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Acc 222 Review Material
Acc 222 Review Material
Cost of Capital
3. It measures the relative variability of the firm’s stock with that of the composite
price in the stock market.
a. Dividend
b. CAPM
c. Beta coefficient
d. Flotation cost
Interest Rates
4. Statement 1: The higher the expected rate of inflation, the larger the required rate
of return.
Statement 2: If risk and inflation are expected to be relatively high, interest rates
tend to be relatively high.
a. True, False
b. True, True
c. False, False
d. False, True
Profitability
11. CAE Division reported the following results for 2022:
Annual Sales P100,000
Net Earnings 50,000
Investment 150,000
The division’s ROI is _____.
a. 35%
b. 33%
c. 34%
d. 30%
Capital Structure and Leverage
ABC Company has the following financial information:
Debt P50,000
PPE 100,000
Earnings Before Interest and Taxes 65,000
Equity 50,000
Cash 2,000
Tax Rate 30%
Horizontal Analysis
15. Moira Corporation earned a net income of P50,000 in 2021 and P35,000 only in
2022. What PERCENTAGE increase in net income must Moira aim for in 2023 to
offset the 2022 decline in net income?
a. 41.85%
b. 42%
c. 43%
d. 42.86%
a. Treasury bill
b. Commercial paper
c. Certificate of deposit
d. Promissory note
12. They can be issued to individuals, corporations and companies during periods of
tight liquidity when the deposit growth of banks is slow but the demand for credit
is high.
a. Commercial papers
b. Call money
c. Commerical Bill
d. Certificate of deposit
13. Helmuth Inc.'s latest net income was $2,580,000, and it had 250,000 shares
outstanding. The company wants to pay out 45% of its income. What dividend
per share should it declare?
a. 4.36
b. 4.24
c. 4.48
d. 4.64
a. 2.72%
b. 2.59%
c. 2.96%
d. 3.22%
INTEREST RATES
16. On 01 February 2018, US Treasury Yield Curve Rate for 5, 10 and 20-year
maturity is 2.56%, 2.78% and 2.90% respectively and US Treasury Real Yield
Curve Rates for 5, 10 and 20-year maturity are 0.63%, 0.67% and 0.78%
respectively. Find out the inflation premium appropriate for a bond with 10 years
maturity.
a. 2.11%
b. 1.93%
c. 2.56%
d. 2.12%
RATIOS
18. Stewart Inc.'s latest EPS was $3.60, its book value per share was $23.75, it had
215,000 shares outstanding, and its debt-to-assets ratio was 35%. How much
debt was outstanding?
a. $3,393,738
b. $2,749,519
c. $3,760,375
d. $4,166,620