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NEW QUESTION # 12
An accountant for a company has not used readily available professional development opportunities to stay aware of changes in tax laws and applied previous tax rules to the most recent tax return, resulting in an overpayment of income tax Using IMA's Statement of Ethical Professional Practice, how would the accountant's behavior best be described?

A. The accountant has complied with the competence standard if the lack of professional development is disclosed in any reports or analyses the accountant produces
B. The accountant has not complied with the credibility standard but has complied with the competence standard
C. The accountant has complied with the competence standard if the lack of professional development is disclosed to supervisors
D. The accountant has not complied with the competence standard

Answer: D

NEW QUESTION # 13
Studler's Restaurant is considering a contract to supply the weal senior citizen center with 10,000 meals.
Regular sales at regular prices would be unaffected. The food cost for each meal s S3 Additional costs incurred as a result of the contract would De variable overhead of S 50 and variable selling general and administrative costs of S SO per meal sold. The selling price per meal would be $5, A total of $20,000 in fixed costs would be allocated at $2 per meal. The fixed costs are part of an overall total of $500,000 in annual fixed costs incurred regardless of the contract. What will be the effect on pretax income if Studiers takes the special order?

A. $10.000 decrease
B. $10, 000 increase
C. $20.000 decrease
D. $20, 000 increase

Answer: B

NEW QUESTION # 14
LMN Ltd, a British firm, has a financial covenant with its bank mat interest coverage based on earnings before interest taxes, depreciation, and amortization (EBITDA), must be at least 2.5 for each quarter Shown below are summary financial data.

An expected decline m sales will result In net Income of £ 1.500.000 The other elements of EBITDA will be similar to the most recently completed Quarter Given the above information, what is the ratio for the latest completed quarter and do the forecasted results meet the required covenant?

A. 2.59. and will be compliant in the next quarter
B. 2.50. and will not be compliant in the next quartet
C. 1.31. and will not be compliant in the next quarter
D. 2.69 and will not be compliant in the next quarter

Answer: D

NEW QUESTION # 15
A corporation shows the following on its financial statements (in millions).

The corporation has a financial leverage ratio of

A. 0.50
B. 0.06
C. 3.60
D. 2.00

Answer: A

NEW QUESTION # 16
Which one of the following statements regarding portfolio diversification is not correct?

A. A well diversified portfolio can eliminate systematic risk.
B. A well diversified portfolio should include individual stock investments having a balance of positive and negative betas.
C. The standard deviation of a well diversified portfolio's percentage returns should be approximately equal to the standard deviation of the entire stock market's percentage returns.
D. A well diversified portfolio can minimize unsystematic risk

Answer: A

NEW QUESTION # 17
Ryan Fitzgerald the vice president of finance for Southwest Development Company is evaluating a proposed expansion plan currently. Southwest Development has $660 million of total assets and the company's equity ratio Is 38% Southwest Development has never issued preferred shares. The company's earnings before interest and taxes (EBIT) are $83 6 million. The interest rate on their debt is 7 2% and the company's tax rate is 30%. The company is planning to expand by investing $110 million. In assets. As result both sales and EBIT will increase by 20%. The expansion will be financed with 40% debt and 60% common equity If Southwest Development proceeds with the expansion what will happen to the company's return on equally (ROE)?

A. ROB increases from 14.07% to 14.12%.
B. ROE increases from 19.78% to 20.17%.
C. ROE decreases from 28.25% to 26.40%.
D. ROE decreases from 19.78% to 18.48%.

Answer: D

NEW QUESTION # 18
When evaluating a capital Budgeting proposal, an advantage of using the payback method is that Bits process

A. considers the time value of money.
B. incorporates all of the project's cash inflows and outflows
C. assesses the liquidity of the project.
D. objectively determines if the proposal should be accepted or rejected.

Answer: C

NEW QUESTION # 19
Which one of the following statements best describes an offering after an initial public offering where a benchmark stock price will already exist?

