Question 1

A firm maintains a constant dividend payout ratio of .40. What must the plowback ratio be?

Accepted Answer

A)  1 + .40 
B)  1 - .40 
C)  1 * .40 
D)  1/.40 
E)  .40 
A)  1 + .40 
B)  1 - .40 
C)  1 * .40 
D)  1/.40 
E)  .40

Question 2

What is the investment cash flow?

Accepted Answer

A)  -$220 
B)  -$140 
C)  -$120 
D)  -$20 
E)  -$10 
A)  -$220 
B)  -$140 
C)  -$120 
D)  -$20 
E)  -$10

Question 3

Income and expense items NOT realized in cash form are called which one of the following?

Accepted Answer

A)  deductible expenses 
B)  noncash items 
C)  intangible assets 
D)  operating income 
E)  financing activities 
A)  deductible expenses 
B)  noncash items 
C)  intangible assets 
D)  operating income 
E)  financing activities

Question 4

The Erie Bay Liner Company has sales of $2.6 million and operating expenses of $175,000. The firm uses the percentage of sales approach and estimates next year's sales at $2.8 million. What are the operating expenses expected to be next year?

Accepted Answer

A)  $171,231 
B)  $175,123 
C)  $179,400 
D)  $182,549 
E)  $188,462 
A)  $171,231 
B)  $175,123 
C)  $179,400 
D)  $182,549 
E)  $188,462

Question 5

Your company has pretax income of $52,000 on sales of $506,000. Sales are expected to increase by 6 percent next year and the tax rate is 40 percent. What is the expected net income for next year if your firm uses the percentage of sales approach when compiling pro forma statements?

Accepted Answer

A)  $28,938 
B)  $31,835 
C)  $33,072 
D)  $35,582 
E)  $44,520 
A)  $28,938 
B)  $31,835 
C)  $33,072 
D)  $35,582 
E)  $44,520

Question 6

You are interested in reviewing the information corporations file with the SEC. Which one of the following is the archive of these filings?

Accepted Answer

A)  SAMSON 
B)  REG FD 
C)  EDGAR 
D)  Nonpublic information files 
E)  ROA filings 
A)  SAMSON 
B)  REG FD 
C)  EDGAR 
D)  Nonpublic information files 
E)  ROA filings

Question 7

What value does the Statement of Cash Flows add to the financial statements of a firm?

Accepted Answer

The Statement of Cash Flows is a crucial

Question 8

Which one of the following statements is correct?

Accepted Answer

A)  Pretax income is equal to gross profit minus interest expense. 
B)  Gross profit is equal to sales minus costs of goods sold and depreciation. 
C)  Operating expenses are indirect costs. 
D)  Costs that vary directly with production are classified as operating expenses. 
E)  The change in retained earnings is equal to net income plus dividends paid. 
A)  Pretax income is equal to gross profit minus interest expense. 
B)  Gross profit is equal to sales minus costs of goods sold and depreciation. 
C)  Operating expenses are indirect costs. 
D)  Costs that vary directly with production are classified as operating expenses. 
E)  The change in retained earnings is equal to net income plus dividends paid.

Question 9

Which one of the following means of communication do most firms use for announcements in order to comply with Regulation FD?

Accepted Answer

A)  TV spots 
B)  e-mail alerts 
C)  public newspapers 
D)  radio 
E)  analyst networks 
A)  TV spots 
B)  e-mail alerts 
C)  public newspapers 
D)  radio 
E)  analyst networks

Question 10

Which one of the following is the primary difference between operating cash flow and net income?

Accepted Answer

A)  interest expense 
B)  indirect costs 
C)  taxes 
D)  fixed costs 
E)  depreciation 
A)  interest expense 
B)  indirect costs 
C)  taxes 
D)  fixed costs 
E)  depreciation

Question 11

Sugar Tree Cookies has current net income of $268,000 of which $110,000 was paid out in dividends. The remaining $158,000 will be shown in which account on the firm's financial statements for next year?

