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Finance practice problems

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25. A common size income statement:
a. uses the same dollar amount of revenues for each year.
b. expresses items as a percentage of revenues.
c. makes comparisons between years more difficult.
d. is useful in estimating the impact of inflation.

26. Which of the following is(are) an example of a measure of leverage?
a. Debt yield.
b. Debt payout ratio.
c. Preferred dividend coverage ratio.
d. Debt/equity ratio.
e. All of these.

27. Which of the following activities is not part of the management planning and control cycle:
a. data collection and performance feedback.
b. implementation of plans.
c. providing information to investors and creditors.
d. revisiting plans.

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25. A common size income statement:
b. expresses items as a percentage of revenues.
Every amount is converted to a percent of sales! On a common size balance sheet, everything is converted to a percent of total assets.

Which of ...

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Daniel-James Financial Services Regression

1. Mr. James McWhinney, president of Daniel-James Financial Services, believes there is a relationship between the number of client contacts and the dollar amount of sales. To document this assertion, Mr. McWhinney gathered the following sample information. The X column indicates the number of client contacts last month, and the Y column shows the value of sales ($ thousands) last month for each client sampled.

(See attached file for chart)

a. Determine the regression equation.
b. Determine the estimated sales if 40 contacts are made.

2. Refer to Exercise 1.
a. Determine the standard error of estimate.
b. Suppose a large sample is selected (instead of just 10). About 95 percent of the predictions regarding sales would occur between what two values?
(Complete problem set found in attachment)

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