1) Owners Equity consists of all the following except:
a. Additional paid in capital.
b. Par value stock
c. Debentures outstanding
d. Retained earnings
2) On the statement of cash flows an increase in accounts receivables is considered:
a. A cash inflow
b. A use of cash
c. A source of cash
d. None of the above
3) Which of the following best describes how corporations are taxed on dividend income?
a. Like individuals, corporations are taxed on all dividends received.
b. Seventy percent of dividend income received by corporations is tax exempt.
c. Varying amounts of dividend income received by corporations are tax-exempt, depending on the percent of the paying corporation that the receiving corporation owns.
d. In order to avoid triple taxation of earnings, dividend income received by one corporation from another in which it owns stock is 100% tax-exempt.
4) Kleaner Kars has a return on assets of 6.75 percent, a total asset turnover rate of 1.3, and an equity multiplier of 1.6. Using the Dupont Identity, what is the return on equity?
a. 8.30 percent
b. 8.78 percent
c. 10.80 percent
d. 14.04 percent
e. 14.33 percent
5) Jefferson and Sons has total assets of $807,200, total equity of $509,500, total sales of $945,300, and net income of $25,600. What is the profit margin?
a. 1.17 percent
b. 1.86 percent
c. 2.71 percent
d. 3.17 percent
e. 5.02 percent
6) A firm has a debt-to-equity ratio of 0.5. What is the firm's equity multiplier?
a. 0.33
b. 1.50
c. 0.50
d. 2.00
e. 5.00
7) Knox Corp. plans to sell 1,000 units in 2011 at an average sale price of $40 each. Cost of goods sold will be 40% of the sale price. Depreciation expense will be $2,500, interest expense $1,500, and other expenses will be $3,000. Wessel's tax rate is 35%. What will Knox Corp.'s net income be for 2011?
a. $ 9,500
b. $ 6,875
c. $14,200
d. $11,050
e. $28,430
8) What is the return on stockholders' equity for a firm with a net profit margin of 4.9 percent, sales of $350,000, an equity multiplier of 1.6, and total assets of $215,000?
a. 12.76%
b. 15.24%
c. 12.57%
d. 8.88%
9) Assume a firm has an average inventory of $50,000, sales of $250,000, gross profit of $100,000, and net income of $25,000. The preferred formulation for an inventory turnover results in an inventory turnover of:
a. 1 time
b. 3 times
c. 4 times
d. 5.5 times
10) The higher the rate of interest:
a. the smaller the future value of an amount invested to-day
b. the smaller the present value of a future sum of money
c. the larger the present value of a future sum of money
d. all of the above