Fin 412 Corporate Finance Exam 1 UPDATED ACTUAL Exam Questions and CORRECT Answers

Fin 412 Corporate Finance Exam 1
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Sales
-COGS
-Operating Expenses
-Dep
=EBIT
-Int Exp
- Taxes

=Net Income - CORRECT ANSWER - Income Statement



Change in RE = - CORRECT ANSWER - Net Income - Dividends Paid



What can NI be used for? - CORRECT ANSWER - Pay dividends, inc NOWC or FA,
reduce debt, or buy back stock


Taxes:
Marginal -

Ave = - CORRECT ANSWER - Marginal - tax percent paid on next dollar earned
Ave = Tax bill / taxable Income


Net Working Capital = - CORRECT ANSWER - Current Assets - Current Liabilities
Ex:
2012: Current Assets(100) - Current Liabilities(50)
2011: Current Assets(80) - Current Liabilities(40)

, 50 - 40 = 10 = Change in Net Working Capital


Capital Spending = - CORRECT ANSWER - Capital Spending = Ending Net Fixed Assets
- Beg NFA


Current Ratio: Indicates firms ability to meet its short term obligations

Current Ratio = - CORRECT ANSWER - Current Ratio = Current Assets / Current
Liabilities


Quick Ratio: Includes only current assets that can be quickly converted to cash - CORRECT
ANSWER - Quick Ratio = (CA - Inventory) / Current liabilities


Total Debt Ratio : total debt ratio takes into account all debt of all maturities to all creditors -
CORRECT ANSWER - D/E Ratio = tot liabilities / total equity


Equity Multiplier = Total Assets / Total Equity


given one be able to calc the other


Total Asset Turnover: measures work we get out of our total assets - CORRECT
ANSWER - Tot Asset Turnover = sales / tot assets


NWC turnover: measures how much work we get out of our working capital - CORRECT
ANSWER - NWC turnover = Sales / NWC


Inventory Turnover: Measures how many times a firm sold off its entire inventory - CORRECT
ANSWER - Inventory turnover = COGS / Inventory


Days in inventory = 365 / inventory turnover