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Course # 171022
101 Financial Solutions
based on the electronic .pdf file(s):

101 Financial Solutions
by: Dr. Jae K. Shim, Ph.D., 2013, 221 pages

12 CPE Credit Hours

A P E X C P E . C O M  . . . . .  1.877.317.9047  . . . . .  support@apexcpe.com

Chapter 1 - Pricing, Sales, And Advertising Miss Margins

1.    _____________________ is NOT a sign of revenue base erosion:   0
A decline in sales and other sources of revenue
A loss in market share to competitors
An early stage in product's life cycle
Selling prices marked down
2.    When considering a special order that will enable a company to make use of currently idle capacity, which of the following costs is irrelevant?   0
Fixed costs (e. g. , depreciation, rent)
Direct labor
Variable overhead
3.    High levels of merchandise returns are NOT caused by:   0
Poor-quality merchandise
Innovative advertising
Incorrect or excessive pricing
Failure to meet specifications

Chapter 2 - Inventory And Production Shortfalls

4.    __________________ is NOT a cause for low turnover of merchandise:   0
Slow sales
Lack of demand for products
Inventory and sales meeting demands
Deficiencies in the product line
5.    Which condition justifies a low inventory turnover ratio?   0
High carrying costs
High stockout costs
Short lead times
Low ordering costs
6.    For inventory management, ignoring safety stocks, which of the following is a valid computation of the reorder point?   0
The economic order quantity
The economic order quantity times the anticipated demand during lead time
The anticipated demand per day during lead time times lead time in days
The square root of the anticipated demand during the lead time
7.    The carrying costs associated with inventory management include:   0
Insurance costs, shipping costs, storage costs, and obsolescence
Storage costs, handling costs, interest on capital invested, and obsolescence
Purchasing costs, shipping costs, setup costs, and quantity discounts lost
Obsolescence, setup costs, interest on capital invested, and purchasing costs
8.    The order costs associated with inventory management include:   0
Insurance costs, purchasing costs, shipping costs, and obsolescence
Obsolescence, setup costs, quantity discounts lost, and storage costs
Purchasing costs, shipping costs, setup costs, and quantity discounts lost
Quantity discounts lost, storage costs, handling costs, and interest on capital invested
9.    The purpose of the economic order quantity (EOQ) model is to:   0
Minimize the safety stock
Minimize the sum of the order costs and the carrying costs
Minimize the inventory quantities
Minimize the sum of the demand cost and the backlog costs
10.    The economic order quantity (EOQ) will rise following:   0
A decrease in annual unit sales
An increase in carrying costs
An increase in the per-unit purchase price of inventory
An increase in the variable costs of placing and receiving an order
11.    The economic order quantity (EOQ) formula assumes that:   0
Purchase costs per unit differ because of quantity discounts
Costs of placing an order vary with quantity ordered
Periodic demand for the good is known
Erratic usage rates are cushioned by safety stocks
12.    ______________ is used in enterprise supply chain management to improve the efficiency of inventory tracking and management.   0
13.    Lack of inventory storage space may be a result of   0
Decrease in production efficiency
Missed production deadlines
Improper production planning
Missing parts

Chapter 3 - Profit Targets Are Off

14.    ______________________ is the degree or amount that sales may decline before losses are incurred:   0
Margin of safety
Residual income rate
Marginal rate of return
Target (hurdle) rate of return
15.    Contribution margin is the excess of revenues over:   0
Cost of goods sold
Manufacturing cost
Direct cost
All variable costs
16.    The most likely strategy to reduce the breakeven point would be to:   0
Increase both the fixed costs and the contribution margin
Decrease both the fixed costs and the contribution margin
Decrease the fixed costs and increase the contribution margin
Increase the fixed costs and decrease the contribution margin
17.    Basic break-even and CVP models are subject to limiting assumptions such as:   0
The selling price per unit is nonlinear
Costs classified as fixed costs
There is uncertain sales mix
Inventories do not change from period to period.
18.    Generally, the lower the break-even point, the higher the profit and the less the ______________, other things being equal. F   0
Operating risk
Financial risk
Systematic risk
Market risk
19.    When used in cost-volume-profit analysis, sensitivity (what-if) analysis:   0
Determines the most profitable mix of products to be sold
Allows the decision maker to introduce probabilities in the evaluation of decision alternatives
Is done through various possible scenarios and computes the impact on profit of various predictions of future events
Is limited because in cost-volume-profit analysis, costs are not separated into fixed and variable components
20.    The difference between sales and total variable costs is:   0
Gross operating profit
Net profit
The breakeven point
The contribution margin
21.    Problems of weak sales mix are caused by all EXCEPT:   0
Easier to sell cheaper items than top-of-the-line
Sales mix occurs as budgeted
Sales quotas are set in number of units sold rather than profit
Shift in sales mix toward less profitable products
22.    Falling sales and/or profit margin is usually NOT a result of:   0
Stock options
Cost overruns
Inaccurate pricing
Ineffective advertising

