VoyForums
[ Show ]
Support VoyForums
[ Shrink ]
VoyForums Announcement: Programming and providing support for this service has been a labor of love since 1997. We are one of the few services online who values our users' privacy, and have never sold your information. We have even fought hard to defend your privacy in legal cases; however, we've done it with almost no financial support -- paying out of pocket to continue providing the service. Due to the issues imposed on us by advertisers, we also stopped hosting most ads on the forums many years ago. We hope you appreciate our efforts.

Show your support by donating any amount. (Note: We are still technically a for-profit company, so your contribution is not tax-deductible.) PayPal Acct: Feedback:

Donate to VoyForums (PayPal):

[ Login ] [ Contact Forum Admin ] [ Main index ] [ Post a new message ] [ Search | Check update time | Archives: 1, [2] ]

[ Next Thread | Previous Thread | Next Message | Previous Message ]

Date Posted: 19:55:03 06/28/01 Thu
Author: Son Phan
Subject: Re: Here are two sample Exam 1 from Hodges
In reply to: Charles Hodges 's message, "Here are two sample Exam 1 from Hodges" on 06:59:53 06/25/01 Mon

>EXAM 1 FINANCE 3300 SPRING 1999
>
>NAME ________________________ Student #
>_____________________
>
>YOU HAVE 1 ½ HOURS TO COMPLETE THIS EXAM
>
>Instructions:
>1) The exam is closed book and closed notes. No scrap
>paper is allowed, use the back of the exam if
>necessary.
>2) Read the entire exam before starting. The best
>strategy is generally to “cherry pick”. In other
>words, solve the easiest (and/or most familiar)
>problems first. This will save time (and energy) that
>can be expended on the more difficult problems.
>3) Partial points are based on readily observable
>evidence that you know at least part of the solution
>concept. The more evidence presented (and the clearer
>the evidence), the better the chance for partial
>points. In other words, SHOW ALL WORK!
>4) If you have additional time remaining, give your
>work one last check.
>5) True/False questions are worth 1 1/2 points.
>Multiple choice questions are worth 3 points. Number
>one is b. Short answer questions usually take less
>than three sentences and are worth 4 points. Problems
>are worth the number of points listed in the question.
>
>PART I. CONCEPT QUESTIONS
>
>1. The goal of the financial manager should be to
>maximize earnings per share.
> B. False
>
>2. In which financial statement does one find the
>account “Additional Paid-in Capital” ? What would
>cause the amount listed in “Additional Paid-in
>Capital” to change from year to year?
>
"Additional Paid-in Capital" is found in balance sheet. This amount listed in "Additional Paid-in Capital" is change from year to year because it, the second component in common stock, represents the additional money or less money when the company buy stock or sell stock
>>
>3. Suppose a profitable firm wants to maintain a
>specific TIE ratio. If the firm knows the level of
>its debt, the interest rate it will pay on that debt
>and the applicable tax rate, the firm can then
>calculate the Net Income level required to maintain
>its target TIE ratio.
> a. True
>
>4. Which of the following would not be listed in a
>profitable firm’s income statement?
>
> E. All of the above would be listed in a profitable
>firm’s income statement.
>
>5. List the three basic methods of manipulating
>financial statements as discussed in class.
Three basix method are conservative vs. aggressive accting,
discretionary spending sale, point in time.

> 6. (Fill in the blanks) Finance would suggest that
>_Future____(Historical/Future) cash flow______________
>(Earnings/Cash Flows) are most important when valuing
>any investment.
>
>7. You have loaned money to a company. The company
>is supposed to repay the loan in 60 days. As a
>short-term creditor concerned only with a company's
>ability to meet its financial obligation to you, which
>one of the following combinations of ratios would you
>most likely prefer?
> Current Debt
> ratio TIE ratio
>
> e. 2.5 0.5 0.71
>
>8. What is the purpose of the Income Statement?
>Does the Income Statement cover a period of time or a
>point in time?
>
>The purpose of the income statement is to recognize the earning profit or loss of a company after all expenses , tax , and depreciation and interest expense.

>9. What are Asset Management ratios intended to
>measure? List one example of an Asset Management ratio.
>
>Asset management ratios measure different business acitivity in a firm and how to utilize the assets more effectively.
>
>
>10. Your profitable, tax-paying firm is buying a
>machine to perform some task and will pay cash for the
>machine on the last day of the year. You are
>considering two machines that are completely equal
>(i.e., they have identical levels of performance,
>efficiency, expected maintenance costs, depreciation
>periods, etc.), except that one machine costs more
>than the other machine. Given this information, which
>of the following is true about next year’s financial
>statements?

> D. We will have lower net income and higher cash
>flow with the more expensive machine.
>
>
>11. We often look for “evidence” of a company’s
>positive (or negative) cash flow. List some things
>that an employee might see if a profitable firm was
>experiencing cash flow difficulties?

