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FIN 100 Week 3 – Quiz 2 Chapters 3, 4, and 5

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FIN 100 Week 3 – Quiz 2 Chapters 3, 4, and 5

You are evaluating the balance sheet for PattyCake’s Corporation. From the balance sheet you find the following balances: cash and marketable securities = $400,000; accounts receivable = $1,200,000; inventory = $2,100,000; accrued wages and taxes = $500,000; accounts payable = $800,000; and notes payable = $600,000.

 

Debt Management Ratios Trina’s Trikes, Inc. reported a debt-to-equity ratio of 1.81 times at the end of 2008. If the firm’s total debt at year-end was $9.00 million, how much equity does Trina’s Trikes have?

Loan amortization schedules show:

Approximately what interest rate is needed to double an investment over four years?

Which ratio measures a firm’s ability to pay short-term obligations with its available cash and market securities?

DuPont Analysis If Epic, Inc. has an ROE = 32%, equity multiplier = 3.3, a profit margin of 12.7%, what is the total asset turnover ratio? (Round your answer to 4 decimal places.)

We call the process of earning interest on both the original deposit and on the earlier interest payments:

A deposit of $300 earns interest rates of 7 percent in the first year and 10 percent in the second year. What would be the second year future value?

A deposit of $300 earns interest rates of 7 percent in the first year and 10 percent in the second year. What would be the second year future value?

To compute the present or future value of an annuity due, one computes the value of an ordinary annuity and then:

What is the present value, when interest rates are 6.5 percent, of a $100 payment made every year forever?

Which of the following refers to the amount of debt versus equity a firm has on its balance sheet?

What is the present value of a $200 payment made in 3 years when the discount rate is 8 percent?

Asset Management Ratios Corn Products, Corp. ended the year 2008 with an average collection period of 41 days. The firm’s credit sales for 2008 were $9.1 million. What is the year-end 2008 balance in accounts receivable for Corn Products? (Consider a 365 days a year.)

People borrow money because they expect:

What is the future value of $700 deposited for one year earning 4 percent interest rate annually?

What is the present value of a $7,000 payment made in six years when the discount rate is 4 percent?

Which of these can be used by interested parties to identify changes in corporate performance?

Which of these ratios measure the extent to which the firm uses debt (or financial leverage) versus equity to finance its assets?

You are considering a stock investment in one of two firms (A and B), both of which operate in the same industry. A finances its $20 million in assets with $18 million in debt and $2 million in equity. B finances its $20 million in assets with $2 million in debt and $18 million in equity. Calculate the equity multiplier for the two firms.

Which of the following refer to ratios that measure the relationship between a firm’s liquid (or current) assets and its current liabilities?

Which ratio measures the number of dollars of sales produced per dollar of inventory?

Which of the following is NOT true when developing a time line?

If you start making $115 monthly contributions today and continue them for six years, what is their present value if the compounding rate is 12 percent APR? What is the present value of this annuity?

With regard to money deposited in a bank, future values are:

A firm reported year-end sales of $20 million. It listed $7 million of inventory on its balance sheet. Using a 365-day year, how many days did the firm’s inventory stay on the premises?

When computing the rate of return from selling an investment, the number of years between the present and future cash flows is an important factor in determining:

Which of the following measures the operating return on the firm’s assets, irrespective of financial leverage and taxes?