CPA BAR Practice Exam 2

Orion Manufacturing provided the following data for the current year:<br/><br/>- Net Sales: $5,000,000<br/>- Cost of Goods Sold: $3,500,000<br/>- Average Accounts Receivable: $600,000<br/>- Average Inventory: $800,000<br/>- Average Accounts Payable: $450,000<br/><br/>Management is considering a new vendor policy that would increase the average accounts payable to $550,000 but would require a price increase on raw materials, raising Cost of Goods Sold by $100,000 (assuming sales price and volume remain constant). What would be the net impact on the Cash Conversion Cycle (CCC)?

A company has a Debt-to-Equity ratio of 1.5 and a Times Interest Earned (TIE) ratio of 4.0. The company plans to issue $2 million in new debt at a 10% interest rate to repurchase $2 million of equity. The current Earnings Before Interest and Taxes (EBIT) is $5 million and is expected to remain constant. The current interest expense is $1.25 million. Ignoring taxes, what will be the impact on the company's solvency ratios?

An analyst is reviewing a company's quarterly revenue data using a visualization tool. The trend line shows consistent 5% growth quarter-over-quarter for the last three years. However, in Q4 of the current year, there is a significant spike in revenue (20% growth) while cash collections for the same period remained flat compared to Q3. Accounts Receivable Days Sales Outstanding (DSO) jumped from 45 days to 75 days. Which of the following is the MOST LIKELY explanation for this anomaly requiring investigation?

TechSolutions Inc. reports Net Income of $500,000. The following items are included in the calculation of Net Income:<br/>- Depreciation Expense: $120,000<br/>- Amortization of Intangibles: $50,000<br/>- Interest Expense: $80,000<br/>- Income Tax Expense: $150,000<br/>- Stock-Based Compensation Expense: $60,000<br/>- Restructuring Costs: $40,000<br/>- Unrealized Gain on Trading Securities: $10,000<br/><br/>Calculate the company's Adjusted EBITDA, assuming management defines it as EBITDA adjusted for stock-based compensation, restructuring costs, and unrealized gains/losses.

A company is implementing a Balanced Scorecard. They have identified 'Employee Training Hours per FTE' and 'Information System Availability %' as key metrics. Under which perspective of the Balanced Scorecard should these metrics be categorized?