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
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