Accepted Answer

A)  long-term debt 
B)  common stock 
C)  net income 
D)  retained earnings 
E)  paid in surplus 
A)  long-term debt 
B)  common stock 
C)  net income 
D)  retained earnings 
E)  paid in surplus

Question 12

Which of the following are classified as equity accounts on a balance sheet?
I. goodwill
II. paid in capital
III. net income
IV. retained earnings

Accepted Answer

A)  IV only 
B)  I and III only 
C)  II and IV only 
D)  I, II, and IV only 
E)  II, III, and IV only 
A)  IV only 
B)  I and III only 
C)  II and IV only 
D)  I, II, and IV only 
E)  II, III, and IV only

Question 13

A firm has net sales of $35,000, operating expenses of $6,100, depreciation of $1,700, and cost of goods sold of $18,300. What is the gross margin?

Accepted Answer

A)  31.1 percent 
B)  35.4 percent 
C)  47.7 percent 
D)  52.9 percent 
E)  59.2 percent 
A)  31.1 percent 
B)  35.4 percent 
C)  47.7 percent 
D)  52.9 percent 
E)  59.2 percent

Question 14

Which of the following reports are always included in a 10K filing with the SEC?
I. statement of cash flows
II. balance sheet
III. pro-forma statement
IV. income statement

Accepted Answer

A)  I only 
B)  IV only 
C)  II, III, and IV only 
D)  I, II, and IV only 
E)  I, II, III, and IV 
A)  I only 
B)  IV only 
C)  II, III, and IV only 
D)  I, II, and IV only 
E)  I, II, III, and IV

Question 15

Return on equity is equal to which one of the following?

Accepted Answer

A)  dividend yield divided by total equity 
B)  retained earnings divided by total equity 
C)  revenue divided by total equity 
D)  net income divided by total equity 
E)  operating cash flow divided by total equity 
A)  dividend yield divided by total equity 
B)  retained earnings divided by total equity 
C)  revenue divided by total equity 
D)  net income divided by total equity 
E)  operating cash flow divided by total equity

Question 16

HNW Manufacturing, Inc. has 270,000 shares of stock outstanding. The firm paid out $270,000 in dividends, $195,000 in interest, and added $175,000 to retained earnings for the year. What is the amount of the earnings per share?

Accepted Answer

A)  $0.70 
B)  $0.78 
C)  $1.37 
D)  $1.43 
E)  $1.65 
A)  $0.70 
B)  $0.78 
C)  $1.37 
D)  $1.43 
E)  $1.65

Question 17

Zonvier, Inc. has sales of $51,000, a profit margin of 8.5 percent, and a plowback ratio of 40 percent. The company has 20,000 shares of stock outstanding. The firm uses the percentage of sales method for pro forma statements and estimates next year's sales will increase by 15 percent. What is the dividend per share expected to be next year?

Accepted Answer

A)  $0.149 
B)  $0.150 
C)  $0.161 
D)  $0.168 
E)  $0.174 
A)  $0.149 
B)  $0.150 
C)  $0.161 
D)  $0.168 
E)  $0.174

Question 18

A firm has $1,500 of cash, equipment worth $43,000, inventory of $15,200, $14,000 worth of patents, and $13,200 of accounts receivable. What is the value of the total current assets?

Accepted Answer

A)  $1,500 
B)  $14,700 
C)  $16,700 
D)  $29,900 
E)  $72,900 
A)  $1,500 
B)  $14,700 
C)  $16,700 
D)  $29,900 
E)  $72,900

Question 19

Sales minus cost of goods sold are equal to which one of the following?

Accepted Answer

A)  net sales 
B)  operating income 
C)  gross profit 
D)  pretax income 
E)  net income 
A)  net sales 
B)  operating income 
C)  gross profit 
D)  pretax income 
E)  net income

Question 20

Which one of the following is generally used as the basis for computing the cash flow per share?

Accepted Answer

A)  operating cash flow 
B)  investment cash flow 
C)  financing cash flow 
D)  net cash increase 
E)  retained cash earnings 
A)  operating cash flow 
B)  investment cash flow 
C)  financing cash flow 
D)  net cash increase 
E)  retained cash earnings

A firm maintains a constant dividend payout ratio of .40. What must the plowback ratio be?

