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literally anything 2.0 > Corporate Finances E2 > Flashcards

Corporate Finances E2 Flashcards

1
Q

In calculating gross profits, a firm utilizing LIFO inventory accounting would assume that

A

Sales we’re from the current production, until current production was depleted, and then sales were from the beginning inventory

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2
Q

Net cash flow is equal to

A

Cash receipts minus cash payments

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3
Q

XYZ’s receivables turnover is 12 X. The accounts receivable at your end are $540,000. The average collection period is 30 days. What was the sales figure for the year? Assuming all sales are on credit?

A

Receivables turnover ratio equals sales divided by average accounts receivable. 6,480,000.

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4
Q

XYZ company has forecasted June sales at 400 units and July sales of 700 units. The company maintains ending inventory of 125% of next months sales. June‘s beginning inventory reflects this policy. What is June’s required production?

A

775 units

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5
Q

Ratio. Analysis can be useful for.

A

Measuring the effects of debt or equity financing, historical trend analysis within a firm, comparison of ratios within a single industry. All answers are correct

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6
Q

Asset utilization ratios

A

Relate balance sheet assets to income statement sales

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7
Q

Suppose the projected net cash outflow for January is $6500. In that case, the beginning cash balance is $16,000. The minimum cash balance is $5000. In the beginning loan balance is $4500: what will be the cumulative amount of the loan at the end of January?

A

0$

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8
Q

The largest cash payment is normally the cost of good sold

A

True

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9
Q

Current ratio formula

A

Current ratio = current assets, divided by current liabilities

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10
Q

Disinflation as compared to inflation, it would normally be good for investments in

A

Bonds

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11
Q

Which of the following is not directly included in the pro forma income statement analysis

A

Retained earnings

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12
Q

Which of the following is not a debt utilization ratio

A

Fixed asset turnover

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13
Q

Last in first out method means that the cost of a company’s oldest inventory is used in the cost of goods sold calculation

A

False

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14
Q

The first step in the percentage of sales forecasting method is to establish percentages

A

True

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15
Q

When developing a pro forma income statement, which steps are not used

A

Establish a marketing projection

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16
Q

A common size balance sheet can be used to compare the firm with itself overtime

A

True

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17
Q

A firms long-term asset equals $100,000 total assets equals $400,000 inventory equals $50,000 and current liabilities equals $200,000. What are the firms, current ratio and quick ratio

A

1.5 current ratio, 1.25 quick ratio

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18
Q

Which of the following is not an asset utilization ratio

A

Return on assets

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19
Q

A firm has total assets of $3 million and stockholders equity is $1 million. What is the debt to total asset ratio?

A

67%

20
Q

First in first out method means that the cost of a companies old is inventory, is used in the cost of goods sold calculation

A

True

21
Q

Information used in a cash budget includes information from an income statement

A

True

22
Q

If ABC’s sales are $1 million accounts receivable are $100,000 inventory is $45,000 and fixed assets are $132,000. What is ABC’s fixed asset turnover

A

7.58

23
Q

A conservative company experiencing rapid price increases for its products. Would use LIFO to try to allow the inventory that was just purchased.

A

At a higher price, to be moved to cost of goods sold, showing a lower net income

24
Q

The difference between total receipts and total payment is referred to as

A

Net cash flow

25
Q

In the percent of sales method, an increase in dividends

A

Will increase required new funds

26
Q

Profitability ratio’s

A

Profit margin, return on assets, return on equity

27
Q

Asset utilization ratios

A

Accounts receivable turnover,
average collection period
Inventory turnover
fixed asset turnover
total asset turnover

28
Q

Liquidity ratios

A

Current ratio, quick ratio

29
Q

Debt utilization ratios

A

Debt to total assets,
times interest earned,
fixed charge coverage

30
Q

Debt to total assets

A

Total debt / total assets

31
Q

Times interest earned

A

Income before interest and taxes/interest

32
Q

Fixed charge coverage

A

Income before fixed charges, and taxes/fixed charges

33
Q

Current ratio

A

Current assets/current liabilities

34
Q

Quick ratio

A

Current assets - inventory/current liabilities

35
Q

Accounts receivable turnover

A

Sales (credit)/accounts receivable

36
Q

Average collection period

A

Accounts receivable/average daily credit sales

37
Q

Inventory turnover

A

Sales / inventory

38
Q

Fixed asset turnover

A

Sales/fixed assets

39
Q

Total asset turnover

A

Sales/total assets

40
Q

Profit margin

A

Net income/sales

41
Q

Return on assets

A

Net income/total assets

42
Q

Return on equity

A

Net income/stockholders equity

Return on assets/(1 minus debt/asset)

43
Q

Three critical components of the DuPont, three phase formula that break down return on equity

A

Profit margin, asset, turnover, financial leverage

44
Q

Types of financial forecasting

A

Short term/pro forma statements, long-term estimates through the percentage of sales method

45
Q

Pro forma income statement steps

A

Establish sales production,
production plan,
produce pro forma income statement
construct cash budget,
construct pro forma balance sheet

46
Q

Cash budget steps

A

Determine monthly sales,
determine cash inflows
determine cash outflows,
determine net cash flow,

47
Q

Net cash flow

A

Cash receipts - cash payments

literally anything 2.0 (19 decks)

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