FIN 302 Final Exam
The purpose of financial markets is to bring borrowers and savers together. - Answers-True
The agency problem arises due to the separation of ownership and control in a corporation. - Answers-
True
ABC Corporation issued and sold 10 shares of stock to Irene Investor, a private individual. Thisrepresents
a secondary market transaction. - Answers-False
Established firms in need of additional capital can raise it in the secondary market. - Answers-False
The true owners of the corporation are the - Answers-common stockholders.
Which one of the following categories of owners enjoys limited liability? - Answers-Shareholders
(common stock) of a corporation
Maximization of shareholder wealth as a goal is superior to accounting profit maximizationbecause -
Answers-
What does the agency problem refer to? - Answers-
Consider the timing of the profits of the following certain investment projects:
Profit
, LS
Year 1 $ 0 $ 3000
Year 2 $ 3000 $ 0 - Answers-Project S is preferred to Project L.
Firms that wish to raise funds for investment purposes issue securities in the - Answers-primary markets.
If you were given the components of current assets and of current liabilities, what ratio(s) couldyou
compute? - Answers-Current ratio and quick ratio
Patriot Corporation purchased manufacturing equipment with an expected useful life of five years. The
purchase of the machinery would be shown as - Answers-an asset on the balance sheet.
Your firm has the following income statement items: sales of $50,250,000; income tax of
$1,744,000;operating expenses of $10,115,000; cost of goods sold of $35,025,000; and interest expense
of - Answers-$15,225,000
All things equal, if the total asset turnover decreases, then the return on equity will - Answers-decrease.
Which of the basic financial statements is best used to answer the question, ʺHow profitable is
thebusiness? - Answers-Income statement
Your firm has the following balance sheet statement items: total current liabilities of $805,000;
totalassets of $2,655,000; fixed and other assets of $1,770,000; and long -term debt of $200,000. What
isthe amount of the firmʹs total current assets? - Answers-$885,000
Common size financial statements represent all figures on the financial statements - Answers-as a
percentage of either sales or total assets.
The purpose of financial markets is to bring borrowers and savers together. - Answers-True
The agency problem arises due to the separation of ownership and control in a corporation. - Answers-
True
ABC Corporation issued and sold 10 shares of stock to Irene Investor, a private individual. Thisrepresents
a secondary market transaction. - Answers-False
Established firms in need of additional capital can raise it in the secondary market. - Answers-False
The true owners of the corporation are the - Answers-common stockholders.
Which one of the following categories of owners enjoys limited liability? - Answers-Shareholders
(common stock) of a corporation
Maximization of shareholder wealth as a goal is superior to accounting profit maximizationbecause -
Answers-
What does the agency problem refer to? - Answers-
Consider the timing of the profits of the following certain investment projects:
Profit
, LS
Year 1 $ 0 $ 3000
Year 2 $ 3000 $ 0 - Answers-Project S is preferred to Project L.
Firms that wish to raise funds for investment purposes issue securities in the - Answers-primary markets.
If you were given the components of current assets and of current liabilities, what ratio(s) couldyou
compute? - Answers-Current ratio and quick ratio
Patriot Corporation purchased manufacturing equipment with an expected useful life of five years. The
purchase of the machinery would be shown as - Answers-an asset on the balance sheet.
Your firm has the following income statement items: sales of $50,250,000; income tax of
$1,744,000;operating expenses of $10,115,000; cost of goods sold of $35,025,000; and interest expense
of - Answers-$15,225,000
All things equal, if the total asset turnover decreases, then the return on equity will - Answers-decrease.
Which of the basic financial statements is best used to answer the question, ʺHow profitable is
thebusiness? - Answers-Income statement
Your firm has the following balance sheet statement items: total current liabilities of $805,000;
totalassets of $2,655,000; fixed and other assets of $1,770,000; and long -term debt of $200,000. What
isthe amount of the firmʹs total current assets? - Answers-$885,000
Common size financial statements represent all figures on the financial statements - Answers-as a
percentage of either sales or total assets.
