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Finance Multiple Choice Questions
All else constant, what would Baldwin’s SG&A/Sales ratio be if the company had spent an additional $1,500,000 for Buddy’s promotional budget and $750,000 for Buddy’s sales budget?
Select: 1
11.3%
8.4%
11.8%
9.8%
The Chester’s balance sheet has $106,417,000 in equity. Further, the company is expecting $3,000,000 in net income next year. Assuming no dividends are paid and no stock is issued, what would their Book Value be next year?
Select: 1
$16.22
$71.60
$32.41
$33.33
Chester Corp. is downsizing the size of their workforce by 10% (to the nearest person) next year from various strategic initiatives. How much will the company pay in separation costs if each worker receives $5,000 when separated?
Select: 1
$225,000
$2,030,000
$90,000
$812,000
In the Month of March, Baldwin Corporation received orders of 162 units at a price of $15.00 for their product Bold. Baldwin uses the accrual method of accounting and offers 30 day credit terms. Baldwin delivers 108 units in March and the balance of 54 units in April. They received payment for 54 units in March, 54 units in April, and 54 units in May. How much revenue is recognized on the March income statement from this order? How much in the April Income statement? (Answer in thousands)
Select: 1
$2,430 , 0
0 , $2,430
$1,620 , $810
$810 , $810
Your Competitive Intelligence team is predicting that the Baldwin Company will invest in adding capacity to their Baker product this year. Assume Baldwin’s product Baker invests in increasing its capacity by 10% this year. Because of this new information, your company anticipates all other products in the Core segment will increase their capacity by the same amount. How much can the industry produce in the Core segment the next year? Consider only products primarily in the Core segment last year. Ignore current inventories. Figures in thousands (000).
Select: 1
8,725
9,702
7,675
8,652
11,066
3,980
7,668
Assume Andrews is paying a dividend of $1.38 (per share). If this dividend was raised by 15%, given its current stock price, what would be the Dividend Yield?
Select: 1
0.9%
134.5%
0.7%
0.7%
Last year Abby charged $2,753,867 Depreciation on the Income Statement of Andrews. If Abby sold a fully depreciated piece of equipment at a loss, the effect on Andrews’s financial statements would be (all other items remaining equal):
Select: 1
Decrease Net Cash from operations on the Cash Flow Statement
No impact on Net Cash from operations
Increase Net Cash from operations
Just impact the Balance Sheet
The Baldwin company wants to decrease its plant utilization for Buddy by 15%. How many units would need to be produced next year to meet this production goal? Ignore impact of accounts payable on plant utilization.
Select: 1
1,305
1,782
2,030
1,535
[SOLVED]Review The Inquirer To Determine Digby's Current Strategy
1. Review the Inquirer to determine Digby’s current strategy. How will they seek a competitive advantage? From the following list, select the top five sources of competitive advantage that Digby would be most likely to pursue.
Select: 5
Seek high automation levels
Seek the lowest price in their target market while maintaining a competitive contribution margin
Seek excellent product designs, high awareness, and high accessibility
Accept lower plant utilization and higher capacities to insure sufficient capacity is available to meet demand
Increase demand through TQM initiatives
Seek high plant utilization, even if it risks occasional small stockouts
Reduce cost of goods through TQM initiatives
Add additional products
Offer attractive credit terms
Reduce labor costs through training and recruitment
2. Rank the following companies from high to low cumulative profit, (in descending order, 1=highest, 4=lowest).
Rank in order from 1 to 4
Digby
Andrews
Baldwin
Chester
3. Which description best fits Baldwin in your industry? For clarity:
– A differentiator competes through good designs, high awareness, and easy accessibility.
– A cost leader competes on price by reducing costs and passing the savings to customers.
– A broad player competes in all parts of the market.
– A niche player competes in selected parts of the market.
Which of these four statements best describes this competitor?
Select: 1
Baldwin is a niche cost leader
Baldwin is a broad differentiator
Baldwin is a broad cost leader
Baldwin is a niche differentiator
4. If Baldwin issued 1000 shares of common stock at last year’s end price, the effect on the balance sheet would be:
Select: 1
Retained earnings would increase by $4,413
Retained earnings would increase by $44,128
Equity would decrease by $4,413
Equity would increase by $44,128
5. The Baldwin Company has just purchased $40,900,000 of plant and equipment that has an estimated useful life of 15 years. The expected salvage value at the end of 15 years is $4,090,000. What will the depreciation expense for this purchase (exclude all other plant and equipment) be after its second year of use? (Use FASB GAAP)
Select: 1
$4,908,000
$5,453,333
$2,454,000
$2,726,667
6. What is the Quick Ratio of Chester?
Select: 1
2.01
.50
1.46
.69
7. Chester has a ROA of 0.13 (ROA = Net income/Total Assets). That means:
Select: 1
Every dollar of Chester’s assets result in earnings of $0.13.
Chester uses $0.87 of each dollar earned to purchase assets.
Chester uses $0.13 of each dollar earned to purchase assets.
