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FIN 571 Final Exam (Newest)

1. In a general partnership, the general partners have
_____ liability and have _____ control over day-to-day
operations.

limited; no
no; total
unlimited; no
limited; total
unlimited; total

2. Which one of these is a correct definition?

Long-term debt is defined as a residual claim on a
firms assets.
Net working capital equals current assets plus
current liabilities.
Current liabilities are debts that must be repaid in
18 months or less.

 Tangible assets are fixed assets such as patents.

Current assets are assets with short lives, such as
inventory.

3. The owners of a limited liability company generally

prefer:
being taxed personally on all business income.
having liability exposure similar to that of a general
partner.
having liability exposure similar to that of a sole
proprietor.
being taxed like a corporation.
being taxed like a corporation with liability like a
partnership.

4. Which one of the following is least apt to help

convince managers to work in the best interest of the
stockholders?pay raises based on length of service
implementation of a stock option plan
threat of a proxy fight
management compensation tied to the market value of
the firms stock
threat of a takeover of the firm by unsatisfied
stockholders

5.

 (a). Compute the future value of $2,000

compounded annually for 20 years at 4 percent.
(Do not round intermediate calculations and round
your answer to 2 decimal places, e.g., 32.16.)
Future value
$_________
(b). Compute the future value of $2,000
compounded annually for 15 years at 10 percent.
(Do not round intermediate calculations and round
your answer to 2 decimal places, e.g., 32.16.)
Future value
$_________
(c). Compute the future value of $2,000
compounded annually for 25 years at 4 percent.
(Do not round intermediate calculations and round
your answer to 2 decimal places, e.g., 32.16.)
Future value
$_________
6. For each of the following, compute the present value
(Do not round intermediate calculations and round your
answers to 2 decimal places, e.g., 32.16.):
Present Value Years
value
$_________
$15,551
14
15
$_________
$551,164

Interest Rate

8%
$_________
5
$52,557
$_________
$887,073

Future

14

35

30

7. First City Bank pays 8 percent simple interest on its

savings account balances, whereas Second City Bank
pays 8 percent interest compounded annually.
If you made a $74,000 deposit in each bank, how
much more money would you earn from your
Second City Bank account at the end of 8 years?
(Do not round intermediate calculations and round
your answer to 2 decimal places, e.g., 32.16.)
Difference in accounts

$_________

8. Winslow, Inc. stock is currently selling for $40 a

share. The stock has a dividend yield of 3.8 percent.
How much dividend income will you receive per year if
you purchase 500 shares of this stock?

$1,053
$152
$190
$329
$760

9. You bought 360 shares of stock at a total cost of

$7,754.40. You received a total of $403.20 in dividends
and sold your shares for $19.98 a share. What was your
total rate of return?
5.38%
7.24%
-1.29%

 3.67%
-2.04%
10. According to generally accepted accounting
principles (GAAP), revenue is recognized as income
when:
income taxes are paid on the revenue earned.
the transaction is complete and the goods or
services are delivered.
a contract is signed to perform a service or deliver
a good.
payment is requested.
managers decide to recognize it.
11. Sankey, Inc., has current assets of $4,230, net fixed
assets of $25,700, current liabilities of $3,500, and
long-term debt of $14,400. (Do not round intermediate
calculations.)
What is the value of the shareholders' equity
account for this firm?
Shareholders' equity
$_________
How much is net working capital?
Net working capital
$_________

12. The financial statement summarizing a firm's

accounting performance over a period of time is the:
statement of equity..
income statement.

 tax reconciliation statement.

balance sheet.
statement of cash flows.
13. Net working capital is defined as:

current assets minus current liabilities.

total assets minus total liabilities.
fixed assets minus long-term liabilities.
current assets plus stockholders' equity.
current assets plus fixed assets.

14. Jessica's Boutique has cash of $59, accounts

receivable of $62, accounts payable of $210, and
inventory of $140. What is the value of the quick ratio?

.30
1.82
.67
.58
1.24

15. Al's Sport Store has sales of $2,940, costs of goods

sold of $2,090, inventory of $526, and accounts
receivable of $445. How many days, on average, does
it take the firm to sell its inventory assuming that all
sales are on credit?
90.6
65.3

 119.9
91.9
120.4
16. Galaxy United, Inc.2009 Income Statement($ in
millions)
Net sales
$8,550
Less: Cost of goods sold
7,150
Less: Depreciation
410
Earnings before interest and taxes
990
Less: Interest paid
82
Taxable Income
908
Less: Taxes
318
Net income
$ 590

Galaxy United, Inc.2008 and 2009 Balance Sheets($

in millions)

2008

2008
2009

2009

Cash
$120
Accounts payable
$1,120
Accounts rec.
term debt

940
990

Inventory
$3,140

1,480
1,520
$2,940

Sub-total
earnings

$1,130
790
1,201

$2,540
510

Net fixed assets

$140

Common stock
$2,450
799

3,220

Total assets
$5,760
& equity
$5,760

Long-

Retained
3,620

$6,070
$6,070

Total liab.

