1. The income statement measures the increase in the assets of a firm over a period of time.
4. For corporations with low taxable income (less than $100,000), the effective tax rate can be as much as 40%.
5. Interest expense is deductible before taxes and therefore has an after-tax cost equal to the interest paid times (1 tax rate).
6. Allen Lumber Company had earnings after taxes of $580,000 in the year 2006 with 400,000 shares outstanding on December 31, 2006. On January 1, 2007, the firm issued 35,000 new shares. Because of the proceeds from these new shares and other operating improvements, 2007 earnings after taxes were 25 percent higher than in 2006. Earnings per share for the year-end 2007 was
D. None of these
7. Earnings per share is
A. operating profit divided by number of shares outstanding.
B. net income divided by number of shares outstanding.
C. net income divided by stockholders' equity.
D. net income minus preferred dividends divided by number of shares outstanding.
8. Net worth is equal to stockholders' equity
A. plus dividends.
B. minus preferred stock.
C. plus preferred stock.
D. minus liabilities.
9. Which of the following would represent a use of funds and, indirectly, a reduction in cash balances?
A. an increase in inventories
B. a decrease in marketable securities
C. an increase in accounts payable
D. the sale of new bonds by the firm
10. Assuming a tax rate of 30%, the after-tax cost of interest expense of $200,000 is
11. In examining the liquidity ratios, the primary emphasis is the firm's
A. ability to effectively employ its resources.
B. overall debt position.
C. ability to pay short-term obligations on time.
D. ability to earn an adequate return.
12. Refer to the figure above. Times interest earned for Megaframe Computer is
13. Refer to the figure above. The firm's debt to asset ratio is
14. Refer to the figure above. Using the DuPont method, return on assets (investment) for Marni is approximately
D. None of these.
15. Trend and industry analysis provide all of the following information except
B. the progress of the company
C. basis for decision-making about capital structure
D. future information about the company
16. If accounts receivable stays the same, and credit sales go up
A. the average collection period will go up.
B. the average collection period will go down.
C. accounts receivable turnover will decrease.
D. B and C.
17. In addition to comparison with industry ratios, it is also helpful to analyze ratios using
A. trend analysis.
B. historical comparisons.
C. neither; only industry ratios provide valid comparisons.
D. both a and b.
18. Disinflation may cause
A. an increase in the value of gold, silver, and gems.
B. a reduced required return demanded by investors on financial assets.
C. additional profits through falling inventory costs.
D. None of these.
19. If the company's accounts receivable turnover is increasing, the average collection period:
A. is going up slightly
B. is going down
C. could be moving in either direction
D. is going up by a significant amount
20. Refer to the figure above. What is Megaframe Computer's total asset turnover?
21. The percent-of-sales method would be more accurate under a steady sales assumption than cyclical sales.
22. Compared to a firm operating at 100% of capacity, firms that are operating at less than full capacity will require greater new external funds when sales increase.
24. A firm's cash borrowing needs can be reduced if its inventory turnover rate can be increased.
25. The calculation of cash receipts requires a breakout of cash and credit sales and collections history.
26. MG Lighting had sales of 1,000 units at $100 per unit last year. The marketing manager projects a 10 percent decrease in unit volume this year because a 20 percent price increase is needed to pass rising costs through to customers. Returned merchandise will represent 2 percent of total sales. What is your net dollar sales projection for this year?
D. None of these
27. 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 value of the ending inventory using LIFO?
28. In forecasting a firm's cash needs for some future period
A. the percent-of-sales method is a "broad-brush" approach.
B. cash budgets are more exact than the percent-of-sales method.
C. a cash budget approach can deal effectively with both level and seasonal production schedules.
D. all of these.
29. Firms that successfully increase their rates of inventory turnover will, among other things,
A. be able to reduce their borrowing needs.
B. be able to reduce their dividend payments to stockholders.
C. find it more difficult to be given credit by their resource suppliers.
D. have a greater need for high balances in their cash accounts.
30. If the actual December 31st A/R balance was $12,000; projected sales in March are $50,000; 70% of sales are on credit; 60% of credit sales are collected in the month of sale and 40% are collected in the month after the sale, what is the projected A/R balance on the proforma balance sheet for the end of March?
