30 Questions on the Financial Management - Examination 1 | FIN 3123, Exams of Finance

Download 30 Questions on the Financial Management - Examination 1 | FIN 3123 and more Exams Finance in PDF only on Docsity! Financial Management FIN 3123 01 TEST ONE Name: "As a Mississippi State University student I will conduct myself with honor and integrity at all times. I will not lie, cheat, or steal, nor will I accept the actions of those who do." Signature: Conceptual Questions 1. The financial statement summarizing a firm's assets and liabilities at a particular time is the: A. income statement B. balance sheet C. statement of cash flows D. shareholders' equity sheet E. none of the above B 2. _____ refers to the net total cash flow of the firm available for distribution to its creditors and stockholder. A. Net working capital B. Capital spending C. Cash flow from assets D. Cash flow to shareholders E. Fixed assets C 3. Which one of the following will increase the free cash flow, all else equal? A. increase in cash flow to creditors B. increase in the change in net working capital C. increase in net capital spending D. decrease in operating cash flow E. None of the above A 4. Which one of the following will increase the cash flow to stockholders, all else equal? A. increase in the interest paid B. increase in the dividends C. increase in cash flow to creditors D. increase in the new equity raised E. None of the above B 5. Which one of the following is a use of cash? A. Decrease in the fixed assets B. Decrease in the accounts receivable C. Increase in the common stock Change in net working capital = ($70,900 − $60,000) − ($65,406 − $53,755) = -$751 million A 12. What is the amount of the net capital spending for 2012? (Unit: $ in millions) A. $9,382 million B. $10,229 million C. $30,804 million D. $50,375 million E. $70,855 million Net capital spending = $361,100 − $339,695 + $49,450 = $70,855 million E 13. What is the cash flow from assets for 2012? (Unit: $ in millions) A. $35,800 million B. $22,247 million C. $27,961 million D. $34,915 million E. $42,267 million Change in net working capital = ($70,900 − $60,000) − ($65,406 − $53,755) = -$751 million Net capital spending = $361,100 − $339,695 + $49,450 = $70,855 million Operating cash flow = $66,618 + $49,450 − $10,164 = $105,940 million Cash flow from assets = $105,940 − $70,855 − (-$751) = $35,800 million A 14. What is the amount of net new borrowing for 2012? (Unit: $ in millions) A. $0 million B. $2,738 million C. $4,400 million D. $6,245 million E. $5,000 million Net new borrowing = $89,000 − $84,000 = $5,000 million E 15. What is the cash flow to creditors for 2012? (Unit: $ in millions) A. $15,654 million B. $26,899 million C. $30,210 million D. $10,800 million E. $5,000 million Cash flow to creditors = $15,800 − ($89,000 − $84,000) = $10,800 million D 16. What is the amount of dividends paid in 2012? (Unit: $ in millions) A. $0 million B. $15,654 million C. $25,000 million D. $10,613 million E. $20,174 million Dividends paid = $40,654 − ($223,000 − $207,346) = $25,000 million C 17. What is the cash flow to stockholders for 2012? (Unit: $ in millions) A. $0 million B. $10,100 million C. $15,654 million D. $25,000 million E. $26,899 million Cash flow to stockholders = 25,000 - ($60,000 - $60,000) = $25,000 million D 18. What is the current ratio for 2012? Does Smolira Golf have enough current assets to cover its short-term liabilities in 2012? A. 1.18. Yes. B. 1.18. No. C. 0.85. Yes. D. 0.85. No. E. 1.22. Yes. Current ratio for 2012 = $70,900/$60,000 = 1.18 > 1. Yes. A 19. What is debt-equity ratio? (Use 2012 values) A. 0.53 B. 1.53 C. 0.34 D. 1.34 E. 1.07 Debt-equity ratio = ($432,000-$283,000)/$283,000 = 0.53 A 20. What is the inventory turnover for 2012? A. 0.53 B. 3.53 C. 7.34 D. 9.09 E. 9.47 Inventory turnover for 2012 = $260,000/$28,600 = 9.09 D 21. How many dollars worth of sales are generated from every $1 in total assets? (Use 2012 values) A. $0.87 B. $0.93 C. $1.34 D. $1.09 E. $1.47 Total asset turnover for 2012 = $376,068/$432,000 = 0.87 A 22. What is the return on equity for 2012? And interpret this value. A. 15.21%. Every dollar of owners' equity can generate $0.1521 in profit. B. 15.21%. Every dollar of firm's assets can generate $0.1521 in profit. C. 14.37%. Every dollar of owners' equity can generate $0.1437 in profit. D. 14.37%. Every dollar of firm's assets can generate $0.1437 in profit. E. 19.47%. Every dollar of owners' equity can generate $0.1947 in profit. Return on equity = $40,654/$283,000 = 0.1437 = 14.37% C 23. What is the market capitalization for 2012 ($ in millions)? (Assume the market price is $58.49 per share and the number of the outstanding shares is 10,085 million in 2012.) A. $283,000.00 million B. $432,000.00 million C. $489,123.33 million D. $512,887.91 million E. $589,871.65 million Market capitalization in 2012 = $58.49*10,085 million = $589,871.65 million=$589,871,650,000 E