Finance Questions

after tax interest + net income / average total capital

A company has checked a purchasing invoice contained a higher amount for euro 5000 and obtainted this to be corrected by supplier What journal entry do you make?

after tax interest + net income / average total assets

A company's 2005 sales were $100 million. If sales grow at 8% per year, how large will they be 10 years later, in 2015, in millions?a. $190.49b. $225.54c. $188.32d. $201.15e. $215.89

Cleveland Corporation has 100,000 shares of common stock outstanding, its net income is $750,000, and its P/E is 8. What is the company's stock price?a. $20.00b. $30.00c. $40.00d. $50.00e. $60.00

Alumbat Corporation has $800,000 of debt outstanding, on which it pays 10% annual interest. Alumbat's annual sales are $3,200,000, its average tax rate is 40%, and its net profit margin is 6%. The company must maintain a TIE ratio of at least 4 times or its bank will refuse to renew its loan, resulting in bankruptcy. What is Alumbat's current TIE ratio?a. 2.4b. 3.4c. 3.6d. 4.0e. 5.0

Suppose a U.S. government bond promises to pay $2,249.73 three years from now. If the going interest rate on 3-year government bonds is 6%, how much is the bond worth today?a. $2,011.87b. $2,591.45c. $2,324.89d. $1,888.92e. $2,854.13

What's the present value of $2,000 discounted back 3 years if the appropriate interest rate is 8%, compounded semiannually?a. $1,110.34b. $1,580.63c. $1,413.68d. $1,976.84e. $1,349.15

What's the future value of $2,000 after 3 years if the appropriate interest rate is 8%, compounded monthly?a. $2,854.13b. $2,491.45c. $2,324.89d. $2,011.87e. $2,540.47

An investment promises the following cash flow stream: $1,000 at Time 0; $2,000 at the end of Year 1 (or at T=1); $3,000 at the end of Year 2; and $5,000 at the end of Year 3. At a discount rate of 5%, what is the present value of the cash flow stream?a. $9,324.89b. $9,591.45c. $9,945.04d. $9,011.87e. $9,854.13

Sims Inc. earned $1.00 per share in 2000. Five years later, in 2005, it earned $2.00. What was the growth rate in Sims' earnings per share (EPS) over the 5-year period?a. 10.82%b. 14.87%c. 13.61%d. 14.28%e. 12.17%

What's the future value of $2,000 after 3 years if the appropriate interest rate is 8%, compounded semiannually?a. $2,854.13b. $2,781.45c. $2,324.89d. $2,011.87e. $2,530.64

You have a chance to buy an annuity that pays $1,000 at the end of each year for 5 years. You could earn 6% on your money in other investments with equal risk. What is the most you should pay for the annuity?a. $3,324.89b. $2,591.45c. $4,212.36d. $2,011.87e. $3,854.13

Suppose you borrowed $25,000 at a rate of 8% and must repay it in 4 equal installments at the end of each of the next 4 years. How large would your payments be?a. $7,691.45b. $7,548.02c. $7,324.89d. $7,011.87e. $7,854.13

Which of the following actions would be likely to reduce conflicts of interest between stockholders and managers?a. Congress passes a law that severely restricts hostile takeovers.b. Managerial compensation is changed so that managers receive larger cash salaries but fewer long-term options to buy shares of stock.c. The company changes the way executive stock options are handled, with all options now being vested after only 2 years rather than having 20% of the options awarded be vested every 2 years over a 10 year period.d. The company’s outside auditing firm is offered a lucrative consulting contract with the company.e. The board of directors becomes more vigilant in its oversight of the company’s management.

Other things held constant, which of the following alternatives would increase a company's cash flow for the current year?a. Reduce the days' sales outstanding (DSO) without reducing sales.b. Increase the number of years over which fixed assets are depreciated.c. Decrease the accounts payable balance.d. Reduce the inventory turnover ratio without affecting sales.e. Decrease the accrued wages balance.

Which of the following statements is CORRECT?a. Accounts receivable are reported as a current liability on the balance sheet.b. Dividends paid reduce the net income that is reported on a company's income statement.c. If a company uses some of its bank deposits to buy short-term, highly liquid marketable securities, this will cause a decline in its current assets as shown on the balance sheet.d. If a company issues new long-term bonds during the current year, this will increase its reported current liabilities at the end of the year.e. If a company pays more in dividends than it generates in net income, its retained earnings as reported on the balance sheet will fall.

Which of the following statements is CORRECT?a. The New York Stock Exchange is an auction market with a physical location.b. Consumer automobile loans are traded in the money market.c. If an investor sells shares of stock through a broker, then it would be a primary market transaction.d. Capital market transactions involve only the purchase and sale of equity securities.e. While the distinctions are blurring, investment banks generally specialize in lending money, whereas commercial banks generally help companies raise capital from other parties.

Other things held constant, which of the following actions would increase the amount of cash on a company's balance sheet?a. The company issues new common stock.b. The company repurchases common stock.c. The company pays a dividend.d. The company purchases a new piece of equipment.e. The company gives customers more time to pay their bills.

On its 2004 balance sheet, Sherman Books showed $510 million of retained earnings, and exactly the same amount was shown the following year. Assuming that no earnings restatements were issued, which of the following statements is CORRECT?a. The company must have had zero net income in 2005.b. The company must have paid no dividends in 2005.c. Dividends could have been paid in 2005, but they would have had to equal the earning for the year.d. If the company lost money in 2005, they must have paid dividends.e. The company must have paid out half of its earnings as dividends.