A telecommunications company receives a profit of $587,542 from its cellular phone production unit in the year after investing $962,870 in a new product line. What is the first year return on its original investment?
Answer : C
A company has a line of credit and a bond trustee agreement with a bank. To prevent a decline in the companys bond rating from having a negative impact on the companys line of credit, the bank should have which of the following in place?
Answer : C
ABC Company is a national retail company and uses XYZ Bank for its collections and payroll services. XYZ has recently experienced financial problems; what is the greatest risk to ABC Company?
Answer : D
A real estate development company has excess cash that it would like to invest in one of its properties:
-> Property A has shown an ROI of 40%, a residual income of $25,675, and an EVA of $32,678.
-> Property B has shown an ROI of 45%, a residual income of $27,635, and an EVA of $29,523.
-> Property C has shown an ROI of 55%, a residual income of $22,658, and an EVA of $30,678.
-> Property D has shown an ROI of 52%, a residual income of $19,675, and an EVA of $31,523.
In which property should the company invest?
Answer : A
A deck furniture supply company maintains a large inventory during the summer sales season. One of the PRIMARY benefits of this approach is that the company avoids which of the following costs?
Answer : D
One of the advantages of raising capital through public offerings is that:
Answer : D
In terms of capital structure, lease financing normally has the same effect as:
Answer : B
One reason for using a sale and lease-back arrangement in lease financing is to:
Answer : A
Convertible securities consist of preferred stock anD.
Answer : C
A public companys risk profile is currently in balance. The managements mission statement is to minimize stock devaluation. However, it is forecasting a need for working capital in the short term. Which of the following solutions would BEST assist management in accomplishing its mission?
Answer : C
Which of the following trade payment methods virtually eliminates the seller's credit risk?
Answer : B
Kahuna Boards Co. has just experienced a very profitable year and wants to share the success with its shareholders. In order to pay dividends, a sequence of events must occur.
Which of the following chronological sequence of events is correct?
1. Stock is sold without the upcoming dividend attached.
2. Dividend is paid.
3. Board of directors announces the dividend.
4. Holders of record are specified.
Answer : A
During the 1970s, many companies instituted dividend reinvestment plans (DRIPS). There are many benefits of this plan. What is the one negative aspect?
Answer : B
Company A regularly modifies its capital structure by repurchasing stock. Which one of the following is a true statement?
Answer : A