FIN/331 Final Exam 1
Department of Finance
Principles of Financial Management (FIN331)
1. Which of the aftercited statements is CORRECT?
a. One of the services of the urbane devise of form is that it avoids double taxation.
b. It is easier to sell one’s ownership attention in a direct than in a confirmation.
c. One of the disadvantages of a sole residentship is that the resident is unguarded to unbounded obligation.
d. One of the services of a confirmation from a gregarious nucleus is that complete fundholder has similar voting rights, i.e., “one peculiar, one control.”
e. Corporations of all types are theme to the urbane proceeds tax.
2. Which of the aftercited is NOT to address the possession gainment among shareholders and managers?
a. Maximize sales
b. Monitor managers’ activities
c. Give incentives naturalized on performance
d. Offer fund shares or fund options
e. Unfriendly takeaggravate threat
3. What is the ocean service of S-corp not-absolute to C-corp?
a. Acquisition room
b. Single taxation
c. Limited obligation
d. Dividend plan
e. Chief composition
4. Which of the aftercited mechanisms would be most mitigated to succor motivate managers to act in the best attentions of shareholders?
a. Decrease the use of obligatory covenants in chain agreements.
b. Take possessions that subjugate the possibility of a unfriendly takeover.
c. Elect a consideration of directors that allows managers main immunity of possession.
d. Development the interrelationship of constabulary allowance that comes from fund options and subjugate the interrelationship that is compensated as currency salaries.
e. Eliminate a calibre that members of the consideration of directors keep a real siege in the attached’s fund.
5. If the incomplete net hues is $5m and the dividend payout association is 60%, what is the incomplete retained hues at the end of the present year if the retained hues at the end of this year is $10m?
6. Which of the aftercited items is NOT normally considered to be a exoteric asset?
a. Accounts receivable.
e. Short-term, highly-liquid, interchangeable securities.
7. The aftercited advice for Towsontown, Inc. is provided:
Net Sales: $88,000
Operating Costs: $72,000 (doesn’t include deterioration)
Depreciation Expense: $ 7,200 (no amortization score occurred)
Interest Rates: 10% Annual
Tax Rate: 34%
How abundant net currency run did Woodley produce aggravate the spent year?
8. Houston Pumps recently reputed $185,250 of sales, $140,500 of bounteous costs other than deterioration, and $9,250 of deterioration. The direct had $35,250 of ungathered chains that convey a 6.75% attention objurgate, and its proceeds tax objurgate was 35%. In direct to stay its operations and thus produce advenient sales and currency runs, the attached was required to lay-out $15,250 to buy new chief expenditure and to endow $6,850 in net started chief. What was the attached's easy currency run?
9. Corporations countenance the aftercited tax schedule:
Tax on Base Percentage on
Taxable Income of Bracket Excess overhead Base
Up to $50,000 $0 15%
$50,000-$75,000 7,500 25
$75,000-$100,000 13,750 34
$100,000-$335,000 22,250 39
Company Z has $80,000 of taxable proceeds from its operations, $5,000 of attention proceeds, and $30,000 of dividend proceeds from preferred fund it dwells in other confirmations. What is Direct Z’s tax obligation (For dividend, 70% is exclusive from the taxable proceeds. Taxable proceeds for dividend is Dividend proceeds*(1 – Dividend alienation %))?
10. A direct expects sales to development during the hence year, and it is using the AFN equation to as the subjoined chief that it must establish. Which of the aftercited provisions would motive the AFN to increase?
a. The direct previously sentiment its unwandering possessions were nature operated at generous calibre, but now it learns that it in-fact has intemperance calibre.
b. The direct developments its dividend payout association.
c. The direct begins to pay employees monthly rather than weekly.
d. The direct’s acquisition room developments.
e. The direct decides to bung portico discounts on purchased materials.
11. Chua Chang & Wu Inc. is planning its operations for present year, and the CEO wants you to as the attached's subjoined funds needed (AFN). Data for use in your as are shown underneath. Naturalized on the AFN equation, what is the AFN for the hence year?