A. Subsequent or secondary public offering.
B. Over-the-counter offering
C. Stock repurchase
D. Private placement

Answer: A

NEW QUESTION # 20
Explain one reason each Tot and against issuing bonds with a call feature Essay Quality Digital Design (QDD) Inc is a public-traded technology company Selected financial data of QDD for the prior year are as follows

QDD's stock was trading at $160 per share at the beginning of the yea: and at $176 per share by the end of the year. The company paid dividends of S5 per share. The company "s stock had a beta of 1 4 The stock market provided a total return of 12% last year, well above the 3% risk free rate of return QDD is considering the issuance of $200 million of bonds to fund the repurchase of $200 million of its stock.
QDD is evaluating the bond, including its term structure, maturity, and whether it should be callable obtaining the lowest coupon interest is an important objective of QDD. The CFO has estimated that sales for the current year would remain the same as last year and the new bond would add S12 million in annual interest payments.

Answer:

Explanation:
See the explanation for the answer.
Explanation
A callable bond allows companies to pay off their debt early and benefit from favorable interest rate drops a callable bono benefit the issuer and so investors of these bonds are compensated with a more attractive interest rate man on otherwise similar non-callable bonds However callable bonds are more expensive.

NEW QUESTION # 21
A company had an operating cycle of 110 days, a cash cycle of 40 days, and an accounts receivable period of so days. The company s inventory period and accounts payable period are

A. inventory period = 50 days ana accounts payable period - 150 flays
B. inventory period = 70 flays and accounts payable period = 50 flays
C. inventory period = 50 days and accounts payable period = 70 days
D. inventory period = 10 days and accounts payable period = 50 days

Answer: C

NEW QUESTION # 22
Javier makes hand-looted learner dog collars. The materials cost $10 per collar and the collars are sold for $50 each. Javier sells me collars at a local farmer's market mat charges S100 per month for space rental if Javier's income tax rate is 30%, how many collars must Javier sell each year to earn $1,000 net income?

A. 0
B. 1
C. 2
D. 3

Answer: A

NEW QUESTION # 23
Explain two potential benefits for Guda if it acquires Blue Moon.
Essay
Food Depot Ltd, (FDL) is a privately-held company that provides catering services to airlines and operates several restaurant chains including fast food, casual dining, and fine dining restaurants, FDL has been profitable in recent years and has a very strong cash position. FDL's newest division. Food_TO-Go is an online meal ordering and delivery platform acquired by FDL two year ago.
In 20X7, sales for the entire company were $1 billion, with 50% of the business coming from the Airline Catering division. FDL is the country 's leading airline catering services provider and control 60% of the market share. However, the outlook of the airline catering industry is gloomy. The compound annual growth rate of the industry for the past five years was only 0.5% as airline networks have increasingly dropped catering on short domestic flights.
The Food-To-division only contribution 5% of FDL's total sales in 20X7 and is far behind in competing for marketing for market share of the online meal ordering and delivery industry, it is estimated that Food-To-Go's sales were only 20% of the industry leader's sales. However, the outlook for the online meal ordering and delivery services industry is bright. The compound annual growth rate of the industry since it started three years ago was 50%. It is estimated the rapid growth of the industry will continue in the foreseeable future.
Susan Willey, the head of Food-To-Go, does not agree that the Airline Catering division is the best-performing division in the company. Wiley argues that ber division bad the highest ROI in 20X7, and it deserves more capital finding. FDL's requested rate of return is 12%. The selected financial data for the Airline Catering division and Food-To-Go division in 20X7 are as follow (in $ millions)

Answer:

Explanation:
See the explanation for the answer.
Explanation
They will get stability in their earnings and cash flows as the current sources of income is facing a declining trend and no growth and in maturity stage. The unsystem risk can also be diversified by investing in a different industry, hence lower cost of capital for the company.

NEW QUESTION # 24
According to the IMA Statement of Ethical Professional Practice, identify and explain the standard(s) that Matthew would violate if he chooses not to report the issue regarding the accounting manager.
Apex Manufacturing lnc. (AMI) is a Canada-based company that manufactures a manufactures and unique part for aircrafts. It has few competitors in the market. The company is exposed to exchange rate risk because about 90% of its products are exported to the U.S, and most of its sales contracts are in U.S. dollars. AMI has the capacity to manufacture 1,500 units of the part per year. For the year just ended. AMI manufactured and sold 1,000 units. The operating results are shown below.

