FIN320 EXAM 1 QUESTIONS &
CORRECT PASSED ANSWERS
Current Assets
- Current Liabilities - Correct Answer ✔✔ = Working Capital
Current Assets / Current liabilities - Correct Answer ✔✔ = CURRENT RATIO
Gross Profit / Total Revenue - Correct Answer ✔✔ = GROSS PROFIT MARGIN
Total Revenue / Avg. Total Assets - Correct Answer ✔✔ = TOTAL ASSET TURNOVER
Net Income / Avg. Total Assets - Correct Answer ✔✔ = RETURN ON ASSETS
Net Income / Average Equity - Correct Answer ✔✔ = RETURN ON EQUITY
Stock Price per share * Ending Shares Outstanding - Correct Answer ✔✔ = MARKET
CAPITAL
Net Income / Weighted Avg. Shares Outstanding - Diluted - Correct Answer ✔✔ =
EARNINGS PER SHARE
Operating Cash Flows - CAPEX - Correct Answer ✔✔ = FCF
KPMG
Deloitte
PricewaterhouseCoopers
Ernst & Young - Correct Answer ✔✔ Big Four Accounting Firms
Management knows about business than owners do - Correct Answer ✔✔ Moral
Hazard
Net Income / Total Revenue - Correct Answer ✔✔ Profit Margin
Income tax expense / pretax income - Correct Answer ✔✔ effective tax rate
EBIT * (1-t) + D&A - CAPEX +- Change in NOWC - Correct Answer ✔✔ Academia FCF
money used to buy, maintain, or improve its fixed assets, like buildings, land, etc. -
Correct Answer ✔✔ CAPEX
According to DeGeorge, what is the objective of every for-profit business AND what is
the only way to accomplish that objective? - Correct Answer ✔✔ To make money for the
owners now and in the future by adding value to goods and/or services
CORRECT PASSED ANSWERS
Current Assets
- Current Liabilities - Correct Answer ✔✔ = Working Capital
Current Assets / Current liabilities - Correct Answer ✔✔ = CURRENT RATIO
Gross Profit / Total Revenue - Correct Answer ✔✔ = GROSS PROFIT MARGIN
Total Revenue / Avg. Total Assets - Correct Answer ✔✔ = TOTAL ASSET TURNOVER
Net Income / Avg. Total Assets - Correct Answer ✔✔ = RETURN ON ASSETS
Net Income / Average Equity - Correct Answer ✔✔ = RETURN ON EQUITY
Stock Price per share * Ending Shares Outstanding - Correct Answer ✔✔ = MARKET
CAPITAL
Net Income / Weighted Avg. Shares Outstanding - Diluted - Correct Answer ✔✔ =
EARNINGS PER SHARE
Operating Cash Flows - CAPEX - Correct Answer ✔✔ = FCF
KPMG
Deloitte
PricewaterhouseCoopers
Ernst & Young - Correct Answer ✔✔ Big Four Accounting Firms
Management knows about business than owners do - Correct Answer ✔✔ Moral
Hazard
Net Income / Total Revenue - Correct Answer ✔✔ Profit Margin
Income tax expense / pretax income - Correct Answer ✔✔ effective tax rate
EBIT * (1-t) + D&A - CAPEX +- Change in NOWC - Correct Answer ✔✔ Academia FCF
money used to buy, maintain, or improve its fixed assets, like buildings, land, etc. -
Correct Answer ✔✔ CAPEX
According to DeGeorge, what is the objective of every for-profit business AND what is
the only way to accomplish that objective? - Correct Answer ✔✔ To make money for the
owners now and in the future by adding value to goods and/or services