A company with a positive net income yet negative operatin cash flow is either experiencing severe growth pain, such as
large buildups in acct receivables and or inventories. CAsh flow from operating expense exceeds reported Net Income from the income statement.
>
12. In the statement of cash flows, which of the
>following is a source of funds?
>
> C. Increase in notes payable.
>
>>13. List the three areas of finance.
>
> finance institution, invest ment and coporate finance.
>
>
>14. According to the book, What is the purpose of
>Financial Forecasting?
>
> Financial planning is essential to assure that required funds are available for any new facilities, and / or working capital needed to support the firm's projected growth in sale.The cost and term under which funds are obtained have major effect upon the firm's future profitability, required capital to fund growth must be planned for and analyzed carefully, and that is essence of financial forecasting.
>
>
>15. For firms using accrual accounting, the financial
>statement that lists a firm’s investing cash flows and
>operating expenses over a period of time is the:
>
> C. Statement of Cash Flows.
>
>16. What are three limitations of ratio analysis?
>
>snap in time, accounting data and lack of a standard.
>
>
>
>17. Net Fixed Assets are always less than, or equal
>to, Gross fixed assets.
> B. False
>
>18. A profitable firm that wants to know if it has
>enough cash to meet its bills would be most likely to
>use which kind of ratio?
> (a) liquidity.
>
>
> PART II. PROBLEMS
>1. Fill in the missing numbers for the Aboutt, Inc.
>1997 annual financial statements. Assume all balance
>sheet accounts are 1997 ending balances unless other
>wise noted. Missing numbers are worth 1 1/2 points
>unless otherwise noted.
>
>Profit before taxes $ 162 Accrued Wages $__159______
>Depreciation $90 Income tax $ __77_____
>Net income $ _85_______(3 points) Total current
>liabilities$ ___352_______
>Long term debt $ 205 Net sales $ 907
>Total liabilities and owner's equity $818_____ Beginning
>Retained Earnings $132
>Additional Paid-in Capital $94 Common stock ($.03
>par) $ 24
>Ending retained earnings $ 143 Cost of goods sold
>________
>Beginning Net Fixed Assets $351 Cash $
>__96__________
>Accounts payable $ 193 Accounts receivable $230
>Inventories $ 95
>Gross profit $ 467 Rent $70
>Total Assets $ _818__________ Research and Development
>Expense $7
>Advertising $110 Operating Profit $
>_190________
>Interest expense $8 Total Current assets $ 421
>Ending Net fixed assets $ 397 Dividends $74
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>Fill in the blanks below:
>Purchase of Fixed Assets 136________(3 points)
>Dividends per Share __9.25______(3 points)
> 2. Use this information to answer the questions
>below. Assume all sales are credit sales.
>Balance Sheet 12/31/96 12/31/97
> Cash $ 315 $ 155
> Accounts Receivable 275 275
> Inventory 600 320
> Total Current Assets 1,190 750
> Plant and Equipment 1,648 2,313
> Less: Acc Depr (500) (730)
> Net plant and equipment 1,148 1,583
> Long Term Investments 52 27
> Total assets $2,390 $2,360
>
> Accounts payable $ 150 $ 315
> Notes payable 125 106
> Total Current liabilities 275 421
> Bonds 500 430
> Common Stock (.05 par) 175 165
> Paid-in-capital 775 644
> Retained earnings 665 700
> Total owners' equity 1,615 1,509
> Total liabilities and
> owners' equity $2,390 $2,360
>
>Income Statement (1996) (1997)
> Sales (100% credit) $1,100 $1,330
> Cost of Goods Sold 600 760
> Gross profit 500 570
> Operating expenses 20 170
> Depreciation 160 230
> Net operating income 320 170
> Interest expense 64 57
> Net income before taxes 256 113
> Taxes 87 66
> Net income $ 169 $ 47
>
>2a. (2 points) For this firm, what was the smallest
>source of funds in 1997?
>
>2b. (2 points) What was the firm’s 1997 Net Cash
>Flow? -160
>
>2c. (2 points) Calculate the 1997 Gross Profit Margin?
> 42.9%
>
>2d. (2 points) Calculate the 1997 Current Ratio?
>
>
>2e. (2 points) Calculate the 1997 Inventory Turnover
>Ratio?
>
>
>2f. (2 points) What is the firm’s Debt Ratio?
>
>2g. (3 points) Do a common size analysis on the 1997
>Balance Sheet.
> ________________________________________________
>The following problems do not use the financial
>statements from the previous page.
>
>3. Last year your company had; sales = $150, Net
>Profit Margin = 12%, Assets = $80, and a
>debt-to-equity ratio=3. Calculate the Return on
>Assets (2 points) and Return on Equity (3 points).
>
>ROA= 22.5%, ROE= 90%
>
>
>
>4. (4 points) The Atlanta Company has determined that
>it return on equity is 15%. You have the following
>information, debt ratio = 45% and Total Asset Turnover
>= 2.8. What is the firm’s profit margin?
>
>Debt ratio = Total liability/Total Asset = 35/100
>so Total asset is 100
> Total asset turn over =sale /total asset=sale/100=2.8 . so sale = 280
>return on equity=net income/equity=15/100. so net income is 15
>profit margin =net income/sale=15/180=5.36%

>5. (4 points) Indicate how the following ratios match
>up to industry averages. (Interpret them in relation
>to the category in which they would be classified.)
> AAAAA Company Industry Interpretation
>Current ratio 2.0 2.7
>Return on Assets 4% 8%
>Inventory turnover 17.5 9.9
>Times interest
>earned 13.2 15.4
>

[ Next Thread | Previous Thread | Next Message | Previous Message ]

Replies:

[ Contact Forum Admin ]

Forum timezone: GMT-8
VF Version: 3.00b, ConfDB:
Before posting please read our privacy policy.
VoyForums(tm) is a Free Service from Voyager Info-Systems.
Copyright © 1998-2019 Voyager Info-Systems. All Rights Reserved.