FIN 515 FINAL EXAM
1. TCO A) In the United States, which of the following
types of organization has the greatest revenue in total?
(Points : 5)
Sole proprietorship
C corporation
S corporation
Limited partnership
2. TCO A) A sole proprietorship is owned by (Points : 5)
one person.
one or two people, but if there are two owners, they must be
married to each other.
up to 100 owners.
up to 64 owners.
3. TCO B) Which of the following would cause the present
value of an annuity to increase? (Points : 5)
Reducing the number of payments.
Increasing the interest rate.
Decreasing the interest rate.
Decreasing the liquidity of the payments.
, 4. TCO B) Which of the following is an annuity due? (Points : 5)
A typical car loan.
A typical mortgage.
A typical apartment rental agreement.
A credit card balance.
5. TCO G) If you were a manager of a company, which of the
three right side components of the DuPont Identity would
you want to increase and which would you want to decrease,
other things being equal? Give a specific example for how to
do that for each of the three. (Points : 20)
The DuPont Identity measures the company’s ROE in terms of its
profitability, asset efficiency, and leverage. The model helps investors
compare similar companies like these with similar ratios. Investors can then
apply perceived risks with each company's business model. Based on these
three performances measures i.e. Profit Margin, Total Asset Turnover and
Financial Leverage, the model concludes that a company can raise its ROE by
maintaining a high profit margin, increasing asset turnover, or leveraging
assets more effectively. In details, net profit margin can be used to margin a
company's overall profitability. Besides, the firm’s asset turnover is used to
identify how efficiently the firm is utilizing its assets to generate sales. The
term equity multiplier indicates the value of assets held per dollar of
1. TCO A) In the United States, which of the following
types of organization has the greatest revenue in total?
(Points : 5)
Sole proprietorship
C corporation
S corporation
Limited partnership
2. TCO A) A sole proprietorship is owned by (Points : 5)
one person.
one or two people, but if there are two owners, they must be
married to each other.
up to 100 owners.
up to 64 owners.
3. TCO B) Which of the following would cause the present
value of an annuity to increase? (Points : 5)
Reducing the number of payments.
Increasing the interest rate.
Decreasing the interest rate.
Decreasing the liquidity of the payments.
, 4. TCO B) Which of the following is an annuity due? (Points : 5)
A typical car loan.
A typical mortgage.
A typical apartment rental agreement.
A credit card balance.
5. TCO G) If you were a manager of a company, which of the
three right side components of the DuPont Identity would
you want to increase and which would you want to decrease,
other things being equal? Give a specific example for how to
do that for each of the three. (Points : 20)
The DuPont Identity measures the company’s ROE in terms of its
profitability, asset efficiency, and leverage. The model helps investors
compare similar companies like these with similar ratios. Investors can then
apply perceived risks with each company's business model. Based on these
three performances measures i.e. Profit Margin, Total Asset Turnover and
Financial Leverage, the model concludes that a company can raise its ROE by
maintaining a high profit margin, increasing asset turnover, or leveraging
assets more effectively. In details, net profit margin can be used to margin a
company's overall profitability. Besides, the firm’s asset turnover is used to
identify how efficiently the firm is utilizing its assets to generate sales. The
term equity multiplier indicates the value of assets held per dollar of