31. A highly automated plant would generally have
A. more variable than fixed costs.
B. more fixed than variable costs.
C. all fixed costs.
D. all variable costs.
32. If the price per unit decreases because of competition but the cost structure remains the same
A. the breakeven point rises.
B. the degree of combined leverage declines.
C. the degree of financial leverage declines.
D. All of these
33. A high DOL means:
A. there are high labor costs.
B. there is high debt.
C. there is a large amount of equity.
D. there are high fixed costs.
34. A firm's earnings per share is not impacted by its financing plan at the point when
A. debt is equal to equity.
B. return on assets equals return on equity.
C. the cost of borrowed funds equals the return on equity.
D. the cost of borrowed funds equals the return on assets.
35. Refer to the figure above. The Degree of Operating Leverage is
36. The contribution margin is equal to price per unit minus total costs per unit.
37. Degree of operating leverage should be computed only over a profitable range of operations.
38. Operating leverage primarily affects the left hand side of the balance sheet while financial leverage affects the right hand side of the balance sheet.
39. The degree of financial leverage measures the percentage change in EPS for every 1 percent move in EBIT.
40. The interwoven boundaries of banks and different trading companies in Japan make it easier to acquire credit in Japan than in the U.S.
41. Many companies such as McDonalds have embraced supply chain management using web-based procedures.
42. Firms with highly volatile and perishable inventory should assume relatively low levels of risk.
43. Generally a downward sloping yield curve indicates an eminent economic boom.
44. Tinbergen Cans expects sales next year to be $30,000,000. Inventory and accounts receivable (combined) will increase $4,000,000 to accommodate this sales level. The company has a profit margin of 10 percent and a 30 percent dividend payout. How much external financing will the firm have to seek? Assume there is no increase in liabilities other than that which will occur with the external financing
A. No external financing will be needed.
B. Less than $1,000,000 of external financing is needed.
C. Between $1,000,000 and $2,000,000 of external financing is needed.
D. More than $2,000,000 of external financing is needed.
45. Publishing companies are characterized by
A. fluctuating production to match sales.
B. seasonal sales.
C. low inventories due to computer inventory management.
D. a and b.
46. The use of cash budgeting procedures
A. helps the firm plan its current asset levels for a given production plan.
B. makes managing inventory easier under seasonal production.
C. illustrates fluctuating levels of current assets for a given production plan.
D. all of these are correct.
47. Financial managers can accurately predict future interest rates by
A. calculating the anticipated inflation rate
B. the Fed's decision regarding the target federal funds rate
C. measuring investor sentiment and consumer confidence indices
D. none of these
48. Yield curves change daily to reflect
A. changing conditions in the money and capital markets.
B. new inflation expectations.
C. changing conditions in the overall economy.
D. all of these.
49. 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
A. expectations hypothesis.
B. segmentation theory.
C. liquidity premium theory.
D. market average rate theory.
50. An aggressive, risk-oriented firm will likely
A. borrow long-term and carry low levels of liquidity.
B. borrow short-term and carry low levels of liquidity.
C. borrow long-term and carry high levels of liquidity.
D. borrow short-term and carry high levels of liquidity.
51. "Float" is the name given for a short-term loan between suppliers and buyers.
52. A lock-box is used by the selling corporation to speed up the check collection and check-clearing process.
53. Small-denomination certificates of deposit are usually more liquid than large-denomination CDs.
54. Inventories are usually the most liquid, but lowest-yielding, current asset of a firm.
55. Seasonal production allows for maximum efficiency in machinery and manpower use.
56. When a potential customer has a mediocre credit history, a firm should not consider allowing them to become a customer.
57. International cash management is more complex than domestic based cash management because of
A. difficult liquidity management.
B. different banking systems.
C. currency risk fluctuations.
D. all of these.
58. A banker's acceptance
A. is a draft drawn on a bank and paid by that bank when presented to it.
B. may be accepted by the bank for future payment.
C. is traded in a relatively liquid market until maturity.
D. all of these.
59. The three primary policy variables to consider when extending credit include all of the following except
A. credit standards.
B. the level of inflation.
C. the terms of trade.
D. collection policy.
60. When developing a credit scoring report, many variables would be considered. Which of the following best represent the major factors Dun & Bradstreet would examine?
A. The age of the management team, the dollar amount of sales, net profits, and long-term debt.
B. The age of the company, the number of employees, the level of current assets.
C. The financial statements, satisfactory or slow payment experiences, negative public records (suits, liens, judgments, bankruptcies).
D. The company's cash balances, return on equity, and its average tax rates.
The solution explains some multiple choice questions in accounting and finance
Amino acids multiple choice questions
Which statement is incorrect about the classification of amino acids?
a. Alanine and valine are neutral, nonpolar amino acids.
b. Lysine and arginine are basic amino acids.
c. Tryptophan and phenylalanine are aromatic amino acids.
d. Aspartic acid and aspargine are acidic amino acids.