Every dollar of Chester’s assets result in earnings of $0.87.
8. Midyear on July 31st, the Digby Corporation’s balance sheet reported:
Total Liabilities of $25.571 million
Cash of $2.010 million
Total Assets of $41.126 million
Total Common Stock of $1.270 million.
What were the Digby Corporation’s retained earnings?
Select: 1
$16.295 million
$16.825 million
$18.835 million
$14.285 million
[SOLVED]20 MCQ's, Business Finance
1. Turnadot & Sons is a small wholesaler of decorative cast iron objects. The following events, related to a special customer order, occur as described below:
• August 5, 2005: Turnadot receives the special order for 200 outdoor planters at a selling price of $50 each, including delivery at a future convenient time and location. The customer, with whom Turnadot has had a long-term, trouble-free relationship, pays $3,000 as a deposit and agrees to pay the rest on delivery. Turnadot immediately orders $4,000 worth of planters from its supplier and pays a $1,000 deposit for them.
• August 27, 2005: Turnadot pays $3,000 balance due to the supplier upon delivery of the planters to its warehouse.
• September 5, 2005: The customer calls for delivery of the planters, and pays the balance of $7,000 when they arrive at the customer site.
What is the dollar gross margin earned by Turnadot on the special order for 200 planters?
• $2,000
• $7,000
• $9,000
• $6,000
2. The next 6 questions refer to Quentin Company’s December 31, 2004 Balance Sheet.
Quentin began 2004 with the following non-current asset balances: Plant and equipment (net) $59,000; Patent (net) $28,000. No long-term assets were purchased or sold during the year. How much amortization and depreciation expense did Quentin record during 2004?
• $3,000
• $4,000
• $7,000
• Cannot be estimated
3. Quentin’s 2004 net income was $5,000. No dividends were declared or paid during 2004. What was Quentin’s retained earnings balance on December 31, 2003?
• $39,000
• $49,000
• $34,000
• Cannot be estimated
4. Quentin’s current ratio on December 31, 2004 is:
• 1.25
• 0.80
• 0.53
• 1.125
1. Quentin’s total debt to equity ratio on December 31, 2004 is:
• 2.12
• 1.52
• 1.19
• 0.53
2. Quentin Company’s year-end 2004 total assets equals its year-end 2004 total liabilities and owners’ equity. This is most likely the result of the company following the:
• Historical Cost concept
• Dual-aspect concept
• Materiality concept
• Money measurement concept
3. Quentin’s December 31, 2003 inventory T-account debit balance was also $56,000. During 2004, its inventory purchases amounted to $25,000, and there were no inventory-related write-downs or losses. What was Quentin’s 2004 cost of goods sold expense?
• $5,000
• $67,000
• $20,000
• $45,000
4. The next 6 questions refer to Carlita Company’s 2004 Income Statement.
Carlita’s 2004 gross margin percentage is:
• 50%
• 33%
• 30%
• 25%
1. During 2004, Carlita’s competitor Farside had double the sales of Carlita, but it also earned a gross margin of $30,000. Farside’s 2004 gross margin percentage was:
• 25%
• 50%
• 12.5%
• Insufficient information; cannot be calculated
2. Carlita began 2004 with a retained earnings account balance of $132,000. During 2004, it declared and paid dividends of $5,000. Its December 31, 2004 retained earnings account balance is:
• $132,000
• $120,000
• $139,000
• Cannot be calculated
3. Carlita’s 2004 return on sales percentage is:
• 25%
• 16.67%
• 15%
• 10%
4. Carlita began 2004 with an interest payable account balance of $13,000. During 2004, it paid $5,000 in interest to its lenders. On December 31, 2004, its interest payable account balance is:
• $15,000
• $10,000
• $13,000
• Cannot be calculated
1. Carlita began 2004 with a taxes payable account balance of $3,000. On December 31, 2004, its taxes payable account balance is $7,000. How much did Carlita pay to the tax authorities during the year?
• $2,000
• $6,000
• $4,000
• Cannot be calculated
2. On January 1, 2005, Jon Sports has a bond payable of $200,000. During 2005, it pays off $20,000 of the outstanding bond principal and issues a new $70,000 bond. There are no other transactions related to the bond payable account.
What is Jon Sports’ December 31, 2005 bond payable balance?
• A debit balance of $250,000
• A credit balance of $150,000
• A debit balance of $150,000
• A credit balance of $250,000
3. The next 7 questions are based on Panjim Trading Company’s cash T-account for 2005.
Based on Panjim’s 2005 cash T-account, which one of the following statements must be true?
• During 2005, Panjim’s total merchandise sales were $60,000
• During 2005, Panjim’s total merchandise purchases were $44,000
• During 2005, Panjim issued $75,000 of debt
• Panjim did not record any tax expense for 2005
4. Panjim began 2005 with salaries payable balance of $75,000. It had 2005 salary expense of $80,000. Its 2005 ending salaries payable balance must be:
• $95,000
• $55,000
• $155,000
• $105,000