Chapter 4 - Risk-Return Unbalance

23.    What are the risk and the risk-return trade-off:   0
The lesser the risk, the greater the return expected
The greater the risk, the greater the return expected
The greater the investment, the lesser the risk expected
The greater the investment, the greater the return expected
24.    Which of the following are components of interest-rate risk?   0
Purchasing-power risk and default risk
Price risk and market risk
Portfolio risk and reinvestment-rate risk
Price risk and reinvestment-rate risk
25.    Lack of diversification can be identified by all EXCEPT:   0
Increased risk
Highly specialized and concentrated operations
Lower profitability
Operating leverage
26.    The type of risk that is NOT diversifiable and affects the value of a portfolio is:   0
Purchasing-power risk
Market risk
Nonmarket risk
Interest-rate risk
27.    The risk that securities cannot be sold at a reasonable price on short notice is called:   0
Default risk
Liquidity risk
Interest-rate risk
Purchasing-power risk
28.    A warning sign of financial problems does NOT include:   0
Costly inventory buildups
Incompatible and uncoordinated projects
Actual costs below standard production costs
Operating inefficiencies

Chapter 5 - Inability To Finance Weakens Business Development

29.    Market price drops of stock can be caused by all EXCEPT:   0
Market conditions
Excessive business risk
Foreign competition
Updated technology to meet market needs
30.    Moody's and Standard & Poor's debt ratings depend on:   0
The chances of default
The size of the company
The size and the type of issue
The firm's industry
31.    If a bond is rated below BBB, it is called:   0
A zero-coupon bond
An investment grade bond
A junk bond
An income bond
32.    Dividends per share/market price per share is   0
Current yield
Dividend yield
Yield to maturity
Dividend payout ratio

Chapter 6 - Business Control Threatened

33.    Which of the following cannot lead to bankruptcy?   0
Declining profitability
Cash flow inadequacies
Unavailability of financing
Aggressive expansion/growth of business
34.    Management can take many steps to protect itself against business failure excludes   0
Avoiding excessive debt
Reducing prices on fast-moving inventory
Restricting capital expansion
Selling off unprofitable business segments.
35.    An investor has calculated Altman's Z-Score for each of four possible investment alternatives. Each firm is a public industrial firm. The calculated scores for the four investments were as follows: Firm W = 3. 89; Firm X = 2. 48; Firm Y = 2. 00 and Firm Z = 1. 10. Given this info, which statement is true?   0
Z is least risky and W is most risky
Y is least risky and W is most risky
W is least risky and Z is most risky
X is least risky and W is most risky
36.    A defensive measure defines as when the target buys back stock accumulated by the raider at a premium price is:   0
Green mail
Poison pill
Golden parachute
White knight

Chapter 7 - Cash Flow Disturbances

37.    Cash-related ratios to be computed by management do NOT include:   0
Cash from sales to total sales
Cash debt coverage equals cash flow from operations less dividends divided by total debt
Cash dividends coverage equal to cash flow from operations divided by total dividend
Current ratio
38.    To generate adequate cash flow, you do the following EXCEPT:   0
Obtain immediate financing
Do not delay cash payments
Establish open line of credit
Sell assets to generate cash
39.    When investing surplus funds, aggressive cash managers seek:   0
Maximizing yields
Minimizing taxes.
Investing in Treasury bonds since they have no default risk,
Liquidity and safety.
40.    Which of the following is NOT an early warning sign for going broke?   0
The company shows a profit but has no cash.
Management mistakes accounts receivable for cash, while daily payments are made for inventory purchases, payroll, and taxes.
The company fails to budget properly for capital expenditures and emergencies.
The company shows increasing overhead.
41.    The average collection period for a firm measures the number of days:   0
After a typical credit sale is made until the firm receives the payment.
For a typical check to ôclearö through the banking system.
Beyond the end of the credit period before a typical customer payment is received.
Before a typical account becomes delinquent.

