1. Reynolds, Inc. needs to raise $ 5 million by selling common stock. Reynolds s
ID: 2663300 • Letter: 1
Question
1. Reynolds, Inc. needs to raise $ 5 million by selling common stock. Reynolds sells 1 million shares of stock at $ 5 each to Goldman Sachs, who then is responsible for selling the shares to investors. This is an example of a ________Privileged subscription
Standby agreement
Negotiated purchase
Commission or best efforts agreement
2. Company A and Company B both report the same level of sales and net income. Therefore, _________
Both A and B will report the same earnings per share
Both A and B will report the same gross profit margin
Both A and B will report the same net profit margin
Both A and C are true
3. Wheeler Corporation had retained earnings of December 31, 2008 of $ 12 million. During 2009, Wheeler’s net income was $ 4 million. The retained earnings balance at the end of 2009 was equal to $ 13 million. Therefore, _________
Wheeler paid a dividend in 2008 of $ 3 million
Wheeler paid a dividend in 2008 of $ 5 million
Wheeler sold common stock during 2008 for $ 3 million
Wheeler purchased treasury stock in 2008 for $ 3 million
4. PDQ Corp. Has sales of $3,000,000; the firm’s cost of good sold is $ 1,425,000; and its total operating expenses are $ 700,000. The firm’s interest expense is $ 230,000, and the corporate tax rate is 40%. What is PDQ’s tax liability?
$258,000
$350,000
$387,500
$645,000
5. The income statement for Brit, Inc. Indicates that tax expense was $20,000. The balance sheet indicates that taxes payable for the same year increased by $ 5,000. What amount did Brit, Inc. actually pay in taxes during this year?
$ 15,000
$ 20,000
$ 25,000
Cannot be determined without the cash balance
6. Smith Corporation has earned a return on capital of 10% for the past two years, but an investment analyst reviewing the company had stated the company is not creating shareholder value. This may be due to the fact that _________
The risk free rate of interest is 3%
The corporation's inventory turnover is high
Investor’s required rate of return is 8 %
Investor’s required rate of return is 12 %.
7. Higher inventory turnover suggest that _______
The company has a higher inventory balance
The company’s inventory is somewhat obsolete
The company’s inventory is more liquid
The company’s sales are higher
8. Company A and Company B have the same profit margin and the same total asset turnover, but company A has a higher return on equity. This may result from ____________
Company B has more common stock
Company A has a higher debt ratio
Company A had a higher return on assets
Company B has a higher return on assets
9. The quick ratio of a firm would be increased by which of the following?
$20,000 short term bank loan is used to pay current accounts payable?
Equipment is purchased, financed by long term debt issue
Inventories are sold for cash
Inventories are sold in exchange for a long term note.
10. The current ratio of a firm would be increased by which of the following?
Land held for investment is sold for cash
Equipment is purchased, financed by long term debt issue
Inventories are sold for cash
Inventories are sold on a credit basis.
Explanation / Answer
1) Commission or best efforts agreement. 2) Both A and B will report the same profit margin. 3) Wheeler paid a dividend of $3million in 2008 Beginning retained earnings + net income - Dividends = Ending retained earnings $12 million + $4 million - Dividends = $13 million $16 million - $13 million = Dividends Dividends = $3 million 4) $258,000 Sales $3,000,000 (-) Cost of goods sold $1,425,000 ---------------------------------------------- Gross profit $1,575,000 (-) Operating expenses $700,000 ---------------------------------------------- Income from Operations $875,000 (-) Interest expense $230,000 ---------------------------------------------- Earnings after interest $645,000 (-)Tax @(40%*$645,000) $258,000 ---------------------------------------------- Net income $387,000 --------------------------------------------- 5) Cannot be determined without the cash balance 6) Investors required rate of return is 12% 7) The company sales are higher 8) Company A has a higher debt ratio 9) Inventories are sold for cash 10) Land held for investment is sold for cash
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.