Fin 534 final exam 1 new 2016

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FIN 534 Final Exam 1 2016 1. Which of the following statements is CORRECT? 2. Which of the following statements is CORRECT? 3. You recently sold 100 shares of your new company, XYZ Corporation, to your brother at a family reunion. At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates. Which of the following statements best describes this transaction?

4.

Cheers Inc. operates as a partnership. Now the partners have decided to convert the business into a regular corporation. Which of the following statements is CORRECT? 5. Which of the following statements is CORRECT? 6. Which of the following statements is CORRECT? 7. Which of the following statements is CORRECT? 8. You recently sold 200 shares of Apple stock to your brother. The transfer was made through a broker, and the trade occurred on the NYSE. This is an example of: 9. Assume that Congress recently passed a provision that will enable Barton's Rare Books (BRB) to double its depreciation expense for the upcoming year but will have no effect on its sales revenue or tax rate. Prior to the new provision, BRB's net income after taxes was forecasted to be $4 million. Which of the following best describes the impact of the new provision on BRB's financial statements versus the statements without the provision? Assume that the company uses the same depreciation method for tax and stockholder reporting purposes.

10. Which of the following statements is CORRECT? 11. Danielle's Sushi Shop last year had (1) a negative net cash flow from operations, (2) a negative free cash flow, and (3) an increase in cash as reported on its balance sheet. Which of the following factors could explain this situation?

12. Aubey Aircraft recently announced that its net income increased sharply from the previous year, yet its net cash flow from operations declined. Which of the following could explain this performance?

13. Which of the following would be most likely to occur in the year after Congress, in an effort to increase tax revenue, passed legislation that forced companies to depreciate equipment over longer lives? Assume that sales, other operating costs, and tax rates are not affected, and assume that the same depreciation method is used for tax and stockholder reporting purposes.

14. Which of the following factors could explain why Regal Industrial Fixtures had a negative net cash flow last year, even though the cash on its balance sheet increased?

15. The LeMond Corporation just purchased a new production line. Assume that the firm planned to depreciate the equipment over 5 years on a straight-line basis, but Congress then passed a provision that requires the company to depreciate the equipment on a straight-line basis over 7 years. Other things held constant, which of the following will occur as a result of this Congressional action? Assume that the company uses the same depreciation method for tax and stockholder reporting purposes.

16. Which of the following statements is CORRECT? 17. Analysts following Armstrong Products recently noted that the company's operating net cash flow increased over the prior year, yet cash as reported on the balance sheet decreased. Which of the following factors could explain this situation?

18. A firm wants to strengthen its financial position. Which of the following actions would increase its current ratio?

19.

If a bank loan officer were considering a company's request for a loan, which of the following statements would you consider to be CORRECT? 20.

Companies A and C each reported the same earnings per share (EPS), but Company A's stock trades at a higher price. Which of the following statements is CORRECT? 21.

Which of the following would, generally, indicate an improvement in a company's financial position, holding other things constant?

22.

If the CEO of a large, diversified, firm were filling out a fitness report on a division manager (i.e., grading the manager), which of the following situations would be likely to cause the manager to receive a better grade? In all cases, assume that other things are held constant.

23. A firm's new president wants to strengthen the company's financial position. Which of the following actions would make it financially stronger?

24. Arshadi Corp.'s sales last year were $52,000, and its total assets were $22,000. What was its total assets turnover ratio (TATO)?

25. Which of the following statements is CORRECT?