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BFIN 300 midterm exam
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BFIN 300 midterm exam
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BFIN 300 midterm examThe process of planning and managing a firm's long-term investments is called -
CORRECT ANSWER-Capital Budgeting
Which of the following is an example of an indirect agency cost? - CORRECT
ANSWER-A lost opportunity
Which of the following forms of business organization is subject to double
taxation? - CORRECT ANSWER-Corporation
Control of a firm ultimately rests with - CORRECT ANSWER-The Stockholders
Which of the following should a financial manager take into account when
considering an opportunity? - CORRECT ANSWER-How much cash they expect
to receive, When will they receive the funds and How likely they are to receive
the funds
ABC Corporation has current assets of $5,200, fixed assets of $26,000, current
liabilities of $4,900, and long-term debt of $15,000. What is the ABC
Corporation's total equity? What is the NWC of ABC Corporation? - CORRECT
ANSWER-Total Equity $11,300, NWC $300
Company X has fixed assets of $6million on its balance sheet that were originally
purchased for $10million; it can be sold for $7million today. The company's
balance sheet also shows current liabilities of $2.6million and NWC of $900,000.
In addition, if all the current assets were liquidated today, the company would
receive $2.8million cash. What is the book value of Company X's total assets?
What is the market value of Company X's total assets? - CORRECT
ANSWER-BV $9.5million, MV $9.8million
Company has sales of $21,000, costs of $11,200, depreciation expense of
$2,300, and interest expense of $1,300. If the tax rate is 40 percent, what is the
operating cash flow, or OCF? - CORRECT ANSWER-OCF $7320 = EBIT
$7500+Depreciation $2300-Taxes $2480
, XYZ Corporation's balance sheet of 2019 showed net fixed assets of
$1.56million, and the 2020 balance sheet showed net fixed assets of $1.78
million. The company's 2020 income statement showed a depreciation expense
of $140,000. What was the company's net capital spending for 2020? -
CORRECT ANSWER-$360,000
Which one of the following is the financial statement which shows the accounting
value of a firm's equity as of a particular date? - CORRECT ANSWER-Balance
sheet
Which is a financial leverage ratio? - CORRECT ANSWER-Debt to equity
Which is a key turnover ratio? - CORRECT ANSWER-Inventory turnover ratio,
Asset turnover ratio, Receivables turnover ratio and Fixed asset turnover ratio
Which of the following ratios are market-based ratios? - CORRECT
ANSWER-P/E ratio and P/BV ratio
Which of the followings are the correct set of components of ROE? - CORRECT
ANSWER-Profit margin, asset turnover, equity multiplier
Find Current ratio: Company A's balance sheet shows current assets of $6,300,
fixed assets of $32,000, total long-term liabilities of $16,200 and total equity of
$18,100. - CORRECT ANSWER-1.58x
Interest earned on both the initial principal and the interest reinvested from the
prior periods is called - CORRECT ANSWER-Compound interest
Don Lemon invested $2,000 six years ago at 4.5%. He spends his earnings as
soon as he earns any interest so he only receives interest on his initial
investment. Which type of interest is Mr. Lemon earning? - CORRECT
ANSWER-Simple interest
Alan Fishman just computed the present value of a $10,000 bonus he will receive
in the future. The interest rate he used in this process is referred to as which one
of the following? - CORRECT ANSWER-Discount rate
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