BMAL 590 Business Finance Complete Solution 2022

BMAL 590 Business Finance Complete Solution 2022 A company's balance sheet shows the value of assets, liabilities, and stockholders' equity At a specific point in time On a balance sheet, retained earnings are not "unspent cash" because They have been used to finance the firm's assets For both managers and external financial analysts, ________ is the single most important accounting number found on the income statement Net income (net profit after tax) Earnings per share (EPS) is calculated by Dividing earnings available for common stockholders by the number of shares of common stock outstanding Net working capital Is a measure of a firm's overall liquidity Why is the quick ratio a more appropriate measure of liquidity than the current ratio for a large-airplane manufacturer? It excludes inventory from the numerator of the ratio because it is difficult to convert inventory to cash and most sales are made on a credit basis The one fixed asset that is not depreciated is _________ Land Return on total assets (ROA) is equal to _________ All of the above When a firm has no "other income," its operating profit and _________ are equal EBIT The firm's ________ are primarily interested in ratios that measure the short-term liquidity of the company and its ability to make principal and interest payments Creditors When evaluating financial ratios, analysts typically examine a firm's ratio values Compared to the firm's previous years' ratio _________ ratios would provide the best information regarding total return to common stockholders Profitability The firm's managers use ratios to _________ All of the above The ________ flows result from debt and equity financing transactions Financing Which of the following is an inflow of corporate cash? Depreciation charges The bottom-up method for forecasting sales Relies on the ability of sales personnel to assess future demand, usually without the aid of statistical models Following ________ financing strategy takes advantage of short-term interest rates but also increases refinancing risk. Following ________ financing strategy minimizes the risk of a liquidity crisis, but generally increases borrowing costs. Following ________ financing strategy results in the use of long-term funding for permanent assets and short-term financing for temporary or seasonal requirements None of the above The sustainable growth model gives managers a kind of shorthand projection that ties together ________ and ________ Growth objectives and financial needs The key input required to build a cash budget is The firm's sales forecast Which of the following are common cash disbursements? All of the above Most pro forma statements begin with a sales forecast. One approach to deriving a sales forecast is the top-down approach. Top-down sales forecasts rely heavily on Macroeconomic and industry forecasts A firm that employs an aggressive strategy to finance assets Will finance a portion of long-term (permanent) growth in assets with short-term financing A strategic plan is a Long-term guide driven by competitive forces A cash budget is A statement of a firm's planned inflows and outflows of cash used to ensure that a firm has available cash to meet short-term financial obligations A speedup in ________ should ________ a firm's financing needs; whereas, a slow down in ________ should ________ financing needs for a firm Payments; increase; collections; increase ________ are often used as the plug figure in pro forma projections Cash balances "Required total financing" figures in a cash budget Show the additional amount a firm must borrow at the end of each month A long-term financial plan begins with ________ Strategy When generating pro forma statements, most firms rely on a ________ approach to sales forecasts Blended Most firms when planning for growth focus on Meeting sales target growth rates The terms and conditions to which a bond is subject are set forth in its Indenture The preemptive right is important to shareholders because it Protects the current shareholders against dilution of ownership interests Companies can issue different classes of common stock. Which of the following statements concerning stock classes is correct? None of the above statements is necessarily true Pure options are instruments that are All of the above Your Aunt Agatha purchased a call option a few months ago. Today is the expiration date, so she must decide whether to exercise the option. Which of the following statements is correct? Do not consider brokers' commissions in your answer Aunt Agatha should exercise the option if the price of the sock is greater than the exercise, or strike, price Which of the following are generally considered advantages of term loans over publicly issued bonds? All of the above Eurodebt is the term used to designate Debt that is denominated in a currency that is different than the currency of the country in which it is sold An American Depository Receipt (ADR) represents Certificates representing ownership in stocks of foreign companies that are held in trust by a bank located in the country the stock is traded Which of the following statements is correct? Income bonds pay interest only when the amount of the interest is actually earned by the company. Thus, these securities cannot bankrupt a company and this makes them riskier to investors than regular bonds Which of the following statements concerning common stock and the investment banking process is false? Stockholders have the right to elect the firm's directors, who in turn select the officers who manage the business. If stockholders are dissatisfied with management's performance, an outside group may ask the stockholders to vote for it in an effort to take control of the business. This action is called a margin call Which of the following statements is false? The term Eurobond specifically applies to any foreign bonds denominated in U.S. currency A(n) ________ is generally obtained from a bank or insurance company and the borrower agrees to make a series of payments consisting of interest and principal Term loan A(n) ________ is a bond that pays no annual interest but is sold at a discount below bar, thus providing compensation to investors in the form of capital appreciation Zero coupon bond A protective feature on preferred stock that requires preferred dividends previously not paid to be disbursed before any common stock dividends can be paid is called what? Cumulative dividends A ________ is a financial instrument which gives the owner the right but not the obligation to sell shares of stock at a specified price during a particular time period Put option Which of the following is NOT an example of a financial asset? Inventory Which of the following is NOT a source of equity on a firm's balance sheet?