BFIN 300 Midterm Exam Study Guide | Business Finance Review Notes &
Practice Questions 2026
The process of planning and managing a firm's long-term investments is called - ANS ✔✔Capital
Budgeting
Which of the following is an example of an indirect agency cost? - ANS ✔✔A lost opportunity
Which of the following forms of business organization is subject to double taxation? - ANS
✔✔Corporation
Control of a firm ultimately rests with - ANS ✔✔The Stockholders
Which of the following should a financial manager take into account when considering an
opportunity? - ANS ✔✔How much cash they expect to receive, When will they receive the
funds and How likely they are to receive the funds
ABC Corporation has current assets of $5,200, fixed assets of $26,000, current liabilities of
$4,900, and long-term debt of $15,000. What is the ABC Corporation's total equity? What is the
NWC of ABC Corporation? - ANS ✔✔Total Equity $11,300, NWC $300
Company X has fixed assets of $6million on its balance sheet that were originally purchased for
$10million; it can be sold for $7million today. The company's balance sheet also shows current
liabilities of $2.6million and NWC of $900,000. In addition, if all the current assets were
liquidated today, the company would receive $2.8million cash. What is the book value of
Company X's total assets? What is the market value of Company X's total assets? - ANS ✔✔BV
$9.5million, MV $9.8million
, Company has sales of $21,000, costs of $11,200, depreciation expense of $2,300, and interest
expense of $1,300. If the tax rate is 40 percent, what is the operating cash flow, or OCF? - ANS
✔✔OCF $7320 = EBIT $7500+Depreciation $2300-Taxes $2480
XYZ Corporation's balance sheet of 2019 showed net fixed assets of $1.56million, and the 2020
balance sheet showed net fixed assets of $1.78 million. The company's 2020 income statement
showed a depreciation expense of $140,000. What was the company's net capital spending for
2020? - ANS ✔✔$360,000
Which one of the following is the financial statement which shows the accounting value of a
firm's equity as of a particular date? - ANS ✔✔Balance sheet
Which is a financial leverage ratio? - ANS ✔✔Debt to equity
Which is a key turnover ratio? - ANS ✔✔Inventory turnover ratio, Asset turnover ratio,
Receivables turnover ratio and Fixed asset turnover ratio
Which of the following ratios are market-based ratios? - ANS ✔✔P/E ratio and P/BV ratio
Which of the followings are the correct set of components of ROE? - ANS ✔✔Profit margin,
asset turnover, equity multiplier
Find Current ratio: Company A's balance sheet shows current assets of $6,300, fixed assets of
$32,000, total long-term liabilities of $16,200 and total equity of $18,100. - ANS ✔✔1.58x
Interest earned on both the initial principal and the interest reinvested from the prior periods is
called - ANS ✔✔Compound interest
Practice Questions 2026
The process of planning and managing a firm's long-term investments is called - ANS ✔✔Capital
Budgeting
Which of the following is an example of an indirect agency cost? - ANS ✔✔A lost opportunity
Which of the following forms of business organization is subject to double taxation? - ANS
✔✔Corporation
Control of a firm ultimately rests with - ANS ✔✔The Stockholders
Which of the following should a financial manager take into account when considering an
opportunity? - ANS ✔✔How much cash they expect to receive, When will they receive the
funds and How likely they are to receive the funds
ABC Corporation has current assets of $5,200, fixed assets of $26,000, current liabilities of
$4,900, and long-term debt of $15,000. What is the ABC Corporation's total equity? What is the
NWC of ABC Corporation? - ANS ✔✔Total Equity $11,300, NWC $300
Company X has fixed assets of $6million on its balance sheet that were originally purchased for
$10million; it can be sold for $7million today. The company's balance sheet also shows current
liabilities of $2.6million and NWC of $900,000. In addition, if all the current assets were
liquidated today, the company would receive $2.8million cash. What is the book value of
Company X's total assets? What is the market value of Company X's total assets? - ANS ✔✔BV
$9.5million, MV $9.8million
, Company has sales of $21,000, costs of $11,200, depreciation expense of $2,300, and interest
expense of $1,300. If the tax rate is 40 percent, what is the operating cash flow, or OCF? - ANS
✔✔OCF $7320 = EBIT $7500+Depreciation $2300-Taxes $2480
XYZ Corporation's balance sheet of 2019 showed net fixed assets of $1.56million, and the 2020
balance sheet showed net fixed assets of $1.78 million. The company's 2020 income statement
showed a depreciation expense of $140,000. What was the company's net capital spending for
2020? - ANS ✔✔$360,000
Which one of the following is the financial statement which shows the accounting value of a
firm's equity as of a particular date? - ANS ✔✔Balance sheet
Which is a financial leverage ratio? - ANS ✔✔Debt to equity
Which is a key turnover ratio? - ANS ✔✔Inventory turnover ratio, Asset turnover ratio,
Receivables turnover ratio and Fixed asset turnover ratio
Which of the following ratios are market-based ratios? - ANS ✔✔P/E ratio and P/BV ratio
Which of the followings are the correct set of components of ROE? - ANS ✔✔Profit margin,
asset turnover, equity multiplier
Find Current ratio: Company A's balance sheet shows current assets of $6,300, fixed assets of
$32,000, total long-term liabilities of $16,200 and total equity of $18,100. - ANS ✔✔1.58x
Interest earned on both the initial principal and the interest reinvested from the prior periods is
called - ANS ✔✔Compound interest
