Corporate Finance – Exam ACTUAL
QUESTIONS AND CORRECT ANSWERS
Jenna has been promoted and is now in charge of all external financing. In other words, she is
in charge of: - CORRECT ANSWERS✅✅Capital Structure Management
Matt and Alicia created a firm that is a separate legal entity and will share ownership of that
firm on a 75/25 basis. Which type of entity did they create if they have no personal liability
for the firm's debts? - CORRECT ANSWERS✅✅Corporation
Which one of the following statements about a limited partnership is correct? - CORRECT
ANSWERS✅✅TBD
One advantage of the corporate form of organization is the: - CORRECT
ANSWERS✅✅Ability to raise larger sums of equity capital than other organizational forms.
The Sarbanes-Oxley Act of 2002 has: - CORRECT ANSWERS✅✅essentially made officers
of publicly traded firms personally responsible for the firm's financial statements.
Which one of the following situations is most apt to create an agency conflict? - CORRECT
ANSWERS✅✅Basing management bonuses on the length of employment.
An agency issue is most apt to develop when: - CORRECT ANSWERS✅✅the control of a
firm is separated from the firm's ownership.
A firm has common stock of $99, paid-in surplus of $360, total liabilities of $455, current
assets of $480, and net fixed assets of $690. What is the amount of the shareholders' equity? -
CORRECT ANSWERS✅✅$715
Recently, the owner of Martha's Wares encountered severe legal problems and is trying to
sell her business. The company built a building at a cost of $1,270,000 that is currently
appraised at $1,470,000. The equipment originally cost $750,000 and is currently valued at
$497,000. The inventory is valued on the balance sheet at $440,000 but has a market value of
only one-half of that amount. The owner expects to collect 98 percent of the $240,200 in
accounts receivable. The firm has $10,800 in cash and owes a total of $1,470,000. The legal
, problems are personal and unrelated to the actual business. What is the market value of this
firm? - CORRECT ANSWERS✅✅$963,196
Ivan's, Inc., paid $470 in dividends and $580 in interest this past year. Common stock
increased by $190 and retained earnings decreased by $116. What is the net income for the
year? - CORRECT ANSWERS✅✅$354
You find the following financial information about a company: net working capital = $1,140;
fixed assets = $6,345; total assets = $8,670; and long-term debt = $4,671. What are the
company's total liabilities? - CORRECT ANSWERS✅✅$5,856
You find the following financial information about a company: net working capital = $963;
fixed assets = $7,041; total assets = $11,558; and long-term debt = $4,277. What is the
company's total equity? - CORRECT ANSWERS✅✅$3,727
At the beginning of the year, Shinedown, Corp., had a long-term debt balance of $45,630.
During the year, the company repaid a long-term loan in the amount of $11,055. The
company paid $3,940 in interest during the year, and opened a new long-term loan for
$9,840. How much is the ending long-term debt account on the company's balance sheet? -
CORRECT ANSWERS✅✅$44,415
A firm has sales of $1,210, net income of $225, net fixed assets of $542, and current assets of
$298. The firm has $100 in inventory. What is the common-size balance sheet value of
inventory? - CORRECT ANSWERS✅✅11.90%
A firm has total debt of $1,410 and a debt-equity ratio of .26. What is the value of the total
assets? - CORRECT ANSWERS✅✅$6,833.08
Lee Sun's has sales of $3,450, total assets of $3,150, and a profit margin of 6 percent. The
firm has a total debt ratio of 42 percent. What is the return on equity? - CORRECT
ANSWERS✅✅11.33 percent
Jupiter Explorers has $8,800 in sales. The profit margin is 4 percent. There are 5,300 shares
of stock outstanding, with a price of $1.60 per share. What is the company's price-earnings
ratio? - CORRECT ANSWERS✅✅24.09 times
QUESTIONS AND CORRECT ANSWERS
Jenna has been promoted and is now in charge of all external financing. In other words, she is
in charge of: - CORRECT ANSWERS✅✅Capital Structure Management
Matt and Alicia created a firm that is a separate legal entity and will share ownership of that
firm on a 75/25 basis. Which type of entity did they create if they have no personal liability
for the firm's debts? - CORRECT ANSWERS✅✅Corporation
Which one of the following statements about a limited partnership is correct? - CORRECT
ANSWERS✅✅TBD
One advantage of the corporate form of organization is the: - CORRECT
ANSWERS✅✅Ability to raise larger sums of equity capital than other organizational forms.
The Sarbanes-Oxley Act of 2002 has: - CORRECT ANSWERS✅✅essentially made officers
of publicly traded firms personally responsible for the firm's financial statements.
Which one of the following situations is most apt to create an agency conflict? - CORRECT
ANSWERS✅✅Basing management bonuses on the length of employment.
An agency issue is most apt to develop when: - CORRECT ANSWERS✅✅the control of a
firm is separated from the firm's ownership.
A firm has common stock of $99, paid-in surplus of $360, total liabilities of $455, current
assets of $480, and net fixed assets of $690. What is the amount of the shareholders' equity? -
CORRECT ANSWERS✅✅$715
Recently, the owner of Martha's Wares encountered severe legal problems and is trying to
sell her business. The company built a building at a cost of $1,270,000 that is currently
appraised at $1,470,000. The equipment originally cost $750,000 and is currently valued at
$497,000. The inventory is valued on the balance sheet at $440,000 but has a market value of
only one-half of that amount. The owner expects to collect 98 percent of the $240,200 in
accounts receivable. The firm has $10,800 in cash and owes a total of $1,470,000. The legal
, problems are personal and unrelated to the actual business. What is the market value of this
firm? - CORRECT ANSWERS✅✅$963,196
Ivan's, Inc., paid $470 in dividends and $580 in interest this past year. Common stock
increased by $190 and retained earnings decreased by $116. What is the net income for the
year? - CORRECT ANSWERS✅✅$354
You find the following financial information about a company: net working capital = $1,140;
fixed assets = $6,345; total assets = $8,670; and long-term debt = $4,671. What are the
company's total liabilities? - CORRECT ANSWERS✅✅$5,856
You find the following financial information about a company: net working capital = $963;
fixed assets = $7,041; total assets = $11,558; and long-term debt = $4,277. What is the
company's total equity? - CORRECT ANSWERS✅✅$3,727
At the beginning of the year, Shinedown, Corp., had a long-term debt balance of $45,630.
During the year, the company repaid a long-term loan in the amount of $11,055. The
company paid $3,940 in interest during the year, and opened a new long-term loan for
$9,840. How much is the ending long-term debt account on the company's balance sheet? -
CORRECT ANSWERS✅✅$44,415
A firm has sales of $1,210, net income of $225, net fixed assets of $542, and current assets of
$298. The firm has $100 in inventory. What is the common-size balance sheet value of
inventory? - CORRECT ANSWERS✅✅11.90%
A firm has total debt of $1,410 and a debt-equity ratio of .26. What is the value of the total
assets? - CORRECT ANSWERS✅✅$6,833.08
Lee Sun's has sales of $3,450, total assets of $3,150, and a profit margin of 6 percent. The
firm has a total debt ratio of 42 percent. What is the return on equity? - CORRECT
ANSWERS✅✅11.33 percent
Jupiter Explorers has $8,800 in sales. The profit margin is 4 percent. There are 5,300 shares
of stock outstanding, with a price of $1.60 per share. What is the company's price-earnings
ratio? - CORRECT ANSWERS✅✅24.09 times
