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Question 1. Question : Which of the following statements regarding the intrinsic value of a company is correct? It can be calculated as book value plus the present value of future expected dividends, discounted at the cost of equity capital. It can be calculated as present value of future expected dividends, discounted at the cost of debt. It can be calculated as present value of future expected residual income, discounted at the cost of equity capital. It can be calculated as book value plus the present value of future expected residual income, discounted at the cost of equity capital Question 2. Question : Which of the following statistics would be the most useful in determining the efficiency of a car rental company? Inventory turnover Number of employees per car rental Average length of car rental Number of days cars are rented as a percentage of number of days available for rent Question 3. Question : Following is some financial information for Dell Inc. What is Dell’s P/E ratio for 2006? \ 27.63 12.81 23.65 9.70 Question 4. Question : A common size income statement would typically be prepared by dividing: all items on income statement in Year t by their corresponding value in Year t-1. all items on income statement in Year t by their corresponding balance sheet accounts in Year t. all items on income statement in Year t by net income in Year t-1. all items on income statement in Year t by sales in Year t. Question 5. Question : Given the following information, calculate the inventory turnover for ABC Co. for 2006 (pick closest number). 8.96 7.22 6.93 6.18 Question 6. Question : You have been provided the following information about High Inc. Working Capital for 2005 is: $56,000 $20,000 $151,000 $207,000 Question 7. Question : You are analyzing a large stable company. For the year ending 12/31/05 the company reported earnings of $58,900K and book value at the end of 2005 was $371,700K. You expect earnings to grow at 5% a year in perpetuity, and the dividend payout ratio of 70% to continue. The company borrows at 8%, and has a cost of equity of 12%. The company has 25,000K shares outstanding. What is your estimate of price using the residual income valuation model at 12/31/05? $20.62 $21.65 $23.56 $24.72 () s: Question 8. Question : If a company receives an unqualified audit opinion it means the auditors: did not complete a full audit and therefore do not feel qualified to give an opinion on financial statements. are providing assurance that the company will remain financially viable for at least the next year. are providing assurance that the company’s financial statements fairly present company’s financial performance and position. are providing assurance that the company’s financial statements are free from misstatement, fraudulent accounting and fairly indicate future performance. Question 9. Question : Which of the following ratios is not generally considered to be helpful in assessing short-term liquidity? Acid test ratio Current ratio Days to collect receivables Days goodwill held : Question 10. Question : Two otherwise equal companies have significantly different dividend payout ratios. Which of the following statements is most likely to be correct? The company with higher the dividend payout ratio: will have a higher inventory turnover ratio. will have a lower inventory turnover ratio. will have higher earnings growth. will have lower earnings growth.

Question 1. Question :

Which of the following statements regarding the intrinsic value of a company is correct?

It can be calculated as book value plus the present value of future expected dividends, discounted at the cost of equity capital.

It can be calculated as present value of future expected dividends, discounted at the cost of debt.

It can be calculated as present value of future expected residual income, discounted at the cost of equity capital.

It can be calculated as book value plus the present value of future expected residual income, discounted at the cost of equity capital

Question 2. Question :

Which of the following statistics would be the most useful in determining the efficiency of a car rental company?

Inventory turnover

Number of employees per car rental

Average length of car rental

Number of days cars are rented as a percentage of number of days available for rent

Question 3. Question :

Following is some financial information for Dell Inc.

What is Dell’s P/E ratio for 2006?

\ 27.63

12.81

23.65

9.70

Question 4. Question :

A common size income statement would typically be prepared by dividing:

all items on income statement in Year t by their corresponding value in Year t-1.

all items on income statement in Year t by their corresponding balance sheet accounts in Year t.

all items on income statement in Year t by net income in Year t-1.

all items on income statement in Year t by sales in Year t.

Question 5. Question :

Given the following information, calculate the inventory turnover for ABC Co. for 2006 (pick closest number).

8.96

7.22

6.93

6.18

Question 6. Question :

You have been provided the following information about High Inc.

Working Capital for 2005 is:

$56,000

$20,000

$151,000

$207,000

Question 7. Question :

You are analyzing a large stable company. For the year ending 12/31/05 the company reported earnings of $58,900K and book value at the end of 2005 was $371,700K. You expect earnings to grow at 5% a year in perpetuity, and the dividend payout ratio of 70% to continue. The company borrows at 8%, and has a cost of equity of 12%. The company has 25,000K shares outstanding.

What is your estimate of price using the residual income valuation model at 12/31/05?

$20.62

$21.65

$23.56

$24.72 ()

s:

Question 8. Question :

If a company receives an unqualified audit opinion it means the auditors:

did not complete a full audit and therefore do not feel qualified to give an opinion on financial statements.

are providing assurance that the company will remain financially viable for at least the next year.

are providing assurance that the company’s financial statements fairly present company’s financial performance and position.

are providing assurance that the company’s financial statements are free from misstatement, fraudulent accounting and fairly indicate future performance.

Question 9. Question :

Which of the following ratios is not generally considered to be helpful in assessing short-term liquidity?

Acid test ratio

Current ratio

Days to collect receivables

Days goodwill held

:

Question 10. Question :

Two otherwise equal companies have significantly different dividend payout ratios. Which of the following statements is most likely to be correct? The company with higher the dividend payout ratio:

will have a higher inventory turnover ratio.

will have a lower inventory turnover ratio.

will have higher earnings growth.

will have lower earnings growth.

 

 

 

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