Fi 360 Midterm
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
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