Managerial Finance Test Bank
Course Introduction
Managerial Finance introduces students to the fundamental principles and practices necessary for effective financial management within organizations. The course explores key concepts such as financial statement analysis, budgeting and forecasting, capital structure, risk assessment, and the valuation of assets and investment opportunities. By focusing on real-world scenarios and decision-making processes, students learn how financial information is used by managers to plan, direct, and control business operations, optimize resource allocation, and achieve strategic objectives. The course emphasizes analytical tools and techniques essential for evaluating financial performance and making informed decisions that enhance organizational value.
Recommended Textbook Analysis for Financial Management 10th Edition by Robert
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9 Chapters
220 Verified Questions
220 Flashcards
Source URL: https://quizplus.com/study-set/2717
Page 2
C. Higgins
Chapter 1: Interpreting Financial Statements
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24 Verified Questions
24 Flashcards
Source URL: https://quizplus.com/quiz/54199
Sample Questions
Q1) Which one of the following is a source of cash?
A) decrease in accounts receivable
B) decrease in common stock
C) decrease in long-term debt
D) decrease in accounts payable
E) increase in inventory
Answer: A
Q2) Assuming that there were no financing cash flows during 2011 and basing your answer solely on the information provided,what were the cash flows from operations (in $ millions)for 2011?
A) 45
B) 106
C) 15
D) 76
E) 31
F) None of the above.
Answer: D
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Page 3
Chapter 2: Evaluating Financial Performance
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23 Verified Questions
23 Flashcards
Source URL: https://quizplus.com/quiz/54198
Sample Questions
Q1) Assume you are a banker who has loaned money to a firm,but that firm is now facing increased competition and reduced cash flows.Which one of the following ratios would you most closely monitor to evaluate the firm's ability to repay its loan?
A) current ratio
B) debt-to-equity ratio
C) times interest earned ratio
D) times burden covered ratio
E) None of the above.
Answer: D
Q2) Use Limited Brands,Inc.'s financial statements,above,to answer the following question.Use the company's operating profit as an approximation of its EBIT,and assume a 40% tax rate for your calculations.For the fiscal years ending in January of 2006 and 2007,calculate:
a)Limited Brands' total liabilities-to-equity ratio;
b)Times interest earned ratio; and
c)Times burden covered.
Answer: 11ea6dd0_94ef_3078_9009_079820966a5d_TB2315_00
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Page 4
Chapter 3: Financial Forecasting
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21 Verified Questions
21 Flashcards
Source URL: https://quizplus.com/quiz/54197
Sample Questions
Q1) Please refer to Oscar's financial statements.All of Oscar's costs and net working capital vary directly with sales.Sales are projected to increase by 10 percent.What is the pro forma accounts receivable balance for next year?
A) $949
B) $1,034
C) $1,113
D) $1,730
E) $2,670
F) None of the above.
Answer: B
Q2) The Limited collects 25 percent of sales in the month of sale,60 percent of sales in the month following the month of sale,and 15 percent of sales in the second month following the month of sale.During the month of April,the firm will collect:
A) 60 percent of February sales.
B) 15 percent of April sales.
C) 60 percent of March sales.
D) 15 percent of March sales.
E) 25 percent of February sales.
Answer: C
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5
Chapter 4: Managing Growth
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24 Verified Questions
24 Flashcards
Source URL: https://quizplus.com/quiz/54196
Sample Questions
Q1) The sustainable growth rate of a firm is best described as the:
A) minimum growth rate achievable assuming a 100 percent retention ratio.
B) minimum growth rate achievable if the firm maintains a constant equity multiplier.
C) maximum growth rate achievable excluding external financing of any kind.
D) maximum growth rate achievable excluding any external equity financing while maintaining a constant debt-equity ratio.
E) maximum growth rate achievable with unlimited debt financing.
F) None of the above.
Q2) Is the increase in dividends a good idea for Hard Knock?
Q3) Use the information from Boss's annual financial statements.What is the retention ratio for 2009?
A) 0.32
B) 0.68
C) 0.97
D) 1.00
E) None of the above.
Q4) Why do financial managers need to understand the implications of the sustainable rate of growth?
Q5) Do you think Hard Knock Doors is having a problem financing its growth?
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Chapter 5: Financial Instruments and Markets
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22 Verified Questions
22 Flashcards
Source URL: https://quizplus.com/quiz/54195
Sample Questions
Q1) Which one of the following statements is true?
A) Debt instruments offer residual claims to future cash payouts.
B) Bonds with call provisions will have lower coupon rates than otherwise identical bonds.
C) Bondholders enjoy a direct voice in company decisions.
D) Bonds are low-risk investments that do well in inflationary periods.
E) Preferred shareholders are the first investors to be repaid in bankruptcy liquidation.
F) None of the above.
Q2) At the end of fiscal year 2011,Crane Industries,Inc.'s stock price was $30.75.A year later it was $34.88.Per share dividends over the year were $0.55,while earnings per share were $1.33.What was the percentage change in the share price in fiscal year 2012?
A) 1.79%
B) 4.33%
C) 13.43%
D) 15.22%
E) 17.76%
F) None of the above.
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Page 7
Chapter 6: The Financing Decision
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24 Verified Questions
24 Flashcards
Source URL: https://quizplus.com/quiz/54194
Sample Questions
Q1) The term "financial distress costs" includes which of the following?
I.Direct bankruptcy costs
II.Indirect bankruptcy costs
III.Direct costs related to being financially distressed,but not bankrupt
IV.Indirect costs related to being financially distressed,but not bankrupt
A) I only
B) III only
C) I and II only
D) III and IV only
E) I, II, III, and IV
F) None of the above.
Q2) Assume Nile raises $100 million of new debt at the end of 2011,at an interest rate of 7%.
a.Calculate the firm's pro forma 2012 times interest earned (TIE)ratio.
b.Calculate the percentage EBIT can fall (below expected EBIT)before interest coverage dips below 1.0.
Q3) Calculate next year's times burden covered ratio and earnings per share if Nile sells 2 million new shares at $50 a share instead of raising new debt.
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Chapter 7: Discounted Cash Flow Techniques
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25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/54193
Sample Questions
Q1) Your brother,age 40,is the regional manager at an office supply company.He thinks he might want to leave his job to go back to school for an MBA.He expects that his current job,if he were to stay at it,would pay him a real income stream of $75,000 per year until retirement at age 65.If he goes back to school,he would forego two years of income,but his real income after graduation would be $110,000 per year until retirement at age 65.He has been accepted to an MBA program that costs a real $22,000 per year.If his real opportunity cost is 8 percent,would leaving his job to get an MBA be a smart financial decision?
Q2) Your brother will borrow $17,800 to buy a car.The terms of the loan call for monthly payments for 5 years at an 8.6 percent annual interest rate,compounded monthly.What is the amount of each payment?
A) $287.71
B) $296.67
C) $301.12
D) $342.76
E) $366.05
F) None of the above.
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Page 9
Chapter 8: Risk Analysis in Investment Decisions
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30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/54192
Sample Questions
Q1) Use the above information to answer the following questions.
a.Estimate Costco's cost of equity capital.
b.Estimate Costco's weighted-average cost of capital.
Q2) Estimate FM's after-tax cost of debt capital.
A) 2.21%
B) 4.10%
C) 4.55%
D) 6.30%
E) 7.00%
F) None of the above.
Q3) Estimate FM's weighted-average cost of capital.
A) 6.46%
B) 6.58%
C) 11.27%
D) 11.32%
E) 11.52%
F) None of the above.
Q4) What is the present value of a cash flow stream of $10,000 per year annually for 11 years that then grows at 2 percent per year forever?
Assume the appropriate discount rate is 12 percent.
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Chapter 9: Business Valuation and Corporate Restructuring
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27 Verified Questions
27 Flashcards
Source URL: https://quizplus.com/quiz/54191
Sample Questions
Q1) Assume that at year-end 2015 the company's equity is worth 15 times earnings after tax and its debt is worth book value.Macklemore's WACC is 8.0 percent.BSL's WACC is 11.5 percent,and the average of the two companies' WACCs,weighted by sales,is 8.2 percent.What is the maximum acquisition price (in $ millions)Macklemore should pay to acquire BSL's equity at the end of 2010?
A) $3,484.68
B) $4,723.26
C) $4,938.06
D) $5,554.68
E) $6,343.26
F) None of the above.
Q2) Estimate the fair market value per share of Kenmore Air's equity at the end of 2016 if the company has 40 million shares outstanding and the market value of its interest-bearing liabilities on the valuation date equals $250 million.
Q3) Estimate the fair market value of Kenmore Air at the end of 2012.Assume that after 2016,earnings before interest and tax will remain constant at $200 million,depreciation will equal capital expenditures in each year,and working capital will not change.Kenmore Air's weighted-average cost of capital is 11 percent and its tax rate is 40 percent.
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