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7/21/2018
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Course 771003- Accountant's Guide to Financial Management
  Final Exam
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771003v - Accountant's Guide to Financial Management

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Financial Planning
20 CPE Credit Hours

7/21/2018
Final Exam
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Read 'Chapter 1: An Overview of Financial Management' & answer the following question(s):
1. Objectives of managerial finance do not include:
2. Stockholder wealth maximization advantages do not include:
3. Which one of the following is not a policy decision that by itself is likely to affect the value of the firm?
4. Financial managers do all except:
5. In capital markets, the primary market is concerned with the provision of new funds for capital investments through
6. Which of the following is not considered a financial institution?
7. The basic financial statements include a
8. The primary purpose of the balance sheet is to reflect
9. A statement of cash flows is to be presented in general purpose external financial statements by which of the following?
10. A statement of cash flows is intended to help users of financial statements
11. A financial statement includes all of the following items: net income, depreciation, operating activities, and financing activities. What financial statement is this?
12. Footnote disclosures usually do not include:
13. A segment is reportable if any one of the following conditions exist except:
14. The Section 404 of the Sarbanes-Oxley Act requires ___ additional reports on the effectiveness of internal control over financial reporting:
15. Management is required to stare whether or not the company's internal control over financial reporting is effective. A negative assurance statement, such as "nothing has come to management's attention to suggest internal control is ineffective" is acceptable. T F
16. Factors that an investor considers in evaluating a firm’s stock include all except:
17. Which of the following is an example of leverage ratios?
18. Which of the following is not a source of industry statistics?
19. Which of the following is an example of liquidity ratios?
20. If the debt ratio is 0.5 what is the debt-equity ratio?
21. Given the following data: Sales = 2000; Cost of good sold = 1500; Average receivables = 100, calculate the average collection period:
22. Gross profit margin is
23. Free cash flow (FCF) is cash flow from operations minus cash used to purchase fixed assets minus ____________________
24. Market value added (MVA) is ___________________ minus equity capital supplied by shareholders.
25. Which of the following is not true regarding the ROI breakdown, known as the Du Pont formula?
26. Return on Investment (ROI) can be enhanced by management:
27. Margins may be increased by all except:
28. Another version of the Du Pont formula, called the modified Du Pont formula, reflects the effect of using other people’s money. The formula ties together the return on investment (ROI) and:
29. The equity multiplier is not equal to:
30. Basic steps in projecting financial needs by percent of sales method include all except:
31. Major steps in preparing the budget do not include:
32. The most direct way to prepare a cash budget for a manufacturing firm is to include
33. The concept of “The Time value of Money” refers to:
34. The annuity is defined as a series of payments or receipts:
35. Present value of $110,000 expected to be received one year from today at an interest rate (discount rate) of 10% per year is:
36. The minimum rate of return is also called:
37. The return of an investment consists of the following sources of income except:
38. The Capital Asset Pricing Model (CAPM) computes the expected return on a security by adding the risk-free rate of return to the incremental yield of the expected market return, which is adjusted by the company’s beta. Assume that rf=6%, and rm=10% If DQZ’s has a beta of 2.0, what is DQZ’s expected rate of return?
39. Beta does not measure the following
40. The arbitrage pricing theory (APT) explains asset returns in terms of multiple macroeconomic factors. Assume the macroeconomic variables are the gross domestic product, inflation, real interest rates, differences in yields of different grades of corporate bonds, and differences in yields on long versus short-term government bonds. The market return or risk premium (RPi ) and the sensitivity or beta coefficient (bi) for each variable are given below: Variable = 1 2 3 4 5 RPi = .03 .04 .07 .05 .03 bi = .5 .3 .3 .4 .6 If the risk-free interest rate is .05, the expected rate of return according to the APT is
41. What is the risk and the risk-return trade-off:
42. The valuation process for a bond does not require knowledge of:
43. Preferred stock is like common stock except that:
44. Which of the following is directly applied in determining the value of a stock when using the dividend growth model?
45. Assume that nominal interest rates just increased substantially but that the expected future dividends for a company over the long run were not affected. As a result of the increase in nominal interest rates, the company’s stock price should
46. The market value of a firm’s outstanding common shares will be higher, everything else equal, if
47. Determine the cost of equity capital for a firm with a stock price of $50.00, an estimated dividend at the end of the first year of $5.00 per share, and an expected growth rate of 11.1%.
