FIN 6406 Quiz Questions || 100% correct.
Financial managers should strive to maximize the current value per share of the existing stock
because: correct answers the current stockholders are the owners of the corporation
A general partner: correct answers has more management responsibility than a limited partner
A partnership: correct answers terminates at the death of any general partner
Which one of the following statements concerning a sole proprietorship is correct? correct
answers The life of the firm is limited to the lifespan of the owner
Which one of the following parties is considered a stakeholder of a firm?
a. employee
b. long-term creditor
c. preferred stockholder
d. common stockholder
e. all of the above correct answers all of the above are stakeholders; our textbook defines
stakeholders as anyone with a potential claim on the firm other than creditors and owners, but
other sources include owners and creditors in the definition of stakeholder
Which form of business structure faces the greatest agency problems? correct answers
Corporation
Which one of the following statements is correct concerning corporations? correct answers
The largest firms are usually corporations
Which one of the following actions by a financial manager creates an agency problem?
correct answers Agreeing to expand the company at the expense of stockholders' value
Which one of the following statements is correct concerning the organizational structure of a
corporation? correct answers The chief executive officer reports to the board of directors.
A proxy fight occurs when: correct answers A group solicits proxies to replace the board of
directors.
The primary goal of financial management is to: correct answers maximize the current value
per share of the existing stock.
The person generally directly responsible for overseeing the cash and credit functions,
financial planning, and capital expenditures is the: correct answers Treasurer
The bylaws: correct answers mandate the procedure for electing corporate directors
Which one of the following business types is best suited to raising large amounts of capital?
correct answers Corporation
Which of the following may be found on the balance sheet? correct answers Assets,
liabilities, and equity
, Retained earnings: correct answers is the total amount of income over time that has been
reinvested in the firm.
Which of the following are all components of the statement of cash flows? correct answers
Cash flow from operating activities, cash flow from investing activities, and cash flow from
financing activities
_____ is calculated by adding back noncash expenses to net income and adjusting for
changes in current assets and liabilities. correct answers Cash flow from operations
Book value: correct answers is based on historical cost.
Net operating profit after taxes: correct answers is the amount of profit a firm would generate
if it had no debt and held no non-operating assets
The statement of cash flows: correct answers reports the impact of a firms operating,
investing, and financing activities on cash flows over an accounting period.
Which of the following accounts are included in shareholders' equity?
I. interest paid
II. retained earnings
III. capital surplus
IV. long-term debt correct answers II and III only
The cash flow to creditors includes the cash: correct answers outflow when interest is paid on
outstanding debt
Financial statements are primarily designed for use by managers. correct answers False
According to Generally Accepted Accounting Principles, costs are: correct answers matched
with revenues
Land Land Land, Inc. has a return on common equity of 20%. The average return on common
equity for the firm's industry is 25%. Based on this information you know that: correct
answers LLL generates less income for shareholders than the average firm in the industry.
The financial ratio days' sales in inventory is measured as: correct answers 365 days divided
by the inventory turnover.
A firm's sustainable growth rate in sales directly depends on its:
Debt to equity ratio
Profit margin
Dividend policy
Asset efficiency correct answers All of the above
In its recent income statement, Smith Software Inc. reported paying $15 million in dividends
to common shareholders, and in its year-end balance sheet, Smith reported $333 million of
retained earnings. The previous year, its balance showed $317 million of retained earnings.
What was the firm's net income during the most recent year? correct answers $31 million
Financial managers should strive to maximize the current value per share of the existing stock
because: correct answers the current stockholders are the owners of the corporation
A general partner: correct answers has more management responsibility than a limited partner
A partnership: correct answers terminates at the death of any general partner
Which one of the following statements concerning a sole proprietorship is correct? correct
answers The life of the firm is limited to the lifespan of the owner
Which one of the following parties is considered a stakeholder of a firm?
a. employee
b. long-term creditor
c. preferred stockholder
d. common stockholder
e. all of the above correct answers all of the above are stakeholders; our textbook defines
stakeholders as anyone with a potential claim on the firm other than creditors and owners, but
other sources include owners and creditors in the definition of stakeholder
Which form of business structure faces the greatest agency problems? correct answers
Corporation
Which one of the following statements is correct concerning corporations? correct answers
The largest firms are usually corporations
Which one of the following actions by a financial manager creates an agency problem?
correct answers Agreeing to expand the company at the expense of stockholders' value
Which one of the following statements is correct concerning the organizational structure of a
corporation? correct answers The chief executive officer reports to the board of directors.
A proxy fight occurs when: correct answers A group solicits proxies to replace the board of
directors.
The primary goal of financial management is to: correct answers maximize the current value
per share of the existing stock.
The person generally directly responsible for overseeing the cash and credit functions,
financial planning, and capital expenditures is the: correct answers Treasurer
The bylaws: correct answers mandate the procedure for electing corporate directors
Which one of the following business types is best suited to raising large amounts of capital?
correct answers Corporation
Which of the following may be found on the balance sheet? correct answers Assets,
liabilities, and equity
, Retained earnings: correct answers is the total amount of income over time that has been
reinvested in the firm.
Which of the following are all components of the statement of cash flows? correct answers
Cash flow from operating activities, cash flow from investing activities, and cash flow from
financing activities
_____ is calculated by adding back noncash expenses to net income and adjusting for
changes in current assets and liabilities. correct answers Cash flow from operations
Book value: correct answers is based on historical cost.
Net operating profit after taxes: correct answers is the amount of profit a firm would generate
if it had no debt and held no non-operating assets
The statement of cash flows: correct answers reports the impact of a firms operating,
investing, and financing activities on cash flows over an accounting period.
Which of the following accounts are included in shareholders' equity?
I. interest paid
II. retained earnings
III. capital surplus
IV. long-term debt correct answers II and III only
The cash flow to creditors includes the cash: correct answers outflow when interest is paid on
outstanding debt
Financial statements are primarily designed for use by managers. correct answers False
According to Generally Accepted Accounting Principles, costs are: correct answers matched
with revenues
Land Land Land, Inc. has a return on common equity of 20%. The average return on common
equity for the firm's industry is 25%. Based on this information you know that: correct
answers LLL generates less income for shareholders than the average firm in the industry.
The financial ratio days' sales in inventory is measured as: correct answers 365 days divided
by the inventory turnover.
A firm's sustainable growth rate in sales directly depends on its:
Debt to equity ratio
Profit margin
Dividend policy
Asset efficiency correct answers All of the above
In its recent income statement, Smith Software Inc. reported paying $15 million in dividends
to common shareholders, and in its year-end balance sheet, Smith reported $333 million of
retained earnings. The previous year, its balance showed $317 million of retained earnings.
What was the firm's net income during the most recent year? correct answers $31 million
