Finance
1) The net working capital of a firm will decrease when accrued wages are paid with cash.
False
2) While corporations provide shareholders returns from _______, capital markets provide returns to shareholders from ______.
Dividends; capital gains
3) The Sarbanes-Oxley act of 2002 was passed to:
Establish auditing standards.
4) In general, what is changing as you read down the left hand side of a balance sheet? The assets are becoming less liquid.
5) Early in the history of finance, an important issue was:
Liquidity
6) When shareholder A sells its Ford stock to shareholder B in the secondary market, such as on the New York Stock Exchange, how much money is received by Ford?
Ford will receive nothing.
7) The appropriate firm goal in a capitalist society is ________________.
Shareholder wealth maximization
8) All of the following compose cost of goods sold except ________________.
All of the above are part of cost of goods sold
9) Calculate the EBIT for a firm with $4 million total revenues, $3.5 million cost of goods sold, $500,000 depreciation expense, and $120,000 interest expense.
$0
10) All of the following except one are tax-deductible expenses.
Common stock dividends
PART II (52 POINTS)
1) ( 12 POINTS) Classify the following balance sheet items as current (C) or noncurrent (NC):
| Retained earnings | nc | Bonds payable | | Accounts payable | | Accrued wages payable | | Prepaid expenses | | Accounts receivable | nc | Plant and equipment | Nc | Capital in excess of par | | Inventory | | Preferred stock | | Common stock | Nc | Marketable securities |
2) (20 POINTS) Mozart Music Co. had earnings after taxes of $560,000 in 2008 with 200,000 shares of stock outstanding. The stock price was $58.80. In 2009, earnings after taxes increased to $650,000 with the same 200,000 shares outstanding. The stock price was $78.00.
a. Compute earnings per share and
False
2) While corporations provide shareholders returns from _______, capital markets provide returns to shareholders from ______.
Dividends; capital gains
3) The Sarbanes-Oxley act of 2002 was passed to:
Establish auditing standards.
4) In general, what is changing as you read down the left hand side of a balance sheet? The assets are becoming less liquid.
5) Early in the history of finance, an important issue was:
Liquidity
6) When shareholder A sells its Ford stock to shareholder B in the secondary market, such as on the New York Stock Exchange, how much money is received by Ford?
Ford will receive nothing.
7) The appropriate firm goal in a capitalist society is ________________.
Shareholder wealth maximization
8) All of the following compose cost of goods sold except ________________.
All of the above are part of cost of goods sold
9) Calculate the EBIT for a firm with $4 million total revenues, $3.5 million cost of goods sold, $500,000 depreciation expense, and $120,000 interest expense.
$0
10) All of the following except one are tax-deductible expenses.
Common stock dividends
PART II (52 POINTS)
1) ( 12 POINTS) Classify the following balance sheet items as current (C) or noncurrent (NC):
| Retained earnings | nc | Bonds payable | | Accounts payable | | Accrued wages payable | | Prepaid expenses | | Accounts receivable | nc | Plant and equipment | Nc | Capital in excess of par | | Inventory | | Preferred stock | | Common stock | Nc | Marketable securities |
2) (20 POINTS) Mozart Music Co. had earnings after taxes of $560,000 in 2008 with 200,000 shares of stock outstanding. The stock price was $58.80. In 2009, earnings after taxes increased to $650,000 with the same 200,000 shares outstanding. The stock price was $78.00.
a. Compute earnings per share and