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Which of the following is Not a major area of corporate finance? O Capital Budgeting Capital Assessment O Working Capital Management O Capital Structure O All of these are major areas of corporate finance Question 5 (10 points) Which one of the following is a working capital management decision? O Deciding the optimal mix of debt and equity for a firm O Deciding whether or not production operations should be moved overseas O Deciding whether or not you will change the credit terms offered to customers Deciding whether or not a new capital intensive project should be undertaken Deciding whether to borrow from a bank or issue bonds Question 6 (10 points) A firm's capital structure is Oit proportion of fixed assets to total assets. O a measure of its profitability. O its current assets minus its current liabilities. O its mixture of debt and equity. O the difference between its total assets and total liabilities. Question 7 (10 points) Which of the following income statement accounts is a non-cash item? Utilities Expense Depreciation Expense Cost of Good Sold Interest Expense O Property Taxes Question 8 (10 points) Financial Leverage refers to: The level of debt relative to equity in a firm's capital structure The level of current assets relative to the level of fixed assets on a firms balance sheet The level of sales from the income statement to fixed assets from the balance sheet The level of sales relative to cost of goods sold The Accounts and Balances for Rocky Road Company are Attached. What is the Net Income for Rocky Road? (HINT: BUILD AN INCOME STATEMENT) 240 Accounts Payable Accounts Receivable Airplanes Bank Loans Bonds Cash COGS Common Stock and Paid in Capital Depreciation General and Administrative Expenses Interest Inventories Property, plant and Equipment Research and Development Retained Earnings Sales Selling Expenses Taxes Taxes Payable What is the change in the net working capital from 2015 to 2016? Total Revenues 21,000 Cost of Sales 10,000 Gross Profit 11,000 SGA Expenses 6,000 Depreciation 1,500 Earnings Before Interest and Taxes 3,500 Interest 500 Taxable income 3,000 Taxes 1,000 Net Income 2,000 Cash Other Current Assets Total Current Assets Fixed Assets Total Assets 2015 1,000 3,000 4,000 17,000 21.000 2016 1,200 3,100 4,300 18,000 22.300 Trade Payables Unearned Obligations Total Current Liabilities 1,800 1,900 3,700 10,000 13,700 8,600 22.300 2,000 1,500 3,500 10,000 13,500 7.500 21.000 LTD Total Liabilities Equity Total Liabilities and Equity inn Nielsen Auto Parts had beginning net fixed assets of $479 and ending net fixed assets of $528. Assets valued at $251 were sold. Depreciation for the year was $36. What is the amount of net capital spending? $336 O $49 O $13 O $85 $313 Question 14 (10 points) Why should financial managers strive to maximize the current value per share of the existing stock? Obecause managers often receive shares of stock as part of their compensation Obecause this will increase the current dividends per share Odoing so guarantees the company will grow in size at the maximum possible rate because they have been hired to represent the interests of the current shareholders Which of the following is Not a major area of corporate finance? O Capital Budgeting Capital Assessment O Working Capital Management O Capital Structure O All of these are major areas of corporate finance Question 5 (10 points) Which one of the following is a working capital management decision? O Deciding the optimal mix of debt and equity for a firm O Deciding whether or not production operations should be moved overseas O Deciding whether or not you will change the credit terms offered to customers Deciding whether or not a new capital intensive project should be undertaken Deciding whether to borrow from a bank or issue bonds Question 6 (10 points) A firm's capital structure is Oit proportion of fixed assets to total assets. O a measure of its profitability. O its current assets minus its current liabilities. O its mixture of debt and equity. O the difference between its total assets and total liabilities. Question 7 (10 points) Which of the following income statement accounts is a non-cash item? Utilities Expense Depreciation Expense Cost of Good Sold Interest Expense O Property Taxes Question 8 (10 points) Financial Leverage refers to: The level of debt relative to equity in a firm's capital structure The level of current assets relative to the level of fixed assets on a firms balance sheet The level of sales from the income statement to fixed assets from the balance sheet The level of sales relative to cost of goods sold The Accounts and Balances for Rocky Road Company are Attached. What is the Net Income for Rocky Road? (HINT: BUILD AN INCOME STATEMENT) 240 Accounts Payable Accounts Receivable Airplanes Bank Loans Bonds Cash COGS Common Stock and Paid in Capital Depreciation General and Administrative Expenses Interest Inventories Property, plant and Equipment Research and Development Retained Earnings Sales Selling Expenses Taxes Taxes Payable What is the change in the net working capital from 2015 to 2016? Total Revenues 21,000 Cost of Sales 10,000 Gross Profit 11,000 SGA Expenses 6,000 Depreciation 1,500 Earnings Before Interest and Taxes 3,500 Interest 500 Taxable income 3,000 Taxes 1,000 Net Income 2,000 Cash Other Current Assets Total Current Assets Fixed Assets Total Assets 2015 1,000 3,000 4,000 17,000 21.000 2016 1,200 3,100 4,300 18,000 22.300 Trade Payables Unearned Obligations Total Current Liabilities 1,800 1,900 3,700 10,000 13,700 8,600 22.300 2,000 1,500 3,500 10,000 13,500 7.500 21.000 LTD Total Liabilities Equity Total Liabilities and Equity inn Nielsen Auto Parts had beginning net fixed assets of $479 and ending net fixed assets of $528. Assets valued at $251 were sold. Depreciation for the year was $36. What is the amount of net capital spending? $336 O $49 O $13 O $85 $313 Question 14 (10 points) Why should financial managers strive to maximize the current value per share of the existing stock? Obecause managers often receive shares of stock as part of their compensation Obecause this will increase the current dividends per share Odoing so guarantees the company will grow in size at the maximum possible rate because they have been hired to represent the interests of the current shareholders

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