Finance Quiz Questions
AmazingExpertQuestion #1 (1 point) | |
All of the following are major disadvantages of the percent-of-sales method of financial forecasting except | |
| The computerized models needed for forecasting are not user-friendly |
| It assumes everything in the business varies as a constant percent of sales |
| It cannot account for business parameters that have a nonlinear relationship to sales |
| The model requires excessive modification to reflect the real-world business parameters |
Question #2 (1 point) | |
George Inc. only sells one product and they project to sell 4500 units next year at $20 each. They currently have 230 units in stock which cost $11 per unit to manufacture last year. Next year, the cost per unit to manufacture is expected to rise to $12 per unit. They desire to have 15% of unit sales in stock at the end of the year. How many units will George Inc. need to produce next year? | |
| 5245 |
| 4720 |
| 4945 |
| 5170 |
Question #3 (1 point) | |
In 2012, Murray Corp. had sales of $700,000, a profit margin of 5%, common stock of $120,000 and retained earnings of $230,000. What was Murray’s return on equity? | |
| 5% |
| 10% |
| 15% |
| 20% |
Question #4 (1 point) | |
Due to inflation, profit may be a result of increasing prices instead of actual company performance. | |
| True |
| False |
Question #5 (1 point) | |
Chelsea Lighting Inc. has beginning inventory of 18,000 units, will sell 60,000 units for the month, and desires to reduce ending inventory to 50% of beginning inventory. How many units should Chelsea produce? | |
| 42,000 |
| 60,000 |
| 33,000 |
| 51,000 |
Question #6 (1 point) | |
The following data can be found on Pinkerton Inc.'s 2012 balance sheet: Cash $45,000, Marketable Securities $70,000, Accounts Receivable $500,000, Inventory $525,000, Net Plant and Equipment $400,000, Accounts Payable $75,000, and Notes Payable $350,000. Please calculate Pinkerton Inc.'s Current Ratio. | |
| 0.21 |
| 2.68 |
| 1.45 |
| 2.39 |
Question #7 (1 point) | |
When employing financial ratio analysis, it is important to remember that accounting data are historical and therefore may not project current performance. | |
| True |
| False |
Question #8 (1 point) | |
Dull Light Company has $500,000 in assets and $200,000 of debt. They report net income of $50,000. What is the return on the stockholders’ equity? | |
| 25.0% |
| 16.7% |
| 10.0% |
| 18.3% |
Question #9 (1 point) | |
Steve Corp. wants to know how much financing it will need next year. Last year, their sales were $500,000 and they are expected to increase by 20% next year. Their plant is currently operating at full capacity. Using the percent-of-sales-method, cash represents 5% of sales, accounts receivable $15%, inventory 20%, plant and equipment 25%, accounts payable 25% and accrued expenses 5%. If Steve Corp.'s profit margin is 6% with a dividend payout ratio of 40%, how much new funds will they require? | |
| $20,600 |
| $6,200 |
| $11,000 |
| $13,400 |
Question #10 (1 point) | |
Government regulatory agencies use financial ratio analysis for all of the following except | |
| Establish rates for government contracting |
| Conduct audits |
| Establish interest rates |
| Evaluate new public stock issues |
Question #11 (1 point) | |
When using the percent-of-sales method to forecast, no percentages are computed for notes payable, common stock, and retained earnings because they are not assumed to maintain a direct relationship with sales volume. | |
| True |
| False |
Question #12 (1 point) | |
Gemini Inc.'s debt decreases while their assets and return on assets remain unchanged. Gemini’s return on equity will | |
| decrease |
| increase |
| remain unchanged |
| cannot be determined from the information provided |
Question #13 (1 point) | |
The following statements about pro forma statements are true except | |
| With pro forma statements, firms are able to estimate future receivables, inventory, and payables |
| Developing pro forma statements is the most comprehensive means of financial forecasting |
| Pro forma statements are often required by bankers and lenders |
| A pro forma balance sheet must be created before developing a pro forma income statement |
Question #14 (1 point) | |
Strategic business planning is one of the many types of short-range planning. | |
| True |
| False |
Question #15 (1 point) | |
Debt utilization ratios allow us to measure the ability of the firm to earn an adequate return on sales, total assets, and invested capital. | |
| True |
| False |
Question #16 (1 point) | |
George Inc. only sells one product and they project to sell 4500 units next year at $20 each. They currently have 230 units in stock which cost $11 per unit to manufacture last year. Next year, the cost per unit to manufacture is expected to rise to $12 per unit. They desire to have 15% of unit sales in stock at the end of the year. What is the projected total cost of goods sold for next year? | |
| $54,000 |
| $49,500 |
| $53,770 |
| $49,270 |
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