Chapter 8 - Mess In Accounts Payable And Receivable

42.    Vendor’s price increases can be prevented by all EXCEPT:   0
Accumulate stocks of supplies and raw materials
Enter into futures contracts for later date delivery
Enter into long-term supply arrangements
Use horizontal integration
43.    Using a 360-day year, what is the opportunity cost to a buyer of not accepting terms 2/10, net 30?   0
24. 70%
31. 81%
36. 70%
101. 73%
44.    _______________________ do(es) NOT affect credit ratings:   0
Market conditions
Excessive new and innovative assets
Excessive business risk
The quality of management
45.    Which of the following measures does NOT aim at preventing check fraud and improper payments?   0
Review, evaluate, and install new internal control procedures for cash disbursement
Perform a monthly bank reconciliation
Purchase an insurance policy for reimbursement of any actual future losses
Account for all check numbers issued during the month ending on the audit date

Chapter 9 - Lackluster Financial Statements

46.    ___________________ is NOT an example of liquidity ratio:   0
Cash ratio
Cash burn rate
Times interest earned
Current ratio
47.    An early warning signal of inadequate liquidity does NOT include:   0
Failure to pay bill or debts on time
Higher profitability
Inability to buy inventory or assets
Deteriorating credit rating
48.    Return on Investment (ROI) CANnot be enhanced by management:   0
Improving margin
Improving turnover
Improving both turnover and margin
Improving liquidity
49.    ROE is:   0
ROI x equity multiplier
Net Profit after Taxes / Total Assets
Net profit margin x total asset turnover
ROI x debt ratio
50.    A lower rate of return can be detected early by   0
High asset turnover
Lower earnings estimates by broker analyst
lower beta rankings
Low management turnover
51.    Which of the following is NOT a sign for poor-quality earnings?   0
Lower price/earnings ratio
Lower cost of financing
Unavailability of suitable financing
Higher compensating balances and security for loan agreements

Chapter 10 - Costs Out Of Control

52.    Stability in product revenue can be determined by computing the ____________ in sales over five to ten years.   0
Beta coefficient
Standard deviation
Expected return
53.    Excessive labor costs are caused by all EXCEPT:   0
Lack of supervision
Giving-in to the union
Adequate training
Obsolete machinery and equipment
54.    The percentage change in earnings before interest and taxes associated with the percentage change in revenues is the degree of:   0
Operating leverage
Financial leverage
Breakeven leverage
Combined leverage
55.    An accounting system that collects financial and operating data on the basis of the underlying nature and extent of the cost drivers is:   0
Activity-based costing
Target costing
Cycle-time costing
Variable costing
56.    A profit-maximizing firm would never choose to lower its price in the ____________ range of its demand curve.   0

Chapter 11 - Budgeting And Cost Control Problems

57.    Actual costs exceeding budgeted costs are caused by all EXCEPT:   0
Economy of scale
Lack of cost control and planning
Lack of efficiency and cost management
Duplication of effort and facilities
58.    An efficiency variance equals:   0
A flexible budget amount minus a static budget amount
(standard quantity - actual quantity) x standard price
Actual operating income minus flexible budget operating income.
Actual unit price minus budgeted unit price, times the actual units produced

Chapter 12 - Fragile Internal Controls

59.    Record keeping errors can be identified by all EXCEPT:   0
Misstated financial statement figures
Extension of audit report due date
Stable audit fees
Incomplete records

Chapter 13 - Tax Planning And Preparation

60.    Which of the following statement is false regarding the election of an S corporation?   0
All shareholders must be individuals, estates, or certain kinds of trusts.
The shareholders cannot be nonresident aliens.
The corporation may never have more than 70 shareholders
The corporation's election of S corporation status is valid only if all shareholders consent to the election.