FIN 3100 Midterm (20 points in total): Winter 2026
Version A
Name:
Student ID:
Grades:
*Students are allowed two pages of notes and a calculator as an aid*
, Multiple Choices (20 questions, 1 points per question)
PLEASE USE SCANTRON
1. Which of the following is NOT an advantage of a sole proprietorship?
A. Single taxation
B. Ease of setup
C. Limited liability
D. No separation of ownership and control
2. Shareholders' equity, the difference between the firm's ________, is an accounting
measure of the firm's ________.
A. assets and liabilities; net book value
B. assets and liabilities; book value
C. short-term assets and long-term liabilities; net book value
D. short-term assets and long-term liabilities; book value
3. What of the following ratio measures a firm’s leverage?
A. Net Profit Margin, calculated as Net Income over Sales
B. Debt-Equity ratio, calculated as Total Debt over Total Equity
C. Current ratio, calculated as Current Assets over Current Liabilities
D. Return on Assets, calculated as Net Income over Book Value of Equity
Use the table for the question(s) below.
Luther Corporation
Consolidated Income Statement
December 31, 2023 and 2022 (in $ millions)
2023 2022
Total sales 610.1 578.3
Cost of sales (500.2) (481.9)
Gross profit 109.9 96.4
Selling, general, and
administrative expenses (40.5) (39.0)
Research and development (24.6) (22.8)
Depreciation and amortization (3.6) (3.3)
Operating income 41.2 31.3
Other income --- ---
Earnings before interest and taxes
(EBIT) 41.2 31.3
Interest income (expense) (25.1) (15.8)
Pretax income 16.1 15.5
Taxes (5.5) (5.3)
Net income 10.6 10.2
Price per share $16 $15
Version A
Name:
Student ID:
Grades:
*Students are allowed two pages of notes and a calculator as an aid*
, Multiple Choices (20 questions, 1 points per question)
PLEASE USE SCANTRON
1. Which of the following is NOT an advantage of a sole proprietorship?
A. Single taxation
B. Ease of setup
C. Limited liability
D. No separation of ownership and control
2. Shareholders' equity, the difference between the firm's ________, is an accounting
measure of the firm's ________.
A. assets and liabilities; net book value
B. assets and liabilities; book value
C. short-term assets and long-term liabilities; net book value
D. short-term assets and long-term liabilities; book value
3. What of the following ratio measures a firm’s leverage?
A. Net Profit Margin, calculated as Net Income over Sales
B. Debt-Equity ratio, calculated as Total Debt over Total Equity
C. Current ratio, calculated as Current Assets over Current Liabilities
D. Return on Assets, calculated as Net Income over Book Value of Equity
Use the table for the question(s) below.
Luther Corporation
Consolidated Income Statement
December 31, 2023 and 2022 (in $ millions)
2023 2022
Total sales 610.1 578.3
Cost of sales (500.2) (481.9)
Gross profit 109.9 96.4
Selling, general, and
administrative expenses (40.5) (39.0)
Research and development (24.6) (22.8)
Depreciation and amortization (3.6) (3.3)
Operating income 41.2 31.3
Other income --- ---
Earnings before interest and taxes
(EBIT) 41.2 31.3
Interest income (expense) (25.1) (15.8)
Pretax income 16.1 15.5
Taxes (5.5) (5.3)
Net income 10.6 10.2
Price per share $16 $15
