Solved Corporate Finance -Revised Exam |100% Correct|

Solved Corporate Finance -Revised Exam |100% Correct| Jenna has been promoted and is now in charge of all external financing. In other words, she is in charge of: *Ans* 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? *Ans* Corporation Which one of the following statements about a limited partnership is correct? *Ans* TBD One advantage of the corporate form of organization is the: *Ans* Ability to raise larger sums of equity capital than other organizational forms. The Sarbanes-Oxley Act of 2002 has: *Ans* 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? *Ans* Basing management bonuses on the length of employment. An agency issue is most apt to develop when: *Ans* 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? *Ans* $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? *Ans* $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? *Ans* $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? *Ans* $5,856