30 Apr WHICH ONE OF THE FOLLOWING FUNCTIONS SHOULD BE THE RESPONSIBILITY OF THE CONTROLLER RATHER THAN THE TREASURER?
Which one of the following terms is defined as a conflict of interest between the corporate shareholders and the corporate managers?
A. Articles of incorporation.
B. Corporate breakdown.
C. Agency problem.
D. Bylaws.
E. Legal liability.
2.
Which one of the following functions should be the responsibility of the controller rather than the treasurer?
A. Daily cash deposit.
B. Income tax returns.
C. Equipment purchase analysis.
D. Customer credit approval.
E. Payment to a vendor.
3.
Sally and Alicia currently are general partners in a business located in Atlanta, Georgia. They are content with their current tax situation but are both very uncomfortable with the unlimited liability to which they are each subjected. Which form of business entity should they consider to replace their general partnership assuming they wish to remain the only two owners of their business? Whichever organization they select, they wish to be treated equally.
A. Sole proprietorship.
B. Joint stock company.
C. Limited partnership.
D. Limited liability company.
E. Corporation.
4.
Which one of the following best states the primary goal of financial management?
A. Maximize current dividends per share.
B. Maximize the current value per share.
C. Increase cash flow and avoid financial distress.
D. Minimize operational costs while maximizing firm efficiency.
E. Maintain steady growth while increasing current profits.
5.
Which of the following are cash flows from a corporation into the financial markets?
I. Repayment of long-term debt.
II. Payment of government taxes.
III. Payment of loan interest.
IV. Payment of quarterly dividend.
A. I and II only.
B. I and III only.
C. II and IV only.
D. I, III, and IV only.
E. I, II, and III only.
6.
Wagner Industrial Motors, which is currently operating at full capacity, has sales of $2,330, current assets of $670, current liabilities of $360, net fixed assets of $1,520, and a 5 percent profit margin. The firm has no long-term debt and does not plan on acquiring any. The firm does not pay any dividends. Sales are expected to increase by 10 percent next year. If all assets, short-term liabilities, and costs vary directly with sales, how much additional equity financing is required for next year?
A. $171.35
B. $54.85
C. $11.65
D. $233.00
E. $244.65
7.
A firm has a retention ratio of 37 percent and a sustainable growth rate of 11.60 percent. The capital intensity ratio is 1.37 and the debt-equity ratio is .72. What is the profit margin?
A. 23.75 percent
B. 16.33 percent
C. 28.09 percent
D. 22.38 percent
E. 20.50 percent
8.
Major Manuscripts, Inc.
2012 Income Statement
Net sales $ 7,900
Cost of goods sold 6,815
Depreciation 220
Earnings before interest and taxes $ 865
Interest paid 30
Taxable Income $ 835
Taxes 284
Net income $ 551
Dividends $ 228
Major Manuscripts, Inc.
2012 Balance Sheet
2012 2012
Cash $ 2,170 Accounts payable $ 1,470
Accounts rec. 860 Long-term debt 290
Inventory 2,700 Common stock $ 2,900
Total $ 5,730 Retained earnings 4,400
Net fixed assets 3,330
Total assets $ 9,060 Total liabilities & equity $ 9,060
Major Manuscripts, Inc., does not want to incur any additional external financing. The dividend payout ratio is constant. What is the firms maximum rate of growth?
A. 3.70 percent
B. 5.60 percent
C. 10.74 percent
D. 3.77 percent
E. 3.44 percent
9.
Major Manuscripts, Inc.
2012 Income Statement
Net sales $ 7,300
Cost of goods sold 6,500
Depreciation 180
Earnings before interest and taxes $ 620
Interest paid 41
Taxable Income $ 579
Taxes 215
Net income $ 364
Dividends $ 185
Major Manuscripts, Inc.
2012 Balance Sheet
2012 2012
Cash $ 2,290 Accounts payable $ 1,370
Accounts rec. 830 Long-term debt 320
Inventory 2,150 Common stock $ 2,400
Total $ 5,270 Retained earnings 4,450
Net fixed assets 3,270
Total assets $ 8,540 Total liabilities & equity $ 8,540
Major Manuscripts, Inc., is currently operating at 90 percent of capacity. All costs and net working capital vary directly with sales. The tax rate, the profit margin, and the dividend payout ratio will remain constant. How much additional debt is required if no new equity is raised and sales are projected to increase by 10 percent?
A. $330
B. $197
C. $193
D. $137
E. $527
10.
Thomas invests $104 in an account that pays 4 percent simple interest. How much money will Thomas have at the end of 6 years?
A. $124.80
B. $131.59
C. $133.12
D. $126.53
E. $128.96
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