Equity Multiplier

Accounts Receivable Days

ROE (in decimal form, not %)

EPS

P/E

Fixed Asset Turnover:

Operating Margin (in decimal form, not %)

Inventory Turnover

Interest Coverage Ratio (TIE)

Quick Ratio

The following are categories of accounts reported in the financial statements:

A.Current Assets                                                E. Long-Term Liabilities

B.Fixed Assets                                                   F. Stockholders’ Equity

C.Intangible Assets                                            G. Revenue

D.Current Liabilities                                           H. Expense

Indicate where each of the following accounts would be reported (classified) in the financial statement categories noted above (categories may be used more than once or not at all). Identify only one category for each account listed below.

_______Retained Earnings                              ________Accounts Receivable

_______Cash                                                    ________Machinery & Equipment

_______Accounts Payable                              ________Subscription Revenue

_______Wages Expense                                  ________Notes Payable, Long-term

2. i. What is total Stockholders’ Equity based on the following account balances?   _____________

          Paid in Capital:

ii.____Treasury stock represents

Cash

The cost of company shares repurchased by the company

A reduction of stockholders’ equity

b and c are both correct

a and c are both correct

____3. The time it takes McDonald’s to purchase beef patties, cook and sell burgers, and collect cash from customers is known as the:

Accy 306 Quiz #3, page 2 of 2

4. The following information has been provided about the restaurant building:              

                        Original Cost              $160,000

                        Residual Value            $    2,000

                        Estimated Life            40 years

                        Depreciation Method = Straight-line

      i. ____The depreciation expense for year 2 equals:

      a. $3,000

      b. $4,000

      c. $3,950

      d. none of the above

ii.       T or F: The building is classified as an Intangible Asset because of its long life and it is held for use in the business. (If false, correct the error.)

_____5. Which of the following is a current liability?

_____ 6. The Notes to the financial statements indicate the types of sales included in the receivables accounts along with the uncollectible amounts balance (Allowance for Doubtful Accounts). If gross receivables are $200,000 and the allowance for doubtful accounts is 25,000, the Balance Sheet will indicate a line item for “Receivables, net” = $175,000.

____The valuation method for receivables is called:

Net realizable value

Lower of cost or net realizable value (LCNRV)

Fair value

Historical cost

Net present value

_____7. Bonds are popular source of financing because:

Financial analysts tend to downgrade a company that has raised large amounts of cash by frequent issue of stock.

A company having cash flow problems can postpone payment of interest to bondholders.

Bond interest expense is deductible for tax purposes, while dividends paid on stock are not.

The bondholders can always convert their bonds into stock if they choose.

None of the above is correct.

Is there a difference between the means of occupancy rates in May and August? Answer your question by calculating an approximate and appropriate symmetric 95% confidence interval using a Z statistic. Explain your findings

1a. Construct (draw) an E-R diagram representing the conceptual design of the database. Be sure to identify primary keys, relationship cardinalities, etc. State any assumptions you make.

1b. Convert your E-R diagram to the relational schema. Identify the primary keys of ever relation.

Consider the following application: An electronics vendor operates both a Web site and a chain of many physical stores. Examples include Best Buy and Circuit City. To find out more about this application, think about any experiences you may have had making purchases both online and in-store of a store like Best Buy (you can browse their website).

In our hypothetical company, it has been decided to redesign a major part of the database that underlies company operations. Unfortunately, the manager assigned to solicit database design proposals is not very computer literate and is unable to provide a very detailed specification at the technical level. Fortunately, you are able to do that.

Here are a few points to consider:

• There are different products, grouped into a variety of (possibly overlapping)

categories. Groupings can be done --> by type of product (cameras, phones, etc.), by manufacturer

(Sony, Apple, etc.), or by other means (for example, a Gateway PC might be packaged

with a Sony monitor and an HP printer and marketed as a package).

• Some customers have a contract with the company and bill their purchases to an account number. They are billed monthly. Other customers are infrequent customers and

pay with a credit or debit card. Card information may be stored for online customers,

but not for in-store customers.

