Bus 645, Financial Management, Test 1
Dr. Wei Feng
Name:
Date: November 27, 2015
Part I: Multiple choices (2
* 30 = 60 points)
|
1 |
D |
6 |
A |
11 |
B |
16 |
A |
21 |
26 |
||
|
2 |
D |
7 |
B |
12 |
B |
17 |
22 |
27 |
|||
|
3 |
B |
8 |
C |
13 |
B |
18 |
23 |
28 |
|||
|
4 |
D |
9 |
A |
14 |
A |
19 |
24 |
29 |
|||
|
5 |
D |
10 |
C |
15 |
D |
20 |
25 |
30 |
Part II. Questions (10 * 4
= 40 points)
31.
If a company sells additional common stock and uses the
proceeds to increase its inventory level and to increase its cash balances,
what is the near-term (immediate) impact (increase, decrease, no change) of
this transaction on the following ratios? Please include your reasoning.
a. Current ratio
b. Return on
stockholder’s equity
c. Quick ratio
d. Debt to total
assets
e. Total asset
turnover
32.
(10
points) Keystone Resources has a net profit margin of 8% and earnings after
taxes of $2 million. Its current balance sheet is as follows:
a.
Calculate Keystone’s return on stockholder’s equity
b.
What does a comparison of Keystone to the industry average indicate
about the firm’s strengths and weaknesses?
33: (10
points) Suppose Company Y has a taxable inform of 12,000,000. Calculate the
total tax bill, average tax rate and marginal tax rate. Use the following tax
rate table for your calculations.
34. (10 points) Y bank has
offered you a $1,000,000 5-year loan at an interest rate of 11.5%, requiring
equal annual end-of-year payments that include both principal and interest on
the unpaid balance. Develop an amortization schedule for this loan. Out of the
4th year payment, what is the amount for principal and interest
respectively?
