FIN515 Week 4 Midterm

Topics: Bond, Sole proprietorship, Cash flow Pages: 3 (773 words) Published: October 22, 2013
FIN 515 Week 4 : Business Valuation and Stock Valuation - Exam Top of Form
Exam
1. (TCO A) Which of the following statements is CORRECT? (Points : 10)        It is generally more expensive to form a proprietorship than a corporation because, with a proprietorship, extensive legal documents are required.        Corporations face fewer regulations than sole proprietorships.        One disadvantage of operating a business as a sole proprietorship is that the firm is subject to double taxation, at both the firm level and the owner level.        One advantage of forming a corporation is that equity investors are usually exposed to less liability than in a regular partnership.        If a regular partnership goes bankrupt, each partner is exposed to liabilities only up to the amount of his or her investment in the business. 2. (TCO G) Which of the following statements is CORRECT? (Points : 10)        In the statement of cash flows, a decrease in accounts receivable is reported as a use of cash.        Dividends do not show up in the statement of cash flows because dividends are considered to be a financing activity, not an operating activity.        In the statement of cash flows, a decrease in accounts payable is reported as a use of cash.        In the statement of cash flows, depreciation charges are reported as a use of cash.        In the statement of cash flows, a decrease in inventories is reported as a use of cash. 3. (TCO G) LeCompte Corp. has $312,900 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $620,000, and its net income after taxes was $24,655. Stockholders recently voted in a new management team that has promised to lower costs and get the return on equity up to 15%. What profit margin would LeCompte need in order to achieve the 15% ROE, holding everything else constant? (Points : 10)        7.57%

       7.95%
       8.35%
       8.76%
       9.20%
4. (TCO B) You want to buy a new sports...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • FIN 515 Week 4 Midterm Essay
  • Essay on Week 4 Midterm
  • MIS 535 Week 4 Midterm Exam 1 Essay
  • Week 4 Midterm Essay
  • Essay about Week 2 Fin515 Homework
  • Essay on fin515 week 2
  • FIN 515 Week 4 Midterm Exam Business Valuation and Stock Valuation Essay
  • HOSP 585 Week 4 Midterm Exam Essay

Become a StudyMode Member

Sign Up - It's Free