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40%
10.
overhead rate
The major element in budgetary control is:
the approval of the budget by the stockholders
the valuation of inventories
the preparation of long-term plans
the comparison of actual results with planned objectives.
11.
Tule Time Comics is considering a new show that will generate
annual cash flows of $100,000 into the infinite future. If the initial
outlay for such a production is $1,500,000 and the appropriate
discount rate is 6 percent for the cash flows, then what is the
profitability index for the project?
0.11
1.11
0.90
1.90
12.
How firms estimate their cost of capital: The WACC for a firm is
13.00 percent. You know that the firms cost of debt capital is 10
percent and the cost of equity capital is 20% What proportion of the
firm is financed with debt?
70%
50%
33%
30%
13.
The most important information needed to determine
companies can pay their current obligations is the:
relationship between current assets and current liabilities
relationship between short-term and long-term liabilities
projected net income for next year
net income for this year
14.
if
15.
A cost which remains constant per unit at various levels of
activity is a:
fixed cost
mixed cost
manufacturing cost
variable cost
16.
16.The group of users of accounting information charged with
achieving the goals of the business is its:
investors
auditors
creditors
managers
17.
Teakap, Inc. has current assets of $1,456,312 and total assets of
$4,812,369 for the year ending September 30, 2006. It also has
current liabilities of $1,041,012, common equity of $1,500,000 and
retained earnings of $1,468,347. How much long-term debt does the
firm have?
$803,010
$2,303,010
$1,844,022
$2,123,612
18.
19.
Ajax Corp. is expecting the following cash flows - $79,000,
$112,000, $164,000, $84,000, and $242,000 over the next five
23.
Horizontal analysis is a technique for evaluating a series of
financial statement data over a period of time:
that has been arranged from the highest number to the lowest
number.
to determine the amount and/or percentage increase or decrease
that has taken place.
to determine which items are in error.
that has been arranged from the lowest number to the highest
number.
24.
Jayadev Athreya has started his first job. He will invest $5,000 at
the end of each year for the next 45 years in a fund that will earn a
return of 10 percent. How much will Jayadev have at the end of 45
years?
$2,667,904
$5,233,442
$1,745,600
$3,594,524
25.
Turnbull Corp. had an EBIT of $247 million in the last fiscal year.
Its depreciation and amortization expenses amounted to $84 million.
The firm has 135 million shares outstanding and a share price of
$12.80. A competing firm that is very similar to Turnbull has an
enterprise value/EBITDA multiple of 5.40. What is the enterprise value
of Turnbull Corp.? Round to the nearest million dollars.
$1,344 million
$453.6 million
$1,315 million
$1,787 million
26.
Firms that achieve higher growth rates without seeking external
financing:
Have a low plowback ratio
are highly leveraged
have less equity and/or are able to generate high net income
leading to a high ROE.
None of these
27.
28.
The convention of consistency refers to consistent use of
accounting principles:
within industries
among accounting periods
throughout the accounting period
among firms
29.
If a companys weighted average cost of capital is less than the
required return on equity, then the firm:
is financed with more than 50% debt
is perceived to be safe
partnership
has debt in its capital structure
30.
Your firm has an equity multiplier of 2.47. What is the debt-toequity ratio?
0
1.74
0.60
1.47
31.
The accumulation of accounting data on the basis of the
individual manager who has the authority to make day-to-day
decisions about activities in an area is called:
master budgeting
static reporting
responsibility accounting
flexible accounting
32.
Regatta, Inc., has six-year bonds outstanding that pay a 8.25
percent coupon rate. Investors buying the bond today can expect to
earn a yield to maturity of 6.875 percent. What should the companys
34.
35.
When a company assigns the costs of direct materials, direct
labor, and both variable and fixed manufacturing overhead to products,
that company is using:
operations costing
product costing
absorption costing
variable costing
36.
Which of the following is considered a hybrid organizational
form?
sole proprietorship
partnership
limited liability partnership
corporation
37.
Gateway, Corp. has an inventory turnover of 5.6. What is the
firms dayss sales in inventory?
57.9
61.7
65.2
64.3
38.
The process of evaluating financial data that change under
alternative courses of action is called:
incremental analysis
contribution margin analysis
cost-benefit analysis
double entry analysis
39.
What decision criteria should managers use in selecting projects
when there is not enough capital to invest in all available positive NPV
projects?
the modified internal rate of return
the profitability index
the discounted payback
the internal rate of return
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