Which of the following amino acids is the least water soluble at pH 7.0?
b. Glutamic acid
Which amino acid would migrate the furthest toward the anode (positive electrode) during paper electrophoresis at pH 7.0?
a. Aspartic acid
Which of the following functional groups, attached to an inert matrix, could function as a cation exchanger?
Which of the following amino acids would make the best buffer at pH 4.5?
d. Aspartic acid
Which fact is incorrect about stereoisomers?
a. A diastereomer is a nonsuperimposable non-mirror image.
b. An enantiomer is a nonsuperimposible mirror image.
c. Diastereomers have different melting points.
d. Diastereomers rotate plane polarized light in equal but opposite direction.
Which statement is incorrect about L-isoleucine?
a. Its enantiomer is named O-isoleucine.
b. It contains a total of two asymmetric or chiral carbons.
c. It can also be named as (28, 38)-isoleucine using the (R,8) system.
d. Its diastereomer would be named O-alloisoleucine.
An isoelectric amino acid was dissolved in water and the resulting pH was approximately 7.6. What amino acid would possess this property?
b. Glutamic acid
What volume of NaOH is required to adjust the solution of monosodium aspartate to pH 9.8?
a. 1 ml
b. 2 ml
c. 3 ml
d. 6 ml or more
What volume of 2 N Hel is required to completely titrate the 4 mmol of monosodium aspartate?
a. 2 ml
d. 6 ml or more
Which statement is correct about the peptide ala-ser?
a. Alanine is at the N-terminal of the peptide.
b. There are a total six atoms that lie in the plane of the peptide bond linking alanine to serine.
c. The alpha-carbon of alanine is sp3 hybridized d All the above are correct statements.
What is the product formed from the acid hydrolysis of a simple amide?
a. Acid & base
b. Aldehyde & alcohol
c. Acid & amine
d. Ester & alcohol
The complete acid hydrolysis of the peptide ala-gln-trp-ser would yield:
a. Ala, gin, trp, ser
b. Ala, glu, ser
c. Ala, glu, trp, ser
d. Ala. ser
Fibrous proteins, such as collagen, have which of the following properties?
a. Highly soluble in water
b. Their hydrophilic residues are directed into the interior of the protein
c. Exhibit enzymatic activity
d. Serve structural roles in the cell
Quaternary structure is associated with:
a. The overall shape of a polypeptide chain
b. The sum of the secondary and tertiary interactions
c. Simple proteins with only one subunit
d. The relative orientation of one polypeptide to another polypeptide in a multi-subunit protein.
The information needed to define the structure of a protein is essentially contained in:
a. Amino acid composition
b. Amino acid sequence
c. Secondary structure
d. Tertiary structure.
Insulin is a polypeptide hormone that contains two short polypeptide chains linked by two interstrand disulfide bonds. The most logical order of events to perform in order to sequence this protein would be:
A: The peptides are reduced with mercaptoethanol.
B: The peptides are sequenced using Edman chemistry .
C: The peptides are separated by chromatography techniques. 0: The peptides are alkylated with iodoacetamide.
a. A, D,C, B b.C,A, 0, B
c. C, B, A, 0
d. A, B, C, 0
Which statement is incorrect about the peptide val-asp-trp-asn-ser?
a. This peptide would show a strong absorption band at 280 nm.
b. Reaction with chymotrypsin would yield two peptides.
c. To synthesize this peptide using the solid phase method of Merrifield, the amino acid directly attached to the resin would be serine.
d. After the second round of Edman chemistry using the reagent PITC, the PTH -amino acid residue released would be PTH-asn.
Which statement is incorrect about the reaction of the peptide ser-Iys-asp-trp-cys-metasn-phe-ala with the following reagents?
a. Reaction with cyanogens bromide would yield two peptides.
b. Reaction with trypsin would result in three peptides. The smallest of three peptides would have the highest pi of the three.
c. Reaciton with chymotrypsin would result in the peptides ser-Iys-asp & try-cys-met-Iysasn-phe-ala .
d. Reaction with chymotrypsin would yield a different set of peptides that overlap those obtained with tryspsin
Determine the amino acid sequence of the following oligopeptide from the experimental data below:
The amino acid composition is found the be ala, Iys, phe, met, cys plus some
2. The peptide has a molecular weight around 700 Da and absorbs at 280 nm.
3. Treatment with carboxypeptidase results in tryptophan and a peptide.
4. CNBr treatment yields a tetrapeptide and a dipeptide.
5. Trypsine digestion produces an amino acid and a pentapeptide with met on the amino end.
6. Chymotrypsin digestion yields a dipeptide and a tetrapeptide.
d. Iys-ala-cys-phe-met -trp