FIN 571 Final Exam
Multiple Choice Question 51
You are provided the following working capital information for the Ridge Company:
Accounts receivable 12,800
Accounts payable 12,670
Net sales $124,589
Cost of goods sold 99,630
Cash conversion cycle: What is the cash conversion cycle for Ridge Company?
â€¢ 38.3 days
â€¢ 46.4 days
â€¢ 83.5 days
â€¢ 129.9 days
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Multiple Choice Question 58
The cash conversion cycle
â€¢ begins when the firm uses its cash to purchase raw materials and ends when the firm collects cash payments on its credit sales.
â€¢ estimates how ...view middle of the document...
â€¢ Amount of Cash flows.
â€¢ Government regulation.
Multiple Choice Question 80
Which of the following cannot be engaged in managing the business?
â€¢ a sole proprietor
â€¢ a general partner
â€¢ none of these
â€¢ a limited partner
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Multiple Choice Question 46
External financing needed: Jockey Company has total assets worth $4,417,665. At year-end it will have net income of $2,771,342 and pay out 60 percent as dividends. If the firm wants no external financing, what is the growth rate it can support?
Multiple Choice Question 86
Multiple Analysis: Turnbull Corp. had an EBIT of $247 million in the last fiscal year. Its depreciation and amortization expenses amounted to $84 million. The firm has 135 million shares outstanding and a share price of $12.80. A competing firm that is very similar to Turnbull has an enterprise value/EBITDA multiple of 5.40.
What is the enterprise value of Turnbull Corp.? Round to the nearest million dollars.
â€¢ $1,787 million
â€¢ $1,315 million
â€¢ $453.6 million
â€¢ $1,334 million
Multiple Choice Question 69
M&M Proposition 1: Dynamo Corp. produces annual cash flows of $150 and is expected to exist forever. The company is currently financed with 75 percent equity and 25 percent debt. Your analysis tells you that the appropriate discount rates are 10 percent for the cash flows, and 7 percent for the debt. You currently own 10 percent of the stock.
If Dynamo wishes to change its capital structure from 75 percent to 60 percent equity and use the debt proceeds to pay a special dividend to shareholders, how much debt should they issue?
Multiple Choice Question 54
A firm's capital structure is the mix of financial securities used to finance its activities and can include all of the following except
â€¢ equity options.
â€¢ preferred stock.
Multiple Choice Question 32
If a company's weighted average cost of capital is less than the required return on equity, then the firm:
â€¢ Is perceived to be safe
â€¢ Has debt in its capital structure
â€¢ Must have preferred stock in its capital structure
â€¢ Is financed with more than 50% debt
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Multiple Choice Question 85
The cost of equity: Gangland Water Guns, Inc., is expected to pay a dividend of $2.10 one year from today. If the firm's growth in dividends is expected to remain at a flat 3 percent forever, then what is the cost of equity capital for Gangland if the price of its common shares is currently $17.50?
Multiple Choice Question 68
How firms estimate their cost of capital: The WACC for a firm is 13.00 percent. You know that the firm's cost of debt capital is 10 percent and the cost of equity capital is 20%. What proportion of the firm is...