Miami University Finance 301 Final UPDATED Actual Exam Questions and CORRECT Answers
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Course
Miami University Finance 301
Institution
Miami University Finance 301
Miami University Finance 301 Final
UPDATED Actual Exam Questions and
CORRECT Answers
Spontaneously generated funds are generally defined as follows:
a: Funds that a firm must raise externally through borrowing or by selling new common or
preferred stock.
b: Funds that arise out of normal bu...
Miami University Finance 301 Final
UPDATED Actual Exam Questions and
CORRECT Answers
Spontaneously generated funds are generally defined as follows:
a: Funds that a firm must raise externally through borrowing or by selling new common or
preferred stock.
b: Funds that arise out of normal business operations from its suppliers, employees, and the
government, and they include spontaneous increases in accounts payable and accruals.
c: Assets required per dollar of sales.
d: The amount of cash raised in a given year minus the amount of cash needed to finance the
additional capital expenditures and working capital needed to support the firm's growth.
e: A forecasting approach in which the forecasted percentage of sales for each item is held
constant. - CORRECT ANSWER- ✔✔b: funds that arise out of normal business operations
from its supplier4s, employees, and the government, and they include spontaneous increases
in accounts payable and accruals
Last year Wei Guan Inc. had $275 million of sales, and it had $270 million of fixed assets
that were used at 65% of capacity. In millions, by how much could Wei Guan's sales increase
before it is required to increase its fixed assets?
a: 148.08
b: 159.92
c: 115.50
d: 137.71
e: 155.48 - CORRECT ANSWER- ✔✔a: 148.08
Sales at full capacity = Actual Sales/ % of Capacity Used
,= 275,000,000/.65
=423,076,923.1
Full capacity sales-actual sales
= 423,076,923.1-275,000,000 = 148.08mil
Samuelson's has a debt-equity ratio of 20 percent sales of $5,000, net income $600, and total
debt of $3,200. What is the return on equity?
a: 18.75
b: 2.00
c: 12.00
d: 3.13
e: 3.75 - CORRECT ANSWER- ✔✔e: 3.75
Return of Equity = net income/total common equity
Debt equity ratio = 0.2
Sales = $5,000
Net income = $600
Total Debt = 3200
Total equity = total debt/debt-equity ratio
Total equity = 16,000
ROE = 600/16,000
ROE = 3.75%
Working capital management decisions include determining:
a: the number of employees needed to work during a particular shift.
, b: the best method of producing a product.
c: if a competitor should be acquired.
d: when to replace obsolete equipment.
e: the minimum level of cash to be kept in a checking account. - CORRECT ANSWER-
✔✔e: the minimum level of cash to be kept in a checking account
Which of the following statements is CORRECT?
a: One advantage of forming a corporation is that equity investors are usually exposed to less
liability than they would be in a partnership.
b: One disadvantage of operating a business as a proprietor is that the firm is subject to
double taxation because taxes are levied at both the firm level and the owner level.
c: If a partnership goes bankrupt, each partner is exposed to liabilities only up to the amount
of his or her investment in the business.
d: It is generally less expensive to form a corporation than a proprietorship because, with a
proprietorship, extensive legal documents are required.
e: Corporations face fewer regulations than proprietorships. - CORRECT ANSWER- ✔✔a:
One advantage of forming a corporation is equity investors are usually exposed to less
liability than they would be in a partnership
Which of the following would generally indicate an improvement in a company's financial
position, holding other things constant?
a: The TIE declines.
b: The total assets turnover decreases.
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