06/09/2012 19:46 pm
Accounting and financial test
There are 36 questions in this test. Please do not forget to fill in the correct test version number. Good luck.
10. One way to improve the budgeting process is to include qualitative techniques into forecasting. Which of the following is an example of a qualitative technique?
11. Statistical methods can be used to improve the accuracy of forecasting. This approach is particularly useful for forecasting sales since we are searching for the right fit based on several observations. One popular approach to finding the right statistical fit is to use:
12. Which of the following will contribute to making budgeting a non-value added activity; i.e. the cost of budgeting exceeds the benefit?
13. Capital budgeting analysis consists of three distinct stages. The first stage is:
14. The ability to postpone, delay, alter or abandon a project adds value to the project. This value is referred to as:
15. The time value of money is important for three reasons. These three reasons are:
16. Which of the following is relevant in determining the cash flows of a project?
17. You are about to invest $ 15,000 into a project that will generate $ 5,500 of cash flows each year for the next 3 years. If your cost of capital is 11%, then the present value of future cash flows is: (refer to Exhibit 2 for present value tables)
18. We can estimate total cash flow cycle times by calculating three ratios: (a) Average Days in Accounts Receivable, (b) Average Days in Inventory and (c) Average Days in Accounts Payable. Using these three ratios, the formula for calculating the total cash flow cycle time would be:
19. The amount of cash that should be held is a function of four amounts: Transaction Amount (includes compensating balances), Precautionary Amount, Speculative Amount, and Financial Amount. As a general rule, the minimal amount of cash that should be held is:
20. Assume the following: Beginning Cash on Hand is $ 4,000, projected cash inflows are $ 28,000 and projected cash outflows are $ 39,000. You want to have an ending cash balance of $ 2,000. What is your total projected cash deficit?
21. Spontaneous financing or trade credit is simply a way of obtaining more cash by:
22. Two common ways of borrowing against accounts receivable are:
23. In order to arrange financing against your inventory, your inventory must be:
24. Your company has two major customers, Ajax and Miller. Ajax owes you $ 10,000 and Miller owes you $ 20,000 for the current month. Collection probabilities show that Ajax pays 70% of the time in the current month and 30% of the time the following month. Collection probabilities show that Miller pays 40% of the time in the current month and 60% of the time in the following month. Using expected values, what is the total amount of cash receipts for the current month?
25. One of the early warning signs of cash flow distress is:
26. Etco Energy and Baltic Energy have decided to merge. Both companies provide similar products and services. This type of merger is called a:
27. Synergy values are the additional values that companies realize through a merger and acquisition. Synergy values can take three forms. Generally speaking, the most significant and common form of synergy is:
28. Once a company completes the Pre-Acquisition Review, the next phase within the merger and acquisition process is to:
29. Many mergers begin through a series of negotiations between the two companies. If the two companies decide to seriously investigate the possibility of a merger, they will launch Phase II Due Diligence and execute a:
30. Either party in a merger and acquisition may be entitled to indemnification because of a significant misrepresentation. Indemnification is usually not due until a certain threshold has been reached. This threshold amount is often called the:
31. Assuming we are valuing a going concern, which of the following types of income streams would be most appropriate for valuing the company?
32. The following estimates have been made for the year 2006:
Operating Income (EBIT) $ 6,000
Cash Taxes to be paid 950
Income from non operating assets 60
No capital investments or changes to working capital are expected. Based on this information, the projected free cash flows for 2006 are:
33. Marshall Company is considering acquiring Lincoln Associates for $ 600,000. Lincoln has total outstanding liabilities valued at $ 200,000. The total purchase price for Marshall to acquire Lincoln is:
34. The Valuation Process will often analyze several value drivers in order to understand where value comes from. Which of the following value drivers would be least important to the valuation?
35. You have been asked to calculate a terminal value for a valuation forecast. The normalized free cash flow within the forecast is $ 11,400. A nominal growth rate of 3% will be applied along with a weighted average cost of capital of 15%. Using the dividend growth model, the terminal value that should be added to the forecast is:
36. Information from a valuation model for Gemini Corporation is summarized below:
Total present value of forecasted free cash flows $ 150,000
Terminal value added 450,000
Total present value of non-operating assets 20,000
Total present value of outstanding debts 120,000
If Gemini has 20,000 shares of outstanding stock, the value per share of Gemini is: