Question 1

A firm has earnings per share of $3.50 and cash flow per share of $3.84. The price-earnings ratio is 24.1. What is the price-cash flow ratio?

Accepted Answer

A)  19.8 
B)  20.1 
C)  22.0 
D)  26.0 
E)  27.1 
A)  19.8 
B)  20.1 
C)  22.0 
D)  26.0 
E)  27.1 C

Question 2

Which one of the following is defined as anything a firm owns that has value?

Accepted Answer

A)  equity 
B)  asset 
C)  liability 
D)  cash inflow 
E)  cash outflow 
A)  equity 
B)  asset 
C)  liability 
D)  cash inflow 
E)  cash outflow B

Question 3

Which one of the following is the definition of operating cash flow?

Accepted Answer

A)  revenue minus expenses 
B)  cash realized from the sale of assets 
C)  cash flow originating from the issuance of securities 
D)  cash generated by a firm's normal business activities 
E)  pre-tax income 
A)  revenue minus expenses 
B)  cash realized from the sale of assets 
C)  cash flow originating from the issuance of securities 
D)  cash generated by a firm's normal business activities 
E)  pre-tax income D

Question 4

Which one of the following is most apt to be constant given the percentage of sales approach to creating pro forma statements?

Accepted Answer

A)  book value per share 
B)  gross margin 
C)  earnings per share 
D)  return on equity 
E)  cash flow per share 
A)  book value per share 
B)  gross margin 
C)  earnings per share 
D)  return on equity 
E)  cash flow per share

Question 5

O'Hara's Market has net income of $1.6 million and 525,000 shares of stock outstanding. What is the amount of the dividends per share if the plowback ratio is 60 percent?

Accepted Answer

A)  $0.94 
B)  $1.07 
C)  $1.22 
D)  $1.67 
E)  $1.98 
A)  $0.94 
B)  $1.07 
C)  $1.22 
D)  $1.67 
E)  $1.98

Question 6

What is the financing cash flow, given the following information?

Accepted Answer

A)  -$180 
B)  -$150 
C)  -$110 
D)  -$60 
E)  -$10 
A)  -$180 
B)  -$150 
C)  -$110 
D)  -$60 
E)  -$10

Question 7

A firm has a price-cash flow ratio of 12.5 and a price-book value ratio of 7.6. If the cash flow per share is $4.67, what is the book value per share?

Accepted Answer

A)  $2.84 
B)  $3.55 
C)  $4.44 
D)  $6.45 
E)  $7.68 
A)  $2.84 
B)  $3.55 
C)  $4.44 
D)  $6.45 
E)  $7.68

Question 8

What is the operating cash flow, given the following information?

Accepted Answer

A)  $400 
B)  $470 
C)  $530 
D)  $540 
E)  $670 
A)  $400 
B)  $470 
C)  $530 
D)  $540 
E)  $670

Question 9

Explain the role the external financing need plays in the future growth outlook for a firm.

Accepted Answer

The role of external financing need is c

Question 10

Net income is equal to which one of the following?

Accepted Answer

A)  operating income plus interest expense minus taxes 
B)  gross profit minus depreciation and interest expense 
C)  pretax income plus income taxes 
D)  dividends plus the change in retained earnings 
E)  pretax income minus taxes and dividends 
A)  operating income plus interest expense minus taxes 
B)  gross profit minus depreciation and interest expense 
C)  pretax income plus income taxes 
D)  dividends plus the change in retained earnings 
E)  pretax income minus taxes and dividends

Question 11

A firm has the following account balances for this year. Sales for the year are $600,000. Projected sales for next year are $642,000. The percentage of sales approach is used for pro forma purposes. All balance sheet accounts, except long-term debt and common stock, change according to that approach. The firm plans to decrease the long-term debt balance by $5,000 next year. Retained earnings is expected to increase by $3,500 next year. What is the projected external financing need?

Accepted Answer

A)  $10,520 
B)  $13,120 
C)  $18,520 
D)  $20,720 
E)  $25,620 
A)  $10,520 
B)  $13,120 
C)  $18,520 
D)  $20,720 
E)  $25,620

Question 12

Why is the expected rate of sales growth so critical to pro forma statements?

Accepted Answer

The expected rate of sales growth is cri

Question 13

Last year, a firm had net income of $62,000 on sales of $595,000. The projected sales for next year are $654,500. Assume the firm uses the percentage of sales method for pro forma statements. What is the projected net income?

Accepted Answer

A)  $59,500 
B)  $65,500 
C)  $68,200 
D)  $71,500 
E)  $71,900 
A)  $59,500 
B)  $65,500 
C)  $68,200 
D)  $71,500 
E)  $71,900

Question 14

A firm has net income of $20,000 on sales of $208,000. Sales are expected to increase by 10 percent next year and the dividend payout ratio is 35 percent. The firm uses the percentage of sales approach when compiling pro forma statements. What amount is expected to be added to retained earnings next year?

Accepted Answer

A)  $14,300 
B)  $15,400 
C)  $15,686 
D)  $22,000 
E)  $26,600 
A)  $14,300 
B)  $15,400 
C)  $15,686 
D)  $22,000 
E)  $26,600

Question 15

What is the operating cash flow, given the following information?

Accepted Answer

A)  $680 
B)  $650 
C)  $780 
D)  $890 
E)  $930 
A)  $680 
B)  $650 
C)  $780 
D)  $890 
E)  $930

Question 16

Glassmakers, Inc. purchased $125,500 of new equipment this year and also increased the inventory by $36,800. Twenty-seven thousand dollars worth of old equipment was sold. What is the investment cash flow for the year?

Accepted Answer

A)  -$49,300 
B)  -$98,000 
C)  -$98,500 
D)  -$125,500 
E)  -$133,300 
A)  -$49,300 
B)  -$98,000 
C)  -$98,500 
D)  -$125,500 
E)  -$133,300

Question 17

The management of the Uptown Bikes recently voted to limit any future borrowing or sales of company stock. By taking this action, management has effectively done which one of the following?

Accepted Answer

A)  increased the profit margin 
B)  lowered income taxes 
C)  maximized future dividends 
D)  maximized future retained earnings 
E)  limited future growth 
A)  increased the profit margin 
B)  lowered income taxes 
C)  maximized future dividends 
D)  maximized future retained earnings 
E)  limited future growth

Question 18

Which one of the following accounts is least likely to vary directly with the level of sales?

Accepted Answer

A)  accounts payable 
B)  inventory 
C)  cost of goods sold 
D)  interest expense 
E)  accounts receivable 
A)  accounts payable 
B)  inventory 
C)  cost of goods sold 
D)  interest expense 
E)  accounts receivable

Question 19

Marley Enterprises has financing cash flow of -$38,600 and investment cash flow of $29,700 for the year. The beginning cash balance was $64,300 and the ending cash balance was $45,800. What was the operating cash flow for the period?

Accepted Answer

A)  -$15,500 
B)  -$9600 
C)  $6,600 
D)  $8,900 
E)  $15,500 
A)  -$15,500 
B)  -$9600 
C)  $6,600 
D)  $8,900 
E)  $15,500

Question 20

Better Products just filed its quarterly report with the SEC. This report is referred to as which one of the following?

Accepted Answer

A)  10F 
B)  10K 
C)  10Q 
D)  EDGAR 10 
E)  10FD 
A)  10F 
B)  10K 
C)  10Q 
D)  EDGAR 10 
E)  10FD

A firm has earnings per share of $3.50 and cash flow per share of $3.84. The price-earnings ratio is 24.1. What is the price-cash flow ratio?

Which one of the following is defined as anything a firm owns that has value?

Which one of the following is the definition of operating cash flow?

Which one of the following is most apt to be constant given the percentage of sales approach to creating pro forma statements?

