XYZ Co. has forecasted June sales of 400 units and July sales of 700 units. The company maintains ending
inventory equal to 125% of next month’s sales. June beginning inventory re’ects this policy. What is June’s
required production?
Question options:
750 units
0 units
775 units
425 units
Question 2
A firm may use ______ inventory valuation to reduce “inventory profits” during _______ periods.
Question options:
LIFO ; in’ation
LIFO ; disin’ation
LILO ; in’ation
FIFO ; in’ation
View Feedback
Question 3
A conservatively financed firm would
Question options:
use long-term financing for all -xed assets and short-term financing for all other assets.
finance a portion of permanent assets and short-term assets with short-term debt.
use equity to finance -xed assets, use long-term debt to finance permanent assets, and use short-term debt to finance ‘uctuating current assets.
use long-term financing for permanent current as
Question 4
The SG Corp. utilized $2,000,000 in total assets last year to generate $5,000,000 in sales. SG;s net profit
margin was 4% and its debt ratio was 40%. What was SG’s return on equity?
Question options:
4.00%
10.00%
16.67%
1.60%
Question 5
A firm will usually increase the ratio of short-term debt to long-term debt when
Question options:
short-term debt has a lower cost than long-term equity.
the term structure is inverted and expected to shift down.
the term structure is upward sloping and expected to shift up.
the firm is undertaking a large capital budgeting project.
Question 6
Which of the following is not a primary source of capital to the -rm?
Question options:
Assets
Common stock
Preferred stock
Bonds
Question 7
A substantial portion of the increase in assets necessitated by rising sales may be automatically financed
through
Question options:
Retained earnings
Accounts payable
Accounts receivable
Spontaneous assets
Question 8
Credit swaps are
Question options:
an insurance product designed to protect financial institutions from customers who default on their loans.
securities with a maturity of less than one year.
the result of a leveling oD or slowing down of price increases.
market trades in previously issued securities.
Question 9
During periods of disin’ation, investors may;
Question options:
Require lower rates of return
Bid the prices of securities up
Requrie higher rates of return
Both a and b are correct
Question 10
Under normal conditions (60% probability), Financing Plan A will produce a $30,000 higher return than Plan
B. Under tight money conditions (40% probability), Plan A will produce $40,000 less than Plan B. What is
