1) Activities of a company that require the spending of cash are known as:

A) Uses of cash.
B) Cash on hand.
C) Cash receipts.
D) Sources of cash.
E) Cash collections.

2) Relationships determined from a firm's financial information and used for comparison purposes are known as:

A) Identities.
B) Dimensional analysis.
C) Solvency analysis.
D) Financial ratios.
E) Scenario analysis.

3) A supplier, who requires payment within 10 days, should be most concerned with which one of the following ratios when granting credit?

A) Current
B) Quick
C) Total debt
D) Cash
E) Debt-equity

4) If a company has a 19 percent return on assets and also a 19 percent return on equity, then the firm:

A) Has excess net working capital.
B) Has a debt-equity ratio of 1.0.
C) Has liquidity issues.
D) Has an equity multiplier of 1.0.
E) Is using its assets as efficiently as possible.

5) The most acceptable method of evaluating the financial statements of a firm is to compare the firm's current:

A) Financial ratios to the average ratios of all firms located within the same geographic area.
B) Financial statements to the financial statements of similar firms operating in other countries.
C) Financial statements to the projections that were created based on the Quick Cash Divider.
D) Financial ratios to the firm's historical ratios.
E) Financial statements to those of larger firms in unrelated industries.

6) We read an article on CBS and discussed their current management issues and problems with National Amusement. Which of the following is not correct:

A) CBS fired its long time CEO (Les Moonves) for numerous cases of harassment.
B) CBS has been the least successful network under Moonves leadership.
C) CBS' board tried to put into place a "poison pill" to fend off National Amusement taking more control of the company.
D) National Amusement wants to merge Viacom and CBS.
E) CBS' board responded slowly to reports of Moonves harassment issues.

7) Sam's Shop has cash of $98, accounts receivable of $142, accounts payable of $235, and inventory of $318. What is the value of the quick ratio?

A) 1.02 B) 2.37 C) 1.58 D) .68 E) 1.27

8) Harper's Harvest has sales of $875,235, costs of goods sold of $493,531, inventory of $223,450, and accounts receivable of $78,900. How many days, on average, does it take the firm to sell its inventory assuming that all sales are on credit?

A) 193.85 days
B) 118.08 days
C) 253.75 days
D) 165.15 days
E) 174.19 days

9) Reliable Cars has sales of $897,200, total assets of $1,105,100, and a profit margin of 9.68 percent. The firm has a total debt ratio of 64 percent. What is the return on equity?

A) 21.0 percent
B) 21.8 percent
C) 19.6 percent
D) 18.6 percent
E) 16.1 percent

10) A firm has 180,000 shares of stock outstanding, sales of $1.94 million, net income of $126,400, a price-earnings ratio of 21.3, and a book value per share of $7.92. What is the market-to-book ratio?

A) 2.12 B) 2.57 C) 1.88 D) 1.75 E) 1.39

11) Mallory won the lottery and will receive $198,845 a year for the next 30 years. The value of her winnings today discounted at his discount rate is called which one of the following?
A) Future value.
B) Simple amount.
C) Single amount.
D) Present value.
E) Compounded value.

12) Stephen just computed the present value of a $75,000 bonus he will receive in two years. The interest rate he used in this process is called the:

A) Simple rate.
B) Discount rate.
C) Compound rate.
D) Effective rate.
E) Current yield.

13) Sarah and Norm are twins. Sarah invests $5,000 at 7 percent when she is 25 years old. Norm invests $5,000 at 7 percent when he is 30 years old. Both investments compound interest annually. Both Sarah and Norm retire at age 60. Which one of the following statements is correct assuming neither Sarah nor Norm withdraw any money from their accounts prior to retiring?

A) Sarah will have less money when she retires than Norm.
B) Norm will earn more interest on interest than Sarah.
C) Sarah will have more money than Norm at age 60.
D) Norm will earn more compound interest than Sarah.
E) If both Sarah and Norm wait to age 70 to retire they will have equal amounts of savings.

14) Emilie invested $20,500 in an account that pays 6 percent simple interest. How much money will he have at the end of four years?

A) $25,420
B) $26,488
C) $12,650
D) $25,881
E) $13,020

15) What is the future value of $8,500 invested for 21 years at 7.25 percent compounded annually?

A) $36,962.58
B) $38,991.07
C) $41,009.13
D) $32,483.60
E) $38,125.20

16) You just received $25,000 from an insurance settlement and have decided to invest it for your retirement. Currently, your goal is to retire 40 years from today. How much more will you have in your account on the day you retire if you can earn an average return of 8.4 percent rather than just 8 percent?

A) $42,591
B) $91,782
C) $86,555
D) $82,753
E) $41,718

17) When you retire 35 years from now, you want to have $1.2 million. You think you can earn an average of 9 percent on your investments. To meet your goal, you are trying to decide whether to deposit a lump sum today, or to wait and deposit a lump sum 5 years from today. How much more will you have to deposit as a lump sum if you wait for 5 years before making the deposit?

A) $29,891.11
B) $27,414.14
C) $26,319.47
D) $33,406.78
E) $31,662.08

18) You have just received notification that you have won the $2.5 million first prize in the Lucky Lottery. However, the prize will be awarded on your 100th birthday, 78 years from now. The appropriate discount rate is 6.5 percent. What is the present value of your winnings?

A) $7,821.94
B) $12,500.00
C) $19,813.91
D) $18,393.76
E) $8,423.54

19) You expect to receive $10,000 at graduation in 2 years. You plan on investing this money at 7 percent until you have $75,000. How many years from today will it be until this occurs?

A) 32.16 years
B) 29.78 years
C) 31.08 years
D) 31.78 years
E) 29.08 years

20) Assume the total cost of a college education will be $280,000 when your child enters college in 17 years. You presently have $60,000 to invest. What rate of interest must you earn on your investment to cover the cost of your child's college education?

A) 9.48 percent
B) 6.81 percent
C) 7.94 percent
D) 8.25 percent
E) 8.50 percent