What is the return on equity for 2009?

14
17
16
19

percent
percent11 percent
percent
percent

17. Reliable Cars has sales of $3,790, total assets of

$3,350,
and a profit margin of 5 percent. The firm
has a total debt ratio of 41 percent. What is the return
on equity?

9.59 percent
12.20 percent
13.80 percent
8.47 percent
5.66 percent

18. A firm has a debt-equity ratio of .41. What is the

total debt ratio?

1.44
.31
.29
1.41
.69

19. The return on equity can be calculated as:

ROA Equity multiplier.

ROA Debt-equity ratio.
ROA (Net income / Total assets).
Profit margin ROA Total asset turnover.
Profit margin ROA.

20. One of the primary weaknesses of many financial

planning models is that they:
rely too much on financial relationships and too
little on accounting relationships.
are iterative in nature.
ignore the goals and objectives of senior
management.
ignore cash payouts to stockholders.
ignore the size, risk, and timing of cash flows.

21. In the financial planning model, the external

financing needed (EFN) as shown on a pro forma
balance sheet is equal to the changes in assets:

minus the change in retained earnings.

minus the changes in both liabilities and equity.
minus the changes in liabilities.
plus the changes in both liabilities and equity.
plus the changes in liabilities minus the changes in
equity.

22. The Wintergrass Company has an ROE of 15.1

percent and a payout ratio of 40 percent.
What is the companys sustainable growth rate? (Do
not round intermediate calculations and enter your
answer as a percent rounded to 2 decimal places, e.g.,
32.16.)
Sustainable growth rate
_________%

23. Assume the following ratios are constant:

Total asset turnover

Profit margin
Equity multiplier
Payout ratio

2.50
5.4%
1.30
35%

What is the sustainable growth rate? (Do not round

intermediate calculations and enter your answer as a
percent rounded to 2 decimal places, e.g., 32.16.)
Sustainable growth rate

_________%

24. The length of time between the acquisition of

inventory and its sale is called the:

cash cycle.
accounts payable period.
accounts receivable period.
inventory period.
operating cycle.

25. A prearranged, short-term bank loan made on a

formal or informal basis, and typically reviewed for
renewal annually, is called a:

compensating balance.
cleanup loan.
roll-over.
line of credit.

letter of credit.

26. Here are the most recent balance sheets for

Country Kettles, Inc. Excluding accumulated
depreciation, determine whether each item is a source
or a use of cash, and the amount. (Do not round

intermediate calculations and round your answers to

the nearest whole number, e.g., 32. Input all amounts
as positive values):
COUNTRY KETTLES, INC.

Balance Sheet
December 31, 2016
2015
2016

Assets
Cash
$31,800

$31,030

Accounts receivable
74,560
Inventories
64,625

71,300
62,200

Property, plant, and equipment

172,600

161,000

Less: Accumulated depreciation

(51,300 )

(47,040)

Total assets
$279,260

Liabilities and Equity

$291,515

Accounts payable
$48,530

$46,300

Accrued expenses
6,740

7,680

Long-term debt
30,100

27,000

Common stock
30,000

35,400

Accumulated retained earnings

170,745
Total liabilities and equity
$291,515
Item
Source/Use

Amount

Cash
$_________
Accounts receivable
$_________
Inventories
$_________
Property, plant, and equipment
$_________
Accounts payable
$_________

168,280
$279,260

Accrued expenses
$_________
Long-term debt
$_________
Common stock
$_________
Accumulated retained earnings
$_________
27. Consider the following financial statement
information for the Rivers Corporation:
Item
Ending
Inventory
$11,900
Accounts receivable
6,200
Accounts payable
8,500
Net sales
$89,000
Cost of goods sold
69,000

Beginning
$10,900
5,900
8,100

Calculate the operating and cash cycles. (Use 365 days

a year. Do not round intermediate calculations and
round your answers to 2 decimal places, e.g., 32.16.)
Operating cycle
Cash cycle

_________days
_________days

28. The _____ premium is that portion of the bond yield

that represents compensation for potential difficulties
that might be encountered should the bond holder wish
to sell the bond prior to maturity.

default risk
liquidity
taxability
inflation
interest rate risk

29. How much are you willing to pay for one share of
stock if the company just paid an annual dividend of
$1.03, the dividends increase by 3 percent annually,
and you require a rate of return of 15 percent?

$8.84
$6.87
$9.49
$10.40
$8.58

30. The rate at which a stock's price is expected to

appreciate (or depreciate) is called the _____ yield.

total
capital gains
current
earnings
dividend

Read more course.. FIN 571 Week 1 Quiz | FIN 571

Week 2 Quiz | FIN 571 Week 3 Quiz | FIN 571

Week 4 Quiz | FIN 571 Week 5 Quiz | FIN 571
Week 6 Quiz | FIN 571 Final Exam (Newest) | FIN
571 Week 1 Connect Problems | FIN 571 Week 2
Connect Problems | FIN 571 Week 3 Connect
Problems | FIN 571 Week 4 Connect Problems |
FIN 571 Week 5 Connect Problems

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