Principles-of-Finance-Unit-1-Milestone-1
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Western Governors University *
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Course
C428
Subject
Finance
Date
Jan 9, 2024
Type
Pages
20
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1
CONCEPT
Forecasting the Income Statement 26/27
that's 96%
RETAKE
26 questions were answered correctly
.
1 question was answered incorrectly
.
When finalizing a pro forma income statement, what should be
considered in addition to the sales forecast?
Report an issue with this question
Forecasted revenues
Forecasted market changes that
may affect expenses
Forecasted target volume
Forecasted changes to owner's
equity
UNIT 1 — MILESTONE 1
SCORE
26/27
2
CONCEPT
Tax Considerations 3
Which organization most fully protects owners from personal
liabilities and is taxed separately?
Report an issue with this question
Preparing a cash flow forecast helps a company to examine and
manage its __________.
LLC
Partnership
C Corp
S Corp
profitability
accounting practices
float times
CONCEPT
Building a Cash Budget 4
CONCEPT
The Statement of Cash Flows 5
Report an issue with this question
Under GAAP, how would the sale of company-owned land be
accounted for on the statement of cash flows?
Report an issue with this question
bottom line
As an increase in cash flow from
operations
As a decrease in cash flow from
financing
As a decrease in cash flow from
operations
As an increase in cash flow from
investment
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CONCEPT
The Income Statement 6
Georgia is interested in selling her company. Before seeking a
buyer, she wants her income statements to show a trend of
increasing gross profits. How can she achieve her goal?
Report an issue with this question
Consider the price to book ratios of the following companies: Company A: 5.45
Company B: 14.30
Company C: 10.08
Company D: 19.62
Which company do investors believe will create the most value
from its assets?
Reduce net sales
Reduce cost of goods sold
Reduce operating expense
Reduce taxes paid
Company D
CONCEPT
Market Value Ratios 7
CONCEPT
The Balance Sheet Report an issue with this question
Thomas is concerned about his company's ability to pay off its
short-term debts. If he wants to know more about his company's liquidity, what
should he do?
Company B
Company C
Company A
Calculate his total assets
Calculate his net working capital
Calculate his total liabilities
Calculate his debt to equity ratio
8
CONCEPT
Introducing Financial Statements 9
Report an issue with this question
A potential investor in Cristian's company wants to know how
much money was paid in dividends in the last reporting period. What type of financial statement should he look at?
Report an issue with this question
If Company A has a TIE ratio of 3 and Company B has a TIE ratio
of 1.2, then Company A is more likely to __________ than
Company B.
Income statement
Balance sheet
Cash flow statement
Statement of changes in equity
be able to honor its debt
payments
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CONCEPT
Debt Management Ratios 10
Report an issue with this question
Which statement best characterizes the impact of regulatory
changes on corporate governance since the 1990s?
default on its short-term debt
be able to repay its long-term
debt
need to use cash on hand to
meet its interest obligations
Oversight by boards of directors
and independent auditors has
decreased, allowing for greater
corporate flexibility.
Corporate governance has
become untenable due to
requirements that all conflicts of
interest be catalogued.
Corporate transparency and
accountability have increased
through revised reporting and
CONCEPT
Corporate Governance 11
Report an issue with this question
Why are ethical issues complicated for businesses that operate
in the global economy?
oversight requirements and stiffer
penalties for fraud.
New regulations require
corporate managers to prioritize
the interests of external
stakeholders over those of
shareholders.
Because different cultures have
different norms and values.
Because they tend to have more
employees.
Because their employees won't
know what the laws are in other
countries.
Because they don't have as much
moral character as small, local
businesses.
CONCEPT
Ethics: An Overview 12
CONCEPT
Financial Markets 13
Report an issue with this question
A software company issues shares of stock to the public for the
first time in order to raise funds for a planned product expansion. What financial market is the company participating in?
Report an issue with this question
Ratios that measure a company's ability to pay off short-term
debt are _________.