Last year’s sales = S0 $200,000 Terminal year's recitals payable $50,000
Sales development objurgate = g 40% Terminal year's notes payable $15,000
Last year’s completion possessions = A*0 $135,000 Terminal year's accruals $20,000
Last year’s acquisition room = M 20.0% Target payout association 25.0%
12. Which of the aftercited statements is NOT CORRECT?
a. When a confirmation's shares are owned by a few living-souls, we say that the attached is "closely, or secret, held."
b. "Going exoteric" establishes a attached's gentleman intrinsic prize and ensures that a melting negotiate earn regularly endure for the attached's shares.
c. The fund of exotericly owned companies must generally be registered delay and reputed to a regulatory possession such as the SEC.
d. When fund in a air-tight held confirmation is offered to the exoteric for the highest span, the transpossession is named "going exoteric, or an IPO," and the negotiate for such fund is named the new conclusion or IPO negotiate.
e. It is feasible for a attached to go exoteric and yet not establish any subjoined new chief for the attached itself.
13. Which is a contemptible way to parallel financial associations over other companies in the identical toil?
c. Internal uses
e. None of the overhead
14. Considered over, which of the following would increase a direct’s exoteric association?
a. An development in net unwandering possessions.
b. An development in accrued liabilities.
c. An development in notes payable.
d. An development in accounts receivable.
e. An development in accounts payable.
15. Towson, Inc. exotericly has $1,600,000 in recitals receivables and its days sales ungathered (DSO) is 20 days. If recitals receivable imply 50% of the direct’s exoteric possessions and Towson has $4,800,000 in net unwandering possessions, what is its completion asset turnaggravate association?
16. Dell has an register era of 1 month, and an recital receivable era of 0 (zero) months. It so has a payable era of 6 months. What are the currency change cycle era and the attention charge for Dell if they keep annual net completion (credit) sales dimensions of $10 billion? The negotiate attention objurgate is 6.0%.
a. -5.0, $-250 m
b. 6.0, $300m
c. 1.0, $100m
d. 3.0, $150m
e. 0.0, $100m
17. Ryngard Corp's sales terminal year were $38,000, and its completion possessions were $16,000. What was its completion possessions turnaggravate association (TAT)?
18. If your note up association is 25%, what is the room association?
19. Terminal year Rennie Industries had sales of $305,000, possessions of $175,000, a acquisition room of 5.3%, and an equity multiplier of 1.2. The CFO believes that the direct could subjugate its possessions by $51,000 delayout relevant either sales or costs. Had it subjugated its possessions by this sum, and had the liability association, sales, and costs remained regular, how abundant would the ROE keep radical?
20. Which association may be exceedingly forced by the precious of short-term and long-term liability for a given sum of completion liability?
a. Liability association
b. Acquisition room
d. Sharp association
21. Cook, Inc. has a exoteric association of 1.8x on exoteric liabilities of $200,000. The attached has $36,000 of inventories. The attached earn conclusion notes payable and use those funds to buy new inventories to as the register calibre for the dilution. Cook’s liability dwellers specifies that it must oceantain a sharp association at meanest 1.20x, or else it is in delinquency. How abundant new register can Cook establish antecedently it violates its chain contracts?
22. Currency negotiates are markets for
a. Foreign currencies.
b. Consumer automobile loans.
c. Contemptible stocks.
d. Long-term chains.
e. Short-term liability securities such as Treasury bills and interchangeable disquisition.
23. Which of the aftercited statements is CORRECT?
a. If you purchase 100 shares of Disney fund from your brother-in-law, this is an sample of a relevant negotiate proceeding.
b. If Disney conclusions subjoined shares of contemptible fund through an siege banker, this would be a resultant negotiate proceeding.
c. The NYSE is an sample of an aggravate-the-counter negotiate.
d. Barely institutions, and not living-souls, can gain in derivative negotiate proceedings.
e. As they are generally defined, currency market proceedings complicate liability securities delay maturities of near than one year.
24. Which one has molehill to do delay IPO?
a. New conclusions
b. Resultant negotiate
c. An increase of chief to conclusionr
d. Siege Banks haply underwriting
e. Exoteric offering
25. Which of the aftercited statements is CORRECT?
a. The most relevant separation among daub negotiates versus advenients negotiates is the ripeness of the instruments that are traded. Daub negotiate proceedings complicate securities that keep maturities of near than one year inasmuch-as advenients negotiates proceedings complicate securities delay maturities main than one year.
b. Chief negotiate proceedings complicate barely preferred fund or contemptible fund.
c. If General Electric were to conclusion new fund this year, this would be considered a resultant negotiate transpossession since the direct already has fund ungathered.
d. Both Nasdaq dealers and "specialists" on the NYSE dwell inventories of funds.
e. Currency negotiate proceedings do not complicate securities named in currencies other than the U.S. dollar.
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