Question1. Which one of the following is a capital structure decisi

1. Which one of the following is a capital structure decision?

a. Should a new machine be purchased this year?

b. Should the credit terms offered to customers be revised?

c. Should debt or equity financing be used to purchase a building?

d. Should the level of inventory be increased?

2. Which one of the following functions is generally under the control of the corporate treasurer?

a. cost accounting

b. tax management

c. financial planning

d. financial accounting

3. Which one of the following best describes the liability a general partner has for the partnership debts?

a. none

b. liability limited to amount invested in the firm

c. liability limited based on percentage ownership

d. unlimited

4. Which one of the following provides you with the greatest control over a firm’s daily operations?

a. limited partner

b. major stockholder in a corporation

c. minor stockholder in a joint stock company

d. sole proprietor

5. A limited partner:

a. has no personal responsibility for the debts incurred by the partnership.

b. is guaranteed a return of his or her entire investment in the partnership if the partnership terminates.

c. can only control the daily operations for an individual segment of the partnership.

d. has minimal control, if any, over the daily operations of the partnership.

6. The Sarbanes-Oxley Act in 2002 is designed to protect the public against:

a. a firm’s net operating losses if those losses extend beyond a 2-year period.

b. declines in the market value of a firm’s outstanding shares of stock.

c. financial malpractice and accounting fraud.

d. a firm’s issuing additional shares of stock if the issue will reduce the market value of the current

outstanding shares.

7. Who has the ultimate control over a corporation?

a.SHAREHOLDERS

b. chief executive officer

c. chairman of the board

d. board of directors

8. Which one of the following is a primary market transaction?

a. Theo, the president of ABC, sells some of his shares in ABC on the NYSE

b. ABC offers newly issued shares to the general public

c. Tom instructs his broker to sell all of his shares in ABC, Inc.

d. Mary gifts shares of ABC stock to her son

Use these financial statements to answer questions 9 through 13.

Balance Sheet

2007 2008 2007 2008

Cash $ 1,700 $ 1,600 Accounts payable $13,800 $ 12,900

Accounts receivable 14,300 17,400 Long-term debt 47,500 48,600

Inventory 22,500 23,700 Common stock 17,000 22,000

Net fixed assets 82,900 81,600 Retained earnings 43,100 40,800

Total assets $121,400 $124,300 Total liabilities and equity $121,400 $124,300

Income Statement

Net Sales $163,700

Costs 108,200

Depreciation 14,100

EBIT 41,400

Interest 3,800

Taxable income 37,600

Taxes 13,200

Net Income $ 24,400

9. What is the amount of the operating cash flow?

a. $24,400 b. $30,500 c. $38,500 d. $42,300

10 What is the cash flow to stockholders for 2008?

a. $5,000 b. $19,400 c. $21,700 d. $29,400

11. What is the net new borrowing for 2008?

a. -$2,700 b. $200 c. $1,100 d. $4,900

12. What is the change in net working capital for 2008?

a. $5,100 b. $6,300 c. $24,700 d. $25,200

13. What is the cash flow to creditors for 2008?

a. -$2,700 b. -$1,100 c. $1,100 d. $2,700

14. A firm currently has an average tax rate of 20 percent and a marginal tax rate of 25 percent based on its

current taxable income of $36,600. What will the firm’s average tax rate be if it increases its taxable income by $1,100?

a. 20 percent b. 20.05 percent c. 20.09 percent d. 20.15 percent

15. Redding Industrial Supply had common stock of $6,800 and retained earnings of $4,925 at the beginning ofthe year. At the end of the year, the common stock balance is $7,000 and the retained earnings account balance is $5,498. The net income for the year is $938. What is the retention ratio?

a. 17.59 percent b. 38.91 percent c. 61.09 percent d. 82.41 percent

16. Which one of the following formulas is correct?

a. Profit margin = EBIT / Sales

b. Capital intensity ratio = 1 / Return on assets

c. ROA = ROE / Equity multiplier

d. Quick ratio = Cash / Current liabilities

17. If a firm uses cash to purchase inventory, its quick ratio will increase.

a.

True

b.

False

18. Use the following tax table to answer this question.

Taxable Income		Tax Rate
$0-50,000		15%
$50,001-75,000		25%
$75,001-100,000		34%
$100,001-335,000		39%

Pools, Inc., has taxable income of $77,000 for the year. Which one of the following statements is correct concerning Pools’ tax situation?

a.

Pools’ average tax rate is 18.74 percent.

b.

Pools’ average tax rate is 34.00 percent.

c.

Pools’ marginal tax rate is 15.00 percent.

d.

Pools’ marginal tax rate is 18.74 percent.

Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.