MGMT 640 MGMT640 Midterm Exam Part 1 Answers (MD)

MGMT 640 MGMT640 Midterm Exam Part 1 Answers (MD)


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MGMT 640 Midterm Exam Part 1

  1. Which of the following cannot be engaged in managing the business? 
  2. One reason for the existence of agency problems between managers and share holders is that: 
  3. On June 23, 20X8, Mikhal Cosmetics sold $250,000 worth of its products to Rynex Corporation. The goods were shipped to Rynex on July 2. The payment from Rynex was received on September 20. Under the "cash basis of accounting" revenue should be recorded on: 
  4. During the last year, Sigma Co had Net Income of $155, paid $19 in dividends, and sold new stock for $35. Beginning equity for the year was $680. Ending equity was 
  5. The following items are components of a traditional balance sheet. How much are the total assets of the firm? 
  6. Brighton Corp. bought an oil rig exactly 6 years ago for $118,000,000. Brighton depreciates oil rigs straight line over 10 years assuming no salvage value. (Straight line depreciation means that the yearly depreciation will be the purchase price of the oil rig divided by the number of years it will last, which is 10 years here). The rig was just sold to British Petroleum for $27,000,000. What Capital Gain/Loss will Brighton report on this transaction? 
  7. Walker Corporation conducted the following activities during 2001: (1) they sold 10,000 shares of their own stock for $17.00 per share; (2) they issued bonds for which they received $493,000; (3) they paid dividends to their stockholders totaling $83,000; (4) they sold a piece of equipment for $50,000 that they were carrying on their books for $20,000; (5) they earned net income of $140,000. What would be shown on the Statement of Cash Flows for “Cash from financing activities” based on the information above? 
  8. Given the following selected information on Cicalese’s Chocolate, Inc., calculate Cash Flow from Operating Activities for the year 20X1. 
  9. Cameron Balance Sheet
  10. A firm’s current ratio is 1.5, and its quick ratio is 1.0. If its current liabilities are $11,400, what are its inventories? 
  11. Iris Income Statement
  12. Iris Balance Sheet
  13. If firm A has a higher debt-to-equity ratio than firm B, then 
  14. Flying Tigers, Inc., has net sales of $766,000 and accounts receivables of $152,000. What is the firm's accounts receivables turnover? (Give your answer upto two decimal places) 
  15. Reagan Corp. has reported a net income of $827,300 for the year. The company's share price is $13.36, and the company has 317,600 shares outstanding. Compute the firm's price-earnings ratio upto two decimal places. 
  16. You purchased a piece of property for $30,000 nine years ago and sold it today for $83,190. What was the annual rate of return on your investment? 
  17. The First National Bank has agreed to lend you
    $30,000 today, but you must repay $42,135 in 3 years. What rate is the bank is charging you? 
  18. The Florida lottery agrees to pay the winner $275,000 at the end of each year for the next 20 years. What is the future value of this prize if each payment is put in an account earning 0.09? 
  19. Which of the following is not a “Fundamental Decision of Financial Management”? 
  20. Which of the following is least likely to be part of an Annual Report?

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