48. If the before-tax cost of debt is 10% and the corporate tax rate is 30%, calculate the after-tax cost of debt:
49. The cost of common equity for a firm is
50. In computing the overall cost of capital, ____________________ cannot be used as the weights
51. The capital budget is a(n)
52. In order to grow companies, make all but one of the following investment decisions
53. Conditions under which mutually exclusive investments create contrary rankings include all except:
54. The easiest and most popular method of calculating depreciation is:
55. Leverage is that portion of fixed costs which:
56. A firm’s optimal capital structure
57. A company has unit sales of 300,000, the unit variable cost is $1.50, the unit sales price is $2.00, and the annual fixed costs are $50,000. Furthermore, the annual interest expense is $20,000, and the company has no preferred stock. Accordingly, the degree of total leverage is
58. Capital structures decisions are influenced by all except:
59. Working capital is the difference between
60. During the year, Mason Company’s current assets increased by $120, current liabilities decreased by $50, and working capital
61. A change in credit policy has caused an increase in sales an increase in discounts taken, a reduction in the investment in accounts receivable, and a reduction in the number of doubtful accounts. Based upon this information, we know that
62. Types of delays in processing checks include all except
63. A working capital technique that increases the payable float and therefore delays the outflow of cash is
64. Ardmore Industries is in the process of reviewing its inventory and production policies. The company often has an excess supply of some products and shortages of other products needed for planned production runs. The method that Ardmore should use to establish its inventory policies regarding these products is
65. A decrease in inventory order costs will
66. The economic order quantity (EOQ) formula assumes that
67. The ABC Inventory Control Method
68. The credit instrument known as a banker’s acceptance
69. Short-term financial decisions are:
70. The most common way to finance a temporary cash deficit is the use of:
71. In general, it is more expensive for a company to finance with equity capital than with debt capital because
72. Zero-coupon bonds
73. An advantage of issuing new securities to the public is
74. The date when the right to a dividend expires is called the
75. An equity issue sold to the firm's existing stockholders is called:
76. Mirage Corporation has 1,000,000 shares outstanding. It wishes to issue 250,000 new shares using rights issue. How many rights are needed to buy one new share?
77. A potential investor may obtain information about a firm making a new securities issue from which of the following publications?
78. All of the following are examples of services normally offered by investment bankers except
79. In what way do investment bankers make money under best efforts offerings?
80. A sale of securities to a very few parties that is exempt from registration with the SEC is known as a
81. The Unique features of financial management of a multinational corporation (MNC) include: Multiple currency problems, various legal problems, institutional and economic constraints, and
82. Which of the following is not?by definition?a multinational firm?
83. Exchange rates may be in terms of dollars per foreign currency (direct quote) or units of foreign currency per dollars called
84. A foreign exchange rate is
85. An indirect quote is when
86. A "forward" transaction
87. A direct quote is when
88. Transaction exposure measures changes in the value of outstanding financial obligations
89. The potential for an increase or decrease in the parent’s net worth and reported net income caused by a change in exchange rates since the last consolidation of international operations is called
90. Hedging
91. All of the following operating strategies are used for the management of transaction exposure except
92. The primary method by which a firm may protect itself against operating exposure impacts is
93. Operating exposure
94. The objective of operating exposure management is
95. Foreign currency options can be purchased or sold to guard against changes in exchange rates during a period of contract or exposure to risk from such changes. This process is known as
96. Buying insurance policies for political risks are called _________________
97. Interest Rate Parity (IRP) states
98. The mathematical relationship that links changes in exchange rates and changes in price level is called
99. Independent services that provide political risk rating include: Country Risk Rating. Economist Intelligence Unit, and
100. Which of the following is an acceptable method of adjusting for risk when analyzing the prospects of a foreign investment?
Read 'Chapter 2: Financial Statements and Cash Flow' & answer the following question(s):
Read 'Chapter 3: Evaluating a Firm's Financial Performance' & answer the following question(s):
Read 'Chapter 4: Improving Financial Performance' & answer the following question(s):
Read 'Chapter 5: Budgeting, Planning, and Financial Forecasting' & answer the following question(s):
Read 'Chapter 6: The Time Value of Money' & answer the following question(s):
Read 'Chapter 7: The Meaning and Measurement of Risk and Rates of Return' & answer the following question(s):
Read 'Chapter 8: Valuation of Stocks and Bonds' & answer the following question(s):
Read 'Chapter 9: The Cost of Capital' & answer the following question(s):
Read 'Chapter 10: Capital Budgeting: Techniques and Practice' & answer the following question(s):
Read 'Chapter 11: Determining the Financial Mix' & answer the following question(s):
Read 'Chapter 12: Managing Liquid Assests' & answer the following question(s):
Read 'Chapter 13: Short Term Financing' & answer the following question(s):
Read 'Chapter 14: Debt Financing' & answer the following question(s):
Read 'Chapter 15: Equity Financing' & answer the following question(s):
Read 'Chapter 16: International Finance' & answer the following question(s):
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