• Online sales must be sent to a shipper. The company needs to store the tracking

number for the shipping company so it can respond to customer inquiries.

• Inventory must be accurate both in stores and in warehouses used to replenish stores

and to ship to online customers. When inventory is low, a reorder should be sent to

the manufacturer and listed in the database. When goods arrive, inventory should be

updated and reorders marked as having been filled.

• Sales data are important for corporate planning. Marketers may want to look at sales

data by time period, product, product grouping, season, region (for stores), etc.

Recent trends in globalization have forced businesses around the world to more keenly focus on profitability. This trend is also present in Japan, where historical links between banks and businesses have traditionally blurred the goals of firms. For example, the Japanese business engineering firm, Mitsui & Co. Ltd., recently launched “Challenge 21”. A plan directed at helping the company emerge as Japan’s leading business engineering group. According to a spokesperson for the company.” [ This plan permits us to] create new value and maximize profitability by taking steps such as renewing our management framework and prioritizing the allocation of our resources into strategic areas. We are committed to maximizing shareholder value through business conduct that balances the pursuit of earnings with socially responsible behavior.” Ultimately, the goal of any continuing company must be to maximize the value of the firm. This goal is often achieved by trying to hit intermediate targets, such as minimizing costs or increasing market share. If you as a manager- do not maximize your firm’s value over time, you will be in danger of either going out of business, being taken over by other owners (as in a leveraged buyout), or having stockholders elect to replace you and other managers. Source: “Mitsui & Co., Ltd. UK Regulatory Announcement: Final Results.” Business Wire, May 13, 2004.

Questions

1. What is (Challenge 21 ) plan of Mitsui & Co., Ltd.

2. What were the objectives of the management of Mitsui & Co., Ltd

. 3. What are the threats of not maximizing a firm’s value.

Recent trends in globalization have forced businesses around the world to more keenly focus on profitability. This trend is also present in Japan, where historical links between banks and businesses have traditionally blurred the goals of firms. For example, the Japanese business engineering firm, Mitsui & Co. Ltd., recently launched “Challenge 21”. A plan directed at helping the company emerge as Japan’s leading business engineering group. According to a spokesperson for the company.” [ This plan permits us to] create new value and maximize profitability by taking steps such as renewing our management framework and prioritizing the allocation of our resources into strategic areas. We are committed to maximizing shareholder value through business conduct that balances the pursuit of earnings with socially responsible behavior.” Ultimately, the goal of any continuing company must be to maximize the value of the firm. This goal is often achieved by trying to hit intermediate targets, such as minimizing costs or increasing market share. If you as a manager- do not maximize your firm’s value over time, you will be in danger of either going out of business, being taken over by other owners (as in a leveraged buyout), or having stockholders elect to replace you and other managers. Source: “Mitsui & Co., Ltd. UK Regulatory Announcement: Final Results.” Business Wire, May 13, 2004.

Questions

1. What is (Challenge 21 ) plan of Mitsui & Co., Ltd.

2. What were the objectives of the management of Mitsui & Co., Ltd .

3. What are the threats of not maximizing a firm’s value.

Long term securities (matures over one year) are traded in:

A. demand market B. primary market C. money market D. capital market

A bond with a face value of $1,000 matures in 9 years and has a 7% semiannual coupon. The bond currently is traded at $920. Which of the following statements is CORRECT?

What can we do to understand the change in the fair value of the securities?

Why would it be important to know whether any securities are traded on a foreign exchange?

1.Given the following adjusted trial balance, determine the company's net income for the year:

a) $496

b) $270.

c) $324.

d)$98.

e) $220

2.A company has the following adjusted trial balance:

After closing entries have been journalized and posted, the balance in the company's retained earnings account will be

a) $8,450.

b) $4,350.

c) $4,550.

d) $5,050.

e) $4,700.

3. Which of the following accounts will not appear in the post-closing trial balance because it has been closed?

a) Cash

b) Unearned Revenue

c) Service Revenue

d) Accounts Payable

e) Common Stock