Wilmington University - MHR 7830

Finance and Accounting for Managers Exam 1

1)Market Ratios only measure a firms risk

2. You own a building supply store. Today you sold construction materials to a contractor for

$10,000 that you acquired a week ago for $8,000. You paid for the materials in cash, but you sold them to the contractor on credit, and you expect him to pay his bill in a few months. Based on this information during the week you earned a positive profit but experienced a negative cash flow.

3. Both current and prospective shareholders are interested in the firm's current and future level of risk and return, which directly affect share price.
4. As the risk of a stock investment increases, investors’
5. Nico Corporation has cost of goods sold of $300,000 and inventory of $30,000, then the inventory turnover is                                         and the average age of inventory is                     .
6. Which of the following would be the least likely to utilize a cash budget?
7. Which of the following legal forms of organizations is characterized by unlimited liability?
8. Under which of the following legal forms of organization is ownership readily transferable?
9. The SarbanesminusOxley Act of 2002 established the Private Company Accounting Oversight Board (PCAOB) which is a forminusprofit corporation that oversees CEOs of public corporations.
10. Suppose a certain business pays 10% tax on its first $10,000 in come, 12% tax on income above

$10,000 but below $40,000, and 22% tax on income above $40,000. Suppose the business earns

$50,000 in income this year. It's marginal tax rate is               .

11. An analyst should be careful when conducting ratio analysis to ensure that
12. The                ratio measures the return earned on the common stockholders' investment in the firm.
13. Holding all other factors constant, a higher price/earnings (P/E) ratio indicates that investors have more confidence in a firm's future performance.
14. In March 2017, Amazon and Clorox reported nearly identical earnings per share, but the stock price of Amazon was more than six times higher than the Clorox stock price. The most likely explanation for that difference is that                                      .