CompXM Practice Questions

1. Baldwin's EBIT (Earnings Before Interest and Taxes) last year was $10,701,648. What was
Baldwin's net profit?

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$223,085

$167,340,889

$188,073

$10,701,648

2. Your company expects profits to be close to $4,000,000. The Board has instructed you to increase
retained earnings by approximately $2,000,000. What dividend amount, per share, will you pay
this year.

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$6.40

$1.80

$5.10

$0.77
 CompXM Practice Questions
3. Last year, Chester Company's Cake product had a higher contribution margin percentage
compared to Cedar product. However, Cedar's contribution margin (in dollars) is much higher.
This is because:

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Cedar's labor and material costs were substantially higher than Cake's.

Cake has no inventory.

Cedar's sales were substantially higher than Cake's.

4. Digby's revenues were $220,974,547 last year. What percentage went to their marketing
budgets?

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15.9% (SG&A/Revenue)

12.9% (Promo&Sales/Revenue)

5.3% (Promo/Revenue)

7.6% (Sales/Revenue)

5. Consider the cost to separate (terminate) employees at $5,000 per worker (severance pay, etc.).
Consider the cost of training workers at $20 per hour. Consider the cost of recruiting a higher
caliber worker at $3,000. What action would cost Andrews Company the most?
 CompXM Practice Questions
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Firing a quarter of its workforce.

Paying their newly hired employees an additional $3,000.

Training the entire workforce 40 hours per year.

6. The closing price (street value) of your oldest bond is 1.0% above its face value. That means if
your company buys the bond back at street value:

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You pay $101 for every $100 issued.

You pay $10 for every $100 issued.

You pay $99 for every $100 issued.

7. Which of the following does not come after EBIT on the income statement?

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Interest Expense
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Profit Sharing

Net Profit

Taxes

Depreciation

8. Chester Company issues $28M in stock this year. Assuming the stock price does not change from
last December 31st close, how many total shares will be outstanding?

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2,704,757

2,000,000

704,757

9. If $1.00 of Digby's assets produces $1.45 in sales, what is the company's Asset Turnover?

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0.67

1.45
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0.5

2.5

10. Baldwin issues $15M in long term debt. The interest rate is 13%. What is the annual interest of
the bond?

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$2,000,000

$1,950,000

$64,000,000

$16,950,000