FINC 201 Midterm Chapters 1-6 with answers

FINC 201 Midterm Chapters 1-6 with answers The process of planning and managing a firm's long-term investments is called: a. working capital management. b. financial depreciation. c. agency cost analysis. d. capital budgeting. e. capital structure. - answers capital budgeting. The mixture of debt and equity used by a firm to finance its operations is called: a. working capital management. b. financial depreciation. c. cost analysis. d. capital budgeting. e. capital structure. - answers capital structure. The management of a firm's short-term assets and liabilities is called: a. working capital management. b. debt management. c. equity management. d. capital budgeting. e. capital structure. - answers working capital management. The goal of financial management is to maximize the current: a. net income of the firm. b. dividends per share. c. resources of the firm. d. value of the existing stock. - answers value of the existing stock. A conflict of interest between the stockholders and management of a firm is called: a. stockholders' liability. b. corporate breakdown. c. the agency problem. d. corporate activism. e. legal liability. - answers the agency problem. Net working capital is defined as: a. total liabilities minus shareholders' equity. b. current liabilities minus shareholders' equity. c. fixed assets minus long-term liabilities. d. total assets minus total liabilities. e. current assets minus current liabilities. - answers current assets minus current liabilities. Financial leverage refers to the: a. amount of debt used in a firm's capital structure. b. ratio of retained earnings to shareholders' equity. c. ratio of paid-in surplus to shareholders' equity. d. ratio of cost-of-goods-sold to total sales. e. amount of receivables present in the firm's asset structure. - answers amount of debt used in a firm's capital structure. Noncash items refer to: a. the credit sales of a firm. b. the accounts payable of a firm. c. the costs incurred for the purchase of intangible fixed assets. d. expenses charged against revenues that do not directly affect cash flow. e. all accounts on the balance sheet other than cash on hand. - answers expenses charged against revenues that do not directly affect cash flow. Your _____ tax rate is the amount of tax payable on the next taxable dollar you earn. a. deductible b. residual c. total d. average e. marginal - answers marginal _____ refers to the cash flow that results from the firm's ongoing, normal business activities. a. Operating cash flow b. Capital spending c. Net working capital d. Cash flow from assets e. Cash flow to creditors - answers Operating cash flow _____ refers to the net total cash flow of the firm available for distribution to its creditors and stockholders. a. Operating cash flow b. Capital spending c. Net working capital d. Cash flow from assets e. Cash flow to creditors - answers Cash flow from assets Earnings per share is equal to: a. net income divided by the total number of shares outstanding. b. net income divