California Retailing Inc. has sales of $4,000,000; the firm’s cost of goods sold is $2,500,000; and its total operating expenses are $600,000. What is California Retailing’s EBIT? A) $900,000 B) $1,300,000 C) $850,000 D) $875,000 ANSWER A
Ratios of almost all companies are easily comparable because all public companies prepare their financial reports based upon generally accepted accounting principles. Indicate whether the statement is true or false ANSWER FALSE
A homeowner that owes more on his/her mortgage than the home is worth is said to be “under water.” Indicate whether the statement is true or false ANSWER TRUE
A corporation’s operating profit margin is equal to A) net income divided by sales. B) sales divided by EBIT. C) EBIT divided by sales. D) EBIT divided by net income. ANSWER C
ExxonMobil generates about $50 billion in cash annually from its operations and invests about half of that on new exploration. Therefore, ExxonMobil is an example of a(n) A) investment banker. B) savings surplus unit. C) financial intermediary. D) savings deficit unit. ANSWER B
While many factors contributed to the financial crisis of 2007 and beyond, it is safe to say that real estate loans were NOT much of a contributing factor. Indicate whether the statement is true or false ANSWER FALSE
Which of the following statements concerning net income is MOST correct? A) Net income represents income that may be reinvested in the firm or distributed to its owners. B) Net income represents sales minus operating expenses at a specific point in time. C) Negative net income reduces a company’s cash balance. D) Net income represents […]
The process of shelf-registration is beneficial to the issuing firm because it will reduce the time needed for the firm to take an issue to market. Indicate whether the statement is true or false ANSWER TRUE
Common-size balance sheets are balance sheets of companies with almost identical total assets (within 2% of each other). Indicate whether the statement is true or false ANSWER FALSE
Three ways that savings can be transferred through the financial markets include all of the following EXCEPT A) indirect transfer using the investment banker. B) indirect transfer using the venture capital firm. C) indirect transfer using the financial intermediary. D) direct transfer of funds. ANSWER B