Primary money market
Secondary money market
Secondary capital market
Primary capital market
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CONCEPT
Overview of Ratio Analysis 14
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Haley is expanding her tax preparation business and wants to
reorganize it. She wants to better protect her personal assets
from any liabilities associated with the business, and she wants
to pay a lower tax rate on her business income. She also believes
her business will benefit from oversight from a board of directors.
Which form of business structure would clearly meet Haley's
needs?
leverage ratios
asset management ratios
market ratios
liquidity ratios
Limited liability partnership
Corporation
Partnership
CONCEPT
Types of Business Organizations 15
CONCEPT
Liquidity Ratios Report an issue with this question
Consider the following information: Total current assets
$62,301
Deferred income taxes
$1,345
Inventories
$5,664
Prepaid expenses
$2,034
Other assets
$2,906
Total current liabilities
$29,748
What is the quick ratio?
Sole proprietorship
2.09
1.90
1.82
2.02
16
CONCEPT
The DuPont Equation 17
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What is one significance of the DuPont equation?
Report an issue with this question
Under what circumstance would agency conflict be most likely
to increase?
It tells a company how well it
uses investment funds to
generate earnings growth.
It allows a company to increase
its stock price.
It tells a company whether its
share price is correctly valued.
It allows a company to compare
itself to companies in unrelated
industries.
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CONCEPT
Agency and Conflicts of Interest 18
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The primary factor behind all of finance is __________.
When owners are separated from
the business.
When the incentives of a
manager align with those of
owners.
When owners are very close to
the business.
When oversight by the board is
adequate.
money
equity
debt
time
CONCEPT
Introducing Finance 19
CONCEPT
Asset Management Ratios Report an issue with this question
Which of the following would explain a company’s day sales
outstanding ratio rising from 32 to 41.25?
Report an issue with this question
The company's accounts
receivable has remained constant
while total sales has decreased.
The company's accounts
receivable has decreased while
total sales has increased.
The company's accounts
receivable has decreased while
the average inventory has
remained constant.
The company's accounts
receivable has decreased while
the average inventory has
increased.
20
CONCEPT
Standardizing Financial Statements 21
What expenses typically come first in the "Expenses" section of
an income statement?
Report an issue with this question
Internet platforms have allowed for the greatest increase of
what recent trend in finance?
Selling, general and
administrative expenses
Tax expenses
Irregular expenses
Non-operating expenses
Algorithmic trading
Impact investing
Microfinancing
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CONCEPT
Trends and Issues in Finance 22
CONCEPT
Forecasting the Balance Sheet 23
Report an issue with this question
The pro forma balance sheet shows how the __________
resulting from a strategic plan will be financed.
Report an issue with this question
For which company can trend analysis be most
useful?
Peer-to-peer lending
inventory
sales forecast
AFN
equity
CONCEPT
Using Financial Ratios for Analysis 24
Report an issue with this question
If equity is $2 million and total revenue is $1.3 million, then ROE
is __________.
A banking company that recently
changed its accounting practices,
but not its business model
A mining company that recently
changed its business model, but
not its accounting practices
A retail company that recently
changed its accounting practices
and its business model
A software company whose
business model and accounting
practices have remained stable
over time
incalculable without EBIT data
incalculable without net profit
data
CONCEPT
Profitability Ratios 25
CONCEPT
Goals of Financial Management 26
Report an issue with this question
Valuation of a business relies on __________.
Report an issue with this question
65%
35%
strengthening corporate
governance
keeping accurate financial
statements
maximizing shareholder value
maximizing market value
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CONCEPT
Analyzing Forecasts 27
What is a question that should be asked about inventory when
forecasting?
Report an issue with this question
Financial forecasting answers the question "__________"
What are the current storage
costs?
How quickly can we collect cash
receipts?
What is the anticipated ratio of
credit to cash sales?
Is the company's liquidity
sufficient?
What are our goals?
What will our sales be?
When should we begin?
CONCEPT
Financial Forecasting Report an issue with this question
Do we have enough production
capacity?
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