From the information presented in Table 4-6, calculate the following ratios for the Springfield Power Co. i. current ratio ii. acid test ratio iii. average collection period iv. inventory turnover v. gross profit margin vi. operating profit margin vii. net profit margin viii. total asset turnover ANSWER i. Current ratio = (300 + […]
The “blackout” period refers to the time between A) the date of death and when survivors benefits begin. B) when you begin working and you become a covered worker. C) early retirement age and normal retirement age. D) when benefits cease for a caretaking spouse and a widow(er)s pension begins. ANSWER D
For a given return it is preferable to have A) a high turnover rate and a high beta. B) a high turnover rate and a low beta. C) a low turnover rate and a low beta. D) a low turnover rate and a high beta. ANSWER C
Your university is running a special offer on tuition. This year’s tuition cost is $18,000. Next year’s tuition cost is scheduled to be $19,080. The university offers to discount next year’s tuition at a rate of 6% if you agree to pay both year’s tuition in full today. How much is the total tuition bill […]
A certificate of deposit that pays 9.8% compounded monthly is better than a similar certificate of deposit that pays 10% compounded only once per year. Indicate whether the statement is true or false ANSWER TRUE
Which of the following formulas correctly estimates free cash flows to the firm? A) FCFF = EBIT × (1 + tax rate) + non cash expenses – capital expenditures – net increases in working capital B) FCFF = EBIT × (1 – tax rate) + non cash expenses – capital expenditures – net increases in […]
Which of the following statements concerning survivors benefits under a company sponsored retirement plan is false? A) The employee has the power to reject the benefits in exchange for a larger single life annuity. B) Most company retirement plans provide death benefits for s a surviving spouse. C) Survivorship benefits for a surviving spouse are […]
Annuity A has a greater present value than annuity B when cash flows are discounted using the same positive interest rate for each annuity. Which annuity will have the larger future value if compounded at the same interest rate? A) Annuity A will have a larger future value. B) Annuity B will have a larger […]
Assume the information in Figure 13-1 is correct, EXCEPT the market value of property is now estimated to be $450,000. Use the Book value Plus Adjustment method along with the information from 13-1 and the new estimated value of property to value the firm’s equity. A) $1,100,000 B) $1,200,000 C) $1,300,000 D) $1,400,000 […]
Because it pays higher interest, a CD is considered more liquid than a passbook savings account. Indicate whether the statement is true or false ANSWER FALSE