O'Hara's Market has net income of $1.6 million and 525,000 shares of stock outstanding. What is the amount of the dividends per share if the plowback ratio is 60 percent?

What is the financing cash flow, given the following information?

A firm has a price-cash flow ratio of 12.5 and a price-book value ratio of 7.6. If the cash flow per share is $4.67, what is the book value per share?

What is the operating cash flow, given the following information?

Explain the role the external financing need plays in the future growth outlook for a firm.

Net income is equal to which one of the following?

Why is the expected rate of sales growth so critical to pro forma statements?

Last year, a firm had net income of $62,000 on sales of $595,000. The projected sales for next year are $654,500. Assume the firm uses the percentage of sales method for pro forma statements. What is the projected net income?

What is the operating cash flow, given the following information?

Glassmakers, Inc. purchased $125,500 of new equipment this year and also increased the inventory by $36,800. Twenty-seven thousand dollars worth of old equipment was sold. What is the investment cash flow for the year?

The management of the Uptown Bikes recently voted to limit any future borrowing or sales of company stock. By taking this action, management has effectively done which one of the following?

Which one of the following accounts is least likely to vary directly with the level of sales?

Marley Enterprises has financing cash flow of -$38,600 and investment cash flow of $29,700 for the year. The beginning cash balance was $64,300 and the ending cash balance was $45,800. What was the operating cash flow for the period?

Better Products just filed its quarterly report with the SEC. This report is referred to as which one of the following?

A Brief History of Risk and Return

The Investment Process

Overview of Security Types

Mutual Funds

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return, Risk, and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Corporate Bonds

Government Bonds

Mortgage-Backed Securities

Filters

Exam 17: Projecting Cash Flow and Earnings

A firm has earnings per share of $3.50 and cash flow per share of $3.84. The price-earnings ratio is 24.1. What is the price-cash flow ratio?

Which one of the following is defined as anything a firm owns that has value?

Which one of the following is the definition of operating cash flow?

Which one of the following is most apt to be constant given the percentage of sales approach to creating pro forma statements?

O'Hara's Market has net income of $1.6 million and 525,000 shares of stock outstanding. What is the amount of the dividends per share if the plowback ratio is 60 percent?

What is the financing cash flow, given the following information?

A firm has a price-cash flow ratio of 12.5 and a price-book value ratio of 7.6. If the cash flow per share is $4.67, what is the book value per share?

What is the operating cash flow, given the following information?

Explain the role the external financing need plays in the future growth outlook for a firm.

Net income is equal to which one of the following?

Why is the expected rate of sales growth so critical to pro forma statements?

Last year, a firm had net income of $62,000 on sales of $595,000. The projected sales for next year are $654,500. Assume the firm uses the percentage of sales method for pro forma statements. What is the projected net income?

What is the operating cash flow, given the following information?

Glassmakers, Inc. purchased $125,500 of new equipment this year and also increased the inventory by $36,800. Twenty-seven thousand dollars worth of old equipment was sold. What is the investment cash flow for the year?

The management of the Uptown Bikes recently voted to limit any future borrowing or sales of company stock. By taking this action, management has effectively done which one of the following?

Which one of the following accounts is least likely to vary directly with the level of sales?

Marley Enterprises has financing cash flow of -$38,600 and investment cash flow of $29,700 for the year. The beginning cash balance was $64,300 and the ending cash balance was $45,800. What was the operating cash flow for the period?

Better Products just filed its quarterly report with the SEC. This report is referred to as which one of the following?

A Brief History of Risk and Return

The Investment Process

Overview of Security Types

Mutual Funds

The Stock Market

Common Stock Valuation

Stock Price Behavior and Market Efficiency

Behavioral Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Diversification and Risky Asset Allocation

Return, Risk, and the Security Market Line

Performance Evaluation and Risk Management

Futures Contracts

Stock Options

Option Valuation

Corporate Bonds

Government Bonds

Mortgage-Backed Securities

Filters