Tootsie Roll Industries Inc. Income Statement As of December 31, Year 6 ($000s) Year 6 Net sales 194,299 COGS 103,205 SG&A 54,329 EBIT 36,765 Interest expense 612 Other income (expenses), net 966 Income before income taxes 37,119 Income taxes 14,563 Net Income 22,556 Total Cash dividends 12,316 Shares Outstanding 9,645 Average price per share (4th […]
You have equal amounts of money invested in a risk-free dollar-denominated investment and borrowed at the rate paid on the British pound. If you can earn a return during this, you have shown: A) Interest rate arbitrage. B) Interest rate parity C) Purchasing power arbitrage D) Purchasing power parity ANSWER A
Which of the following is not a possible political risk when practicing business internationally? A) Loss of using own specialized labor B) Fewer opportunities for growth C) Limited ability to convert currency D) Additional taxes ANSWER B
It is more difficult to deal with political risk than exchange rate risk. Indicate whether the statement is true or false ANSWER TRUE
A company has the possibility to pay off a line of credit early for a 2% discount rate if paid off in 25 days. There are 24.333 discount periods for the year for this money if the discount is not taken. What are the terms for this cash discount? A) 2/25 net 50 B) 2/25 […]
Tariffs imposed by a foreign government are an example of A) Exchange rate risk B) Foreign risk C) Policy risk D) Political risk ANSWER D
The seizure of a firm’s assets by a foreign government is called A) misappropriation. B) rationalization. C) expropriation. D) extortion. E) confiscation. ANSWER C
The length of time it takes a buyer to acquire, process, and sell the inventory is the: A) Receivables Cycle B) Receivables Period C) Inventory Cycle D) Inventory Period ANSWER D
All of the following are reasons money will adhere to PPP accurately EXCEPT A) Electronic transfers B) Universal value C) Easily determined price D) Not substitutable ANSWER D
The primary reason for offering customers credit is to A) increase the predictability of cash flows. B) stimulate sales. C) smooth billing cycles. D) reduce the risk of nonpayment. E) speed cash flows. ANSWER B