Recently, A new customer made a one-area order of 500 units of the part at $1.200 per unit. The CTO asked the controller to analyze this offer. AMI is considering adjusting its sales price next year in a recent meeting, the CFO suggested to use the market-based approach for pricing decisions, bat the controller insisted that the cost-based approach is more favorable to the company.

Answer:

Explanation:
See the explanation for the answer.
Explanation
Mathew will breach credibility principle as it requires that the information when can affect management decision 4 should be disclosed. So if the does not informs what is known to him he will be breaching me standard of credibility as it is affecting adversely on the shareholders.

NEW QUESTION # 25
On January 1, 2008 the exchange rate between the U S dollar (S) and Indian Rupee (Rs) was $t = Rs 39. 2676.
On January 1, 2009 the rate was Rs 1 = $0,0205. Based only on the relative currency appreciation or depreciation, which country's exports would likely have increased?

A. Both India and U.S
B. U.S
C. Neither India or U.S
D. India

Answer: B

NEW QUESTION # 26
A manufacturing company is reviewing the budget for one of its component parts for next year based on the need for 5.000 units.

The company receives a bid from a supplier offering lo provide (lie needed component for a price of $115 per unit The company is deciding whether to make or buy the component What decision should the firm make if (1) the fixed facilities costs can be avoided or (2) if the fixed facilities costs cannot be avoided If purchasing from the supplier?

A. (1) Buy; (2) Buy
B. (1) Buy; (2) Make
C. (1) Make; (2) Make
D. (1) Make; (2) Buy

Answer: C

NEW QUESTION # 27
Accounts receivable turnover increases from 4.0 times to 6.0 times. It all sales are on account when one of the following must decrease?

A. Days sales in receivables
B. Cash
C. Accounts receivable
D. Sales

Answer: A

NEW QUESTION # 28
K Malone is a successful entrepreneur, Currently she is considering investing in a capital protect, which would benefit tourism in North Caroina Because of tourism, the State of North Carolina is willing to lent) her
$150,000 at a rate of 5%. well below the market rate Her estimated net cash flows for the 3-year lifetime of the project are S15 000 $89,000 and $60,000 respectively Recommend whether or not Malone should undertake this project.

A. She should undertake this project because the present value (PV) of this project is $146,843
B. She should not undertake this project because the net present value NPV is ($14.051).
C. She should not undertake this protect because the net present value (NPV) is ($3.157)
D. She should undertake this project because the net present value (NPV) is $31,022.

Answer: B

NEW QUESTION # 29
A company has hired a consultant to propose a way to increase the company's revenues. The consultant has evaluated two mutually exclusive projects with me following information provided for each project.

The company uses a discount rate of 9% to evaluate both projects Based on the net present value, the company should invest in

A. project A and project B
B. project A only
C. neither project
D. project B only

Answer: B

NEW QUESTION # 30
Company A is concerned with its debt status and interested in analyzing how each one of the following activities might affect its to equity ratio. Assuming each activity is independent, which one of following activities is

A. Purchase back some of its common stock during the year.
B. Acquiring a subsidiary and consolidating for year-end financial statements.
C. Creating a separate entity to purchase a needed machine and leasing it from this entity.
D. Changing its inventory method from LIFO to weighted average.

Answer: B

NEW QUESTION # 31
If a CMA is asked to conduct a financial assessment of a company owned by a close relative, what would be the proper response under the credibility standard of the IMA Statement of Ethical Professional Practice?

A. Provide an assessment that is timely and accurate despite the personal relationship
B. Advise all parties of a potential conflict of interest
C. Keep information confidential except when authorized By the relative
D. Communicate the existence of a constraint that might preclude responsible judgment

Answer: B

NEW QUESTION # 32
Which one of the following would best ensure the effectiveness of an organization s code of conduct?

A. Distribute the document internally to staff and externally to suppliers and distributors to increase awareness of ethics considerations
B. Incorporate ethics training for all new employees as a standard part of the orientation process
C. Require executives and managers to take individual responsibility for practicing ethical behavior
D. Hold periodic employee workshops that illustrate expected behaviors in business situations in which ethical issues may arise

Answer: D

NEW QUESTION # 33
Below is the income statement and balance sheet for a retail corporation.

What is the corporation's debt to total capital in year 2?