MGMT 640 Section 9046 Midterm Exam Fall 2013 The Midterm Exam is individual work. All work on the exam should be from your own efforts, with no assistance from classmates, family, friends or others. By proceeding with this exam, you are agreeing not to share the exam content or your responses with anyone, including future students of MGMT640. Your completed exam is due by 7:00 PM on Saturday, October 26. (Upload to your MTEX Assignments Folder). Please refer to the Syllabus for the policy regarding late submissions. There will be no make-up exams unless for documented emergencies. Identify the letter of the choice that best completes the statement or answers the question in the attached answer sheet. You are not required to submit your working. However, complete working in Excel, showing formulas and calculations may be considered for partial credit for incorrect answers. ______ 1 . Which of the following mechanisms helps to align management interests with those of shareholders? a. A well designed management compensation package. b. An efficient managerial labor market. c. The Sarbanes-Oxley Act of 2002. d. All of the above. __ ____2 . Assume the pre-tax profit of $50,000 has been earned by a business, and the owner/proprietor wants to withdraw all of the after-tax profit for personal use. Assume the tax rate for a C corporation is 34%, while the rate for a person is 27%. The after-tax earnings available under the corporate and proprietorship forms of business are: a. for a corporation, $24,090; for a proprietorship, $36,500. b. for a corporation, $25,125; for a proprietorship, $37,500. c. for either a corporation or a proprietorship, $36,500. d. for either a corporation or a proprietorship, $24,090. Corporation: $50,000 (.66)(.73) = $23,760 Proprietorship: $50,000 (.73) = $36,500 ______ 3 . Galan Associates prepared its financial statements for 2012 based on the information below. The company had cash of $1,206, inventory of $14,290, and accounts receivables of $6,589. The company’s net fixed assets are $42,412, and other assets are $2,822. It has accounts payable of $11,580, notes payable of $2,886, common stock of $21,800, and retained earnings of $14,368. How much long-term debt does the firm have? a. $16,685 b. $18,334 c. $12,314 d. $22,342 1
