FIN 304 EXAM 2 QUESTIONS WITH VERIFIED
ACCURATE ANSWERS
Decisions made by financial managers should primarily focus on increasing the: -
Answers - D) Market value per share of outstanding stock.
Which one of the following best illustrates that the management of a firm is adhering to
the goal of financial management? - Answers - E) An increase in the market value per
share.
Agency problems are most associated with: - Answers - Corporations.
Which one of the following is a current liability? - Answers - Account payable to a
supplier that is due next week
The book value of a firm is: - Answers - B) Based on historical cost.
As the degree of financial leverage increases, the: - Answers - Probability a firm will
encounter financial distress increases.
For a tax-paying firm, an increase in ________ will cause the cash flow from assets to
increase. - Answers - A) Depreciation.
Relationships determined from a company's financial information and used for
comparison purposes are known as: - Answers - Financial ratios
Which one of the following is a current asset? - Answers - C) Accounts receivable.
Which one of the following accounts is the most liquid? - Answers - C) Accounts
receivable.
An example of a capital budgeting decision is deciding: - Answers - Whether or not to
purchase a new machine for the production line.
Capital structure decisions include determining: - Answers - D) How much debt should
be assumed to fund a project.
A business formed by two or more individuals who each have unlimited liability for all of
the firm's business debts is called a: - Answers - General partnership.
ACCURATE ANSWERS
Decisions made by financial managers should primarily focus on increasing the: -
Answers - D) Market value per share of outstanding stock.
Which one of the following best illustrates that the management of a firm is adhering to
the goal of financial management? - Answers - E) An increase in the market value per
share.
Agency problems are most associated with: - Answers - Corporations.
Which one of the following is a current liability? - Answers - Account payable to a
supplier that is due next week
The book value of a firm is: - Answers - B) Based on historical cost.
As the degree of financial leverage increases, the: - Answers - Probability a firm will
encounter financial distress increases.
For a tax-paying firm, an increase in ________ will cause the cash flow from assets to
increase. - Answers - A) Depreciation.
Relationships determined from a company's financial information and used for
comparison purposes are known as: - Answers - Financial ratios
Which one of the following is a current asset? - Answers - C) Accounts receivable.
Which one of the following accounts is the most liquid? - Answers - C) Accounts
receivable.
An example of a capital budgeting decision is deciding: - Answers - Whether or not to
purchase a new machine for the production line.
Capital structure decisions include determining: - Answers - D) How much debt should
be assumed to fund a project.
A business formed by two or more individuals who each have unlimited liability for all of
the firm's business debts is called a: - Answers - General partnership.