What is the investment cash flow?

Income and expense items NOT realized in cash form are called which one of the following?

The Erie Bay Liner Company has sales of $2.6 million and operating expenses of $175,000. The firm uses the percentage of sales approach and estimates next year's sales at $2.8 million. What are the operating expenses expected to be next year?

Your company has pretax income of $52,000 on sales of $506,000. Sales are expected to increase by 6 percent next year and the tax rate is 40 percent. What is the expected net income for next year if your firm uses the percentage of sales approach when compiling pro forma statements?

You are interested in reviewing the information corporations file with the SEC. Which one of the following is the archive of these filings?

What value does the Statement of Cash Flows add to the financial statements of a firm?

Which one of the following statements is correct?

Which one of the following means of communication do most firms use for announcements in order to comply with Regulation FD?

Which one of the following is the primary difference between operating cash flow and net income?

Sugar Tree Cookies has current net income of $268,000 of which $110,000 was paid out in dividends. The remaining $158,000 will be shown in which account on the firm's financial statements for next year?

Which of the following are classified as equity accounts on a balance sheet? I. goodwill II. paid in capital III. net income IV. retained earnings

A firm has net sales of $35,000, operating expenses of $6,100, depreciation of $1,700, and cost of goods sold of $18,300. What is the gross margin?

Which of the following reports are always included in a 10K filing with the SEC? I. statement of cash flows II. balance sheet III. pro-forma statement IV. income statement

Return on equity is equal to which one of the following?

HNW Manufacturing, Inc. has 270,000 shares of stock outstanding. The firm paid out $270,000 in dividends, $195,000 in interest, and added $175,000 to retained earnings for the year. What is the amount of the earnings per share?

A firm has $1,500 of cash, equipment worth $43,000, inventory of $15,200, $14,000 worth of patents, and $13,200 of accounts receivable. What is the value of the total current assets?

Sales minus cost of goods sold are equal to which one of the following?

Which one of the following is generally used as the basis for computing the cash flow per share?

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 maintains a constant dividend payout ratio of .40. What must the plowback ratio be?

What is the investment cash flow?

Income and expense items NOT realized in cash form are called which one of the following?

The Erie Bay Liner Company has sales of $2.6 million and operating expenses of $175,000. The firm uses the percentage of sales approach and estimates next year's sales at $2.8 million. What are the operating expenses expected to be next year?

Your company has pretax income of $52,000 on sales of $506,000. Sales are expected to increase by 6 percent next year and the tax rate is 40 percent. What is the expected net income for next year if your firm uses the percentage of sales approach when compiling pro forma statements?

You are interested in reviewing the information corporations file with the SEC. Which one of the following is the archive of these filings?

What value does the Statement of Cash Flows add to the financial statements of a firm?

Which one of the following statements is correct?

Which one of the following means of communication do most firms use for announcements in order to comply with Regulation FD?

Which one of the following is the primary difference between operating cash flow and net income?

Sugar Tree Cookies has current net income of $268,000 of which $110,000 was paid out in dividends. The remaining $158,000 will be shown in which account on the firm's financial statements for next year?

Which of the following are classified as equity accounts on a balance sheet? I. goodwill II. paid in capital III. net income IV. retained earnings

A firm has net sales of $35,000, operating expenses of $6,100, depreciation of $1,700, and cost of goods sold of $18,300. What is the gross margin?

Which of the following reports are always included in a 10K filing with the SEC? I. statement of cash flows II. balance sheet III. pro-forma statement IV. income statement

Return on equity is equal to which one of the following?

HNW Manufacturing, Inc. has 270,000 shares of stock outstanding. The firm paid out $270,000 in dividends, $195,000 in interest, and added $175,000 to retained earnings for the year. What is the amount of the earnings per share?

A firm has $1,500 of cash, equipment worth $43,000, inventory of $15,200, $14,000 worth of patents, and $13,200 of accounts receivable. What is the value of the total current assets?

Sales minus cost of goods sold are equal to which one of the following?

Which one of the following is generally used as the basis for computing the cash flow per share?

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