Finance & Risk Management Practice Exam

The financial statement that summarizes a firm's accounting value as of a particular date is called the:

A. income statement
B. cash flow statement
C. liquidity position
D. balance sheet

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Which one of the following terms is defined as the total tax paid divided by the total taxable income?

A. Average tax rate
B. Variable tax rate
C. Marginal tax rate
D. Absolute tax rate

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Net working capital decreases when:

A. a new 3-year loan is obtained with the proceeds used to purchase inventory.
B. a credit customer pays his or her bill in full.
C. depreciation increases.
D. a long-term debt is used to finance a fixed asset purchase.
E. a dividend is paid to current shareholders.

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Net income increases when:

A. fixed costs increase.
B. depreciation increases.
C. the average tax rate increases.
D. revenue increases.

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Lucas expects to receive a sales bonus of $7,500 one year from now. The process of determining how much that bonus is worth today is called:

A. aggregating
B. discounting
C. simplifying
D. compounding
E. extrapolating

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ANC Plastics has net working capital of $15,400, current assets of $39,200, equity of $46,600, and long term debt of $22,100. What is the amount of the net fixed assets?
A. $50,800
B. $56,900
C. $45,500
D. $48,100
E. $53,300

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Donut Delite has total assets of $31,300, long-term debt of $8,600, net fixed assets of $19,300, and owners' equity of $21,100. What is the value of the net working capital?

A. $9,800
B. $10,400
C. $18,900
D. $21,300

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Which one of these transactions will increase the liquidity of a firm?

A. Cash purchase of new production equipment
B. Payment of an account payable
C. Cash purchase of inventory
D. Credit sale of inventory at cost

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