26 May Question • Question 1 0 out of 2 points Which of the following would be most likely to occur in the year a
Question
0 out of 2 points
Which of the following would be most likely to occur in the year after Congress, in an effort to increase tax revenue, passed legislation that forced companies to depreciate equipment over longer lives? Assume that sales, other operating costs, and tax rates are not affected, and assume that the same depreciation method is used for tax and stockholder reporting purposes.
Answer
• Question 2
0 out of 2 points
Which of the following statements is CORRECT?
Answer
• Question 3
0 out of 2 points
Other things held constant, which of the following actions would increase the amount of cash on a company’s balance sheet?
Answer
• Question 4
0 out of 2 points
For managerial purposes, i.e., making decisions regarding the firm’s operations, the standard financial statements as prepared by accountants under Generally Accepted Accounting Principles (GAAP) are often modified and used to create alternative data and metrics that provide a somewhat different picture of a firm’s operations. Related to these modifications, which of the following statements is CORRECT?
Answer
• Question 5
2 out of 2 points
The Nantell Corporation just purchased an expensive piece of equipment. Assume that the firm planned to depreciate the equipment over 5 years on a straight-line basis, but Congress then passed a provision that requires the company to depreciate the equipment on a straight-line basis over 7 years. Other things held constant, which of the following will occur as a result of this Congressional action? Assume that the company uses the same depreciation method for tax and stockholder reporting purposes.
Answer
• Question 6
2 out of 2 points
Which of the following items is NOT included in current assets?
Answer
• Question 7
2 out of 2 points
Which of the following items cannot be found on a firm’s balance sheet under current liabilities?
Answer
• Question 8
2 out of 2 points
Last year, Tucker Technologies had (1) a negative net cash flow from operations, (2) a negative free cash flow, and (3) an increase in cash as reported on its balance sheet. Which of the following factors could explain this situation?
Answer
• Question 9
0 out of 2 points
Which of the following statements is CORRECT?
Answer
• Question 10
0 out of 2 points
Which of the following statements is CORRECT?
Answer
• Question 11
0 out of 2 points
Below is the common equity section (in millions) of Teweles Technology’s last two year-end balance sheets:
2009 2008
Common stock $2,000 $1,000
Retained earnings 2,000 2,340
Total common equity $4,000 $3,340
Teweles has never paid a dividend to its common stockholders. Which of the following statements is CORRECT?
Answer
• Question 12
2 out of 2 points
Which of the following statements is CORRECT?
Answer
• Question 13
0 out of 2 points
A start-up firm is making an initial investment in new plant and equipment. Assume that currently its equipment must be depreciated on a straight-line basis over 10 years, but Congress is considering legislation that would require the firm to depreciate the equipment over 7 years. If the legislation becomes law, which of the following would occur in the year following the change?
Answer
• Question 14
0 out of 2 points
Which of the following factors could explain why Dellva Energy had a negative net cash flow last year, even though the cash on its balance sheet increased?
Answer
• Question 15
2 out of 2 points
Analysts who follow Howe Industries recently noted that, relative to the previous year, the company’s operating net cash flow increased, yet cash as reported on the balance sheet decreased. Which of the following factors could explain this situation?
Answer
• Question 16
0 out of 2 points
Which of the following statements is CORRECT?
Answer
• Question 17
2 out of 2 points
Companies HD and LD have the same sales, tax rate, interest rate on their debt, total assets, and basic earning power. Both companies have positive net incomes. Company HD has a higher debt ratio and, therefore, a higher interest expense. Which of the following statements is CORRECT?
Answer
• Question 18
0 out of 2 points
A firm wants to strengthen its financial position. Which of the following actions would increase its quick ratio?
Answer
• Question 19
0 out of 2 points
Considered alone, which of the following would increase a company’s current ratio?
Answer
• Question 20
2 out of 2 points
You observe that a firm’s ROE is above the industry average, but its profit margin and debt ratio are both below the industry average. Which of the following statements is CORRECT?
Answer
• Question 21
0 out of 2 points
Which of the following statements is CORRECT?
Answer
• Question 22
2 out of 2 points
Which of the following statements is CORRECT?
Answer
• Question 23
0 out of 2 points
Which of the following statements is CORRECT?
Answer
• Question 24
0 out of 2 points
HD Corp. and LD Corp. have identical assets, sales, interest rates paid on their debt, tax rates, and EBIT. However, HD uses more debt than LD. Which of the following statements is CORRECT?
Answer
• Question 25
2 out of 2 points
Casey Communications recently issued new common stock and used the proceeds to pay off some of its short-term notes payable. This action had no effect on the company’s total assets or operating income. Which of the following effects would occur as a result of this action?
Answer
• Question 26
0 out of 2 points
If the CEO of a large, diversified, firm were filling out a fitness report on a division manager (i.e., “grading” the manager), which of the following situations would be likely to cause the manager to receive a better grade? In all cases, assume that other things are held constant.
Answer
Correct Answer:
• Question 27
0 out of 2 points
Which of the following statements is CORRECT?
Answer
• Question 28
0 out of 2 points
A firm wants to strengthen its financial position. Which of the following actions would increase its current ratio?
Answer
• Question 29
0 out of 2 points
Companies E and P each reported the same earnings per share (EPS), but Company E’s stock trades at a higher price. Which of the following statements is CORRECT?
Answer
• Question 30
0 out of 2 points
A firm’s new president wants to strengthen the company’s financial position. Which of the following actions would make it financially stronger?
Answer
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