FINANCE FINAL EXAM COB 300 JMU
QUESTIONS AND ANSWERS
The4Primary4goal4of4financial4management4is4to4maximize?4-4ans-
The4market4value4of4owners4equity
Characteristics4of4a4corporation?4Owner4liability4and4control?4-4ans-
Owner4has4limited4liability4and4owner4has4no4operating4control
Which4one4has4double4taxation?4-4ans-C-corp
Dividends4are4determined4by?4-4ans-Corporations4board4of4directors
Investors4capital4is4best4characterized4as?4-4ans-
The4sum4of4the4market4value4of4debt4and4market4value4of4equity
The4rate4of4tax4on4the4next4dollar4earned4is?4-4ans-marginal4tax4rate
How4to4calculate4tax4on4sale:4-4ans-Price4sold4for4-
4Book4value4=4Gain4*4Marginal4tax4rate4=4Tax4on4sale
The4Cash4Conversion4Cycle4-4ans-Days4sale4outstanding4+4days4in4inventory4-
4the4days4payable4outstanding
Which4financial4statement4reports4a4company's4capital4expenditures4during4a4pa
rticular4time4period?4-4ans-Statement4of4Cash4Flows
What4would4decrease4shareholders4equity4on4a4corporations4Balance4Sheet?4-
4ans-The4payment4of4dividends
As4a4company4loosens4its4credit4standards4the4investment4in4accounts4receivab
le4is4expected4to?4-4ans-increase
A4plastics4manufacturing4company4has4decided4to4decrease4inventory4turnover4f
rom4104times4to444times4per4year.4Assuming4a4constant4sales4level,4which4sta
tement4is4true?4-4ans-The4chance4of4spoilage4increases
The4NPV4investment4decision4criteria4typically4assumes4that4cash4flows4are4rei
nvested4at?4-4ans-The4projects4cost4of4capital
QUESTIONS AND ANSWERS
The4Primary4goal4of4financial4management4is4to4maximize?4-4ans-
The4market4value4of4owners4equity
Characteristics4of4a4corporation?4Owner4liability4and4control?4-4ans-
Owner4has4limited4liability4and4owner4has4no4operating4control
Which4one4has4double4taxation?4-4ans-C-corp
Dividends4are4determined4by?4-4ans-Corporations4board4of4directors
Investors4capital4is4best4characterized4as?4-4ans-
The4sum4of4the4market4value4of4debt4and4market4value4of4equity
The4rate4of4tax4on4the4next4dollar4earned4is?4-4ans-marginal4tax4rate
How4to4calculate4tax4on4sale:4-4ans-Price4sold4for4-
4Book4value4=4Gain4*4Marginal4tax4rate4=4Tax4on4sale
The4Cash4Conversion4Cycle4-4ans-Days4sale4outstanding4+4days4in4inventory4-
4the4days4payable4outstanding
Which4financial4statement4reports4a4company's4capital4expenditures4during4a4pa
rticular4time4period?4-4ans-Statement4of4Cash4Flows
What4would4decrease4shareholders4equity4on4a4corporations4Balance4Sheet?4-
4ans-The4payment4of4dividends
As4a4company4loosens4its4credit4standards4the4investment4in4accounts4receivab
le4is4expected4to?4-4ans-increase
A4plastics4manufacturing4company4has4decided4to4decrease4inventory4turnover4f
rom4104times4to444times4per4year.4Assuming4a4constant4sales4level,4which4sta
tement4is4true?4-4ans-The4chance4of4spoilage4increases
The4NPV4investment4decision4criteria4typically4assumes4that4cash4flows4are4rei
nvested4at?4-4ans-The4projects4cost4of4capital