Which account represents the cumulative earnings of the firm since its formation, minus dividends paid?

FIN 200 Final Exam Guide

1) Maximization of shareholder wealth is a concept in which

2) What is the primary goal of financial management?

3) One of the major disadvantages of a sole proprietorship is

4) The statement of cash flows does NOT include which of the following sections?

5) Which of the following is not a primary source of capital to the firm?

6) Which account represents the cumulative earnings of the firm since its formation, minus dividends paid?

7) The most rigorous test of a firm’s ability to pay its short-term obligations is its
8) In examining the liquidity ratios, the primary emphasis is the firm’s
9) Which of the following is not considered to be a profitability ratio?

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Refer to the figure above. The firm’s inventory turnover ratio is

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Refer to the figure above. Megaframe’s current ratio is

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Refer to the figure above. The firm’s debt to asset ratio is

13) In general, the larger the portion of a firm’s sales that are on credit, the

14) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced
15) In order to estimate production requirements, we

16) The key initial element in developing pro forma statements is
17) A firm has beginning inventory of 300 units at a cost of $11 each. Production during the period was 650 units at $12 each. If sales were 700 units, what is the cost of goods sold (assume FIFO)?
18) The difference between total receipts and total payments is referred to as

19) The concept of operating leverage involves the use of __________ to magnify returns at high levels of operation.
20) Financial leverage deals with:
21) When a firm employs no debt

22) A firm’s break-even point will rise if

23) If a firm has a price of $4.00, variable cost per unit of $2.50 and a breakeven point of 20,000 units, fixed costs are equal to:
24) In break-even analysis, the contribution margin is defined as

25) Kuznets Rental Center requires $1,000,000 in financing over the next two years. Kuznets can borrow long-term at 9 percent interest per year for two years. Alternatively, Kuznets can borrow short-term and pay 7 percent interest in the first year. Then, Kuznets projects paying 10 percent interest in the second year. Assuming Kuznets pays off the accrued interest at the end of each year, which of the following statements is true?
26) The theory of the term structure of interest rates which suggests that long-term rates are determined by the average of short-term rates expected over the time that a long-term bond is outstanding is the
27) Normally, permanent current assets should be financed by

28) Risk exposure due to heavy short-term borrowing can be compensated for by
29) An aggressive working capital policy would have which of following characteristics?
30) Which of the following combinations of asset structures and financing patterns is likely to create the most volatile earnings?

31) “Float” takes place because
32) In managing cash and marketable securities, what should be the manager’s primary concern?
33) How would electronic funds transfer affect the use of “float”?

34) Dun & Bradstreet is known for providing
35) The three primary policy variables to consider when extending credit include all of the following except
36) Variables important to credit scoring models include

37) What is generally the largest source of short-term credit small firms?
38) Commercial paper that is sold without going through a broker or dealer is known as
39) Which of the following is not a true statement about commercial paper?

40) A large manufacturing firm has been selling on a 3/10, net 30 basis. The firm changes its credit terms to 2/20, net 90. What change might be expected on the balance sheets of its customers?
41) Which method of controlling pledged inventory provides the greatest degree of security to the lender?
42) Firms exposed to the risk of interest rate changes may reduce that risk by

43) As the interest rate increases, the present value of an amount to be received at the end of a fixed period
44) In determining the future value of a single amount, one measures
45) An annuity may be defined as

46) Mr. Blochirt is creating a college investment fund for his daughter. He will put in $850 per year for the next 15 years and expects to earn an 8% annual rate of return. How much money will his daughter have when she starts college?

47) If you were to put $1,000 in the bank at 6% interest each year for the next ten years, which table would you use to find the ending balance in your account?
48) If you invest $8,000 at 12% interest, how much will you have in 7 years?