Question

Lisa was unsuccessful in her attempt to gain a seat on the board of Simpson Cartoons, Inc. Lisa spent $2,701,000 to acquire Simpson stock when it was trading at a market value of $37 a share. Assuming Simpson uses cumulative voting and everyone else voted for other candidates, which of the following must be true?

A. Lisa would have been successful if she had spent an additional $37,037

B. Lisa would have a seat on the board if she had 1,000 more shares

C. Lisa was unsuccessful because she needed an additional 74,000 shares

D. Lisa would have been successful if the share’s market value was higher than $37

E. Lisa should demand a recount because she had enough shares

Which of the following would prevent a company from paying dividends in a period when net income is twice the amount of the previous annual period?

A. The Rule of Micro-Four-Thirds is inverted

B. Retained earnings would be negative after the dividend

C. Net income exceeds the DuPont ratio

D. Forecasted net income in the next year is expected to be half the current year

E. The company had negative net income in three of the four previous years

On average, it takes Jane’s Widgets 27.67 days to collect its receiveables. The company has cash of $75,000, inventory of $100,000, receivables of $50,000 and net fixed of $125,000. These are the company’s only assets. The profit margin is 3.4 percent. For every dollar in assets, how much does the company generate in sales?

1. $1.88 B. $4.25 C. $2.87 D. $13.54 E. $3.06

Spyglass Optics issued $5,500 in new equity in 2019 and repaid $7,800 in outstanding longterm debt early. The 2019 income statement shows: sales = $345,812; costs = $199,867; other expenses = $26,135; depreciation expense = $27,564; interest expense = $18,745; taxes = $22,222; dividends = $15,600. If net fixed assets increased by $12,250 during the year, what was the addition to net working capital?

A. $14,600 B. $15,800 C. $17,900 D. $17,400 E. $21,000

Assuming no other changes to the calculation of an annuity, what causes the present value to decrease?

I.   The payment amount declines

II. The annuity payments increases

III. Interest rate declines

IV. Interest rates increase  

1. II and III only B. II only C. III only D. I, II, and IV only E. I and IV only

Answer 1

E. Lisa should demand a recount because she had enough shares.

Cumulative voting solves the problem for the minority shareholders by giving them the right to cast their votes to choose board of director. Since Lisa has acquired the company, Lisa should demand a recount because she had enough shares.