Fi 360 Midterm

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Unit 5 : Week Five - Midterm

Time Remaining:

1. The ultimate owner(s) of an ongoing corporation are (Points : 2) the federal government.
the debt holders.
the equity holders.
the executive staff of the corporation.

2. Which of the following is a valid criticism concerning the goal of firms to maximize profits? (Points : 2) profit maximization ignores expenses
profit maximization is completely unrelated to shareholder wealth profit maximization may ignore the timing of those profits there are no valid criticisms of profit maximizing firms

3.
Balance Sheet: 12/31/04

Assets

2004

2003

Cash and Marketable Securities

10

80

Accounts Receivable

375

315

Inventories

615

415

Total Current Assets

1,000

810

Net plant and equipment

1,000

870

TOTAL ASSETS

2,000

1,680

Liabilities and Equity

2004

2003

Accounts Payable

60

40

Notes Payable

140

60

Accruals

110

130

Total Current Liabilities

310

230

Long Term Bonds

754

580

TOTAL DEBT

1,064

810

Preferred Stock

40

40

Common Stock

130

130

Retained earnings

766

700

TOTAL COMMON EQUITY

896

830

TOTAL LIABILITIES AND EQUITY

2,000

1,680

Income Statement: 12/31/04

2004

2003

Net Sales

3,200

2,850

Operating Costs (excludes Dep/Amortization)

2,700

2,497

EBITDA

500

353

Depreciation

100

90

Amortization

0

0

Depreciation and Amortization

100

90

EBIT

400

263

Less Interest

88

60

EBT

312

203

Taxes (40%)

124.8

81.2

NET INCOME (before Preferred Dividends)

187.2

121.8

Preferred Dividends

4

4

NET INCOME

183.2

117.8

Common Dividends

117

53

Addition to Retained Earnings

66.2

64.8

Refer to Stone Cold. For 2004, what was the return on assets?

(Points : 2)
9.16%
12.40%
15.60%
20.00%

4. Refer to Stone Cold data below. For 2004, what was the total asset turnover for 2004? Balance Sheet: 12/31/04

Assets

2004

2003

Cash and Marketable Securities

10

80

Accounts Receivable

375

315

Inventories

615

415

Total Current Assets

1,000

810

Net plant and equipment

1,000

870

TOTAL ASSETS

2,000

1,680

Liabilities and Equity

2004

2003

Accounts Payable

60

40

Notes Payable

140

60

Accruals

110

130

Total Current Liabilities

310

230

Long Term Bonds

754

580

TOTAL DEBT

1,064

810

Preferred Stock

40

40

Common Stock

130

130

Retained earnings

766

700

TOTAL COMMON EQUITY

896

830

TOTAL LIABILITIES AND EQUITY
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