
Insufficient working capital results in
A. Block of cash
B. Loosing interests
C. Lack of production
D. Lack of smooth flow of production
Excess working capital results in
A. Block of cash
B. Losing interests
C. Lack of production
D. Lack of smooth flow of production
Adequate working capital means
A. Sufficient funds
B. Insufficient funds
C. Lack of funds
D. All of the above
The investment in total current assets is known as
A Gross working capital
B Permanent working capital
C Temporary working capital
D Net working capital
The net working capital measures
A. Ability
B. Liquidity
C.Credibility
D. None
A series of activities in an organization related to production is known as
A Operating cycle
B Working cycle
C Current cycle
D Fixed cycle
The time period required for the conversion of raw materials into finished goods
A. Operating cycle period
B. Inventory conversion period
C. Receivable conversion period
D. None
The time period required to convert the credit sales into cash
A Operating cycle period
B Inventory conversion period
C Receivable conversion period
D None
A level of working capital which is required by the firm always is knows as
A Gross working capital
B Permanent working capital
C Temporary working capital
D. Net working capital
Above permanent working capital which is required by the firm is knows as
A Gross working capital
B, Permanent working capital
C.Temporary working capital
D. Net working capital
In his traditional role the finance manager is responsible for _____.
A. Obtain and Use the funds efficiently and adequately
B arrange of utilization of funds.
C acquiring capital assets of the organization.
D arrangement of financial resources.
__________ management is the important task of the finance manager.
A Debt.
B Equity.
C Profit.
D Cash.
Mountains Shop is a retailer of outdoor skiing equipment. Bill provides accounts to all of his major clients. Mountains Shop balance statement shows $20,000 in accounts receivable, $75,000 in gross credit sales, and $25,000 in refunds at the end of the year. Accounts receivable totaled $10,000 on the previous year's balance sheet.
What is Mountains Shop accounts receivable turnover ratio , if 1 year = 360 days
A. 109 days
B. 112 days
C 115 days
d. 113 days
Tivoli Furniture Company's management has been overjoyed with their sales team this year (365 days), as they have moved more inventory than in any previous year. Keith's financial statements show an ending inventory of $50,000 and a cost of good sold of $150,000 at the end of the year. What is Tivoli inventory days sales :
A. 120
B. 132
C. 122
D. 112
The volume of sales is influenced by ____ of a firm
A finance policy.
B credit policy.
C. profit policy.
D fund policy.
Which of the following is/are the problem(s) encountered in financial statement analysis?
A Development of benchmarks
B Window dressing.
C Interpretation of results.
D All of the above.
Which one of the following is capital expenditure
A Capital invested by owner
B. Selling expense for machine
C. Machine purchased
D. Daily expense to operate business
