Review Questions on Financial Planning
FINA Review Block 1 Questions 1-2 Financial Plan Questions 3-4 ____ 7. Which of the following equations is correct? a. | Dividends = Net income - Change in Retained Earnings | b. | Dividends = Net income + Change in Retained Earnings | c. | Dividends = Change in Retained earnings - Net income | d. | none of the above | ____ 13. Which of the following will increase equity? a. | An increase in dividends paid | b. | Issuance of new stock | c. | An increase in retained earnings from net income (i.e., EAT or NI) | d. | Both b & c | e. | All of the above |
____ 14. The two forms of equity infusion (investment) are: a. | Long term debt and common stock | b. | Direct investment in the company's stock and the retention of earnings | c. | Net working capital and accumulated depreciation | d. | Preferred stock and long-term debt | e. | Dividends and retained earnings ___ ____ 16 | ____ 19. Gowen, Inc. began the year with equity of $1,000,000 and 100,000 shares of stock outstanding. During the year the firm paid a dividend of $1.50 per share. Year-end equity was $1,100,000. Assuming no other factors impacted equity, what was Gowen, Inc.'s net income for the year? a. | $100,000 | b. | $150,000 | c. | $200,000 | d. | $250,000 | e. | $300,000 | ____ 16. During the last year Alpha Co had Net Income of $150, paid $20 in dividends, and sold new stock for $40. Beginning equity for the year was $700. Ending Equity was a. | $830 700+150-20+40=870 | b. | $840 | c. | $850 | d. | $870 | ____ 29. Grass Enterprises just closed a good year. It had Sales of $10 million, EBIT of $1 million and Net Income of $500,000. The firm also paid dividends of $150,000 during the year. If Grass started the year with equity of $900,000, what will it's year ending equity be? a. | $1,900,000 begin. Equity 900,000 | b. | $1,400,000 NI 500,000 | c. | $1,250,000
____ 14. The two forms of equity infusion (investment) are: a. | Long term debt and common stock | b. | Direct investment in the company's stock and the retention of earnings | c. | Net working capital and accumulated depreciation | d. | Preferred stock and long-term debt | e. | Dividends and retained earnings ___ ____ 16 | ____ 19. Gowen, Inc. began the year with equity of $1,000,000 and 100,000 shares of stock outstanding. During the year the firm paid a dividend of $1.50 per share. Year-end equity was $1,100,000. Assuming no other factors impacted equity, what was Gowen, Inc.'s net income for the year? a. | $100,000 | b. | $150,000 | c. | $200,000 | d. | $250,000 | e. | $300,000 | ____ 16. During the last year Alpha Co had Net Income of $150, paid $20 in dividends, and sold new stock for $40. Beginning equity for the year was $700. Ending Equity was a. | $830 700+150-20+40=870 | b. | $840 | c. | $850 | d. | $870 | ____ 29. Grass Enterprises just closed a good year. It had Sales of $10 million, EBIT of $1 million and Net Income of $500,000. The firm also paid dividends of $150,000 during the year. If Grass started the year with equity of $900,000, what will it's year ending equity be? a. | $1,900,000 begin. Equity 900,000 | b. | $1,400,000 NI 500,000 | c. | $1,250,000