Exam (elaborations)
CORPORATE FINANCE EXAM QUESTIONS AND ANSWERS #7.
- Course
- Institution
CORPORATE FINANCE EXAM QUESTIONS AND ANSWERS #7.
[Show more]
Seller
Follow
puritywanjihia
Content preview
CORPORATE FINANCE EXAM QUESTIONS ANDANSWERS #7
Jenna has been promoted and is now in charge of all external financing. In other words,
she is in charge of: - correct answer Capital Structure Management
Matt and Alicia created a firm that is a separate legal entity and will share ownership of
that firm on a 75/25 basis. Which type of entity did they create if they have no personal
liability for the firm's debts? - correct answer Corporation
Which one of the following statements about a limited partnership is correct? - correct
answer TBD
One advantage of the corporate form of organization is the: - correct answer Ability to
raise larger sums of equity capital than other organizational forms.
The Sarbanes-Oxley Act of 2002 has: - correct answer essentially made officers of
publicly traded firms personally responsible for the firm's financial statements.
Which one of the following situations is most apt to create an agency conflict? - correct
answer Basing management bonuses on the length of employment.
An agency issue is most apt to develop when: - correct answer the control of a firm is
separated from the firm's ownership.
A firm has common stock of $99, paid-in surplus of $360, total liabilities of $455, current
assets of $480, and net fixed assets of $690. What is the amount of the shareholders'
equity? - correct answer $715
Recently, the owner of Martha's Wares encountered severe legal problems and is trying
to sell her business. The company built a building at a cost of $1,270,000 that is
currently appraised at $1,470,000. The equipment originally cost $750,000 and is
currently valued at $497,000. The inventory is valued on the balance sheet at $440,000
but has a market value of only one-half of that amount. The owner expects to collect 98
percent of the $240,200 in accounts receivable. The firm has $10,800 in cash and owes
a total of $1,470,000. The legal problems are personal and unrelated to the actual
business. What is the market value of this firm? - correct answer $963,196
Ivan's, Inc., paid $470 in dividends and $580 in interest this past year. Common stock
increased by $190 and retained earnings decreased by $116. What is the net income
for the year? - correct answer $354
You find the following financial information about a company: net working capital =
$1,140; fixed assets = $6,345; total assets = $8,670; and long-term debt = $4,671. What
are the company's total liabilities? - correct answer $5,856
, You find the following financial information about a company: net working capital =
$963; fixed assets = $7,041; total assets = $11,558; and long-term debt = $4,277. What
is the company's total equity? - correct answer $3,727
At the beginning of the year, Shinedown, Corp., had a long-term debt balance of
$45,630. During the year, the company repaid a long-term loan in the amount of
$11,055. The company paid $3,940 in interest during the year, and opened a new long-
term loan for $9,840. How much is the ending long-term debt account on the company's
balance sheet? - correct answer $44,415
A firm has sales of $1,210, net income of $225, net fixed assets of $542, and current
assets of $298. The firm has $100 in inventory. What is the common-size balance sheet
value of inventory? - correct answer 11.90%
A firm has total debt of $1,410 and a debt-equity ratio of .26. What is the value of the
total assets? - correct answer $6,833.08
Lee Sun's has sales of $3,450, total assets of $3,150, and a profit margin of 6 percent.
The firm has a total debt ratio of 42 percent. What is the return on equity? - correct
answer 11.33 percent
Jupiter Explorers has $8,800 in sales. The profit margin is 4 percent. There are 5,300
shares of stock outstanding, with a price of $1.60 per share. What is the company's
price-earnings ratio? - correct answer 24.09 times
A firm has a return on equity of 23 percent. The total asset turnover is 2.2 and the profit
margin is 6 percent. The total equity is $5,600. What is the net income? - correct answer
$1,288
Windswept, Inc.
2017 Income Statement
($ in millions)
Net sales$12,050
Cost of goods sold 7,800
Depreciation 480
Earnings before interest and taxes $3,770
Interest paid 94
Taxable income $3,676
Taxes 1,287
Net income$2,389
Windswept, Inc.
2016 and 2017 Balance Sheets
($ in millions)
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller puritywanjihia. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $13.29. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
78252 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now