The ________ method is the most intuitive but least sophisticated capital budgeting technique presented by the author. A) net present value B) internal rate of return C) payback D) modified internal rate of return ANSWER C
Date: September 19th, 2020
Which of the following statements regarding the income statement is INCORRECT? A) The income statement shows the retained earnings and expenses at a given point in time. B) The income statement shows the flow of earnings and expenses generated by the firm between two dates. C) The last or “bottom” line of the income statement […]
Date: September 19th, 2020
________ ratios are a form of leverage-related ratios. A) Profitability B) Liquidity C) Market D) Coverage ANSWER D
Date: September 19th, 2020
Standard deviation is the practice of combining assets or investments in order to reduce risk. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Tangshan Mining has common stock at par of $200,000, paid-in capital in excess of par of $400,000, and retained earnings of $280,000. In states where the firm’s legal capital is defined as the par value of common stock, the firm could pay out ________ in cash dividends without impairing its capital. A) $200,000 B) $680,000 […]
Date: September 19th, 2020
Which of the following best represents operating income? A) Income after financing activities B) Earnings before interest and taxes C) Income from capital gains D) Income from discontinued operations ANSWER B
Date: September 19th, 2020
How many times can the Johnson Corporation cover their interest expenses if the firm has sales of $3,000,000, total assets of $2,100,000, EBIT equal to $1,000,000, a tax rate of 40% and interest expense of $250,000? A) 1.43 B) 2.10 C) 4.00 D) 12.00 ANSWER C Explanation: C) TIE = EBIT/I = $1,000,000/$250,000 […]
Date: September 19th, 2020
Capital budgeting techniques are ________ assessment tools to determine whether a firm should proceed with an investment in ________. A) qualitative; a project. B) qualitative; working capital. C) quantitative; a project. D) quantitative; working capital. ANSWER C
Date: September 19th, 2020
Diversification of stocks reduces unsystematic or firm-specific risk, leaving systematic or market risk. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
A firm reports the following income statement items: sales of $60,550,000; income tax of $1,744,000; operating expenses of $10,115,000; cost of goods sold $34,025,000; and interest expense of $750,000. What is the amount of the firm’s EBIT? A) $18,154,000 B) $14,935,000 C) $16,410,000 D) $7,775,000 ANSWER C Explanation: C) EBIT = Sales – […]
Date: September 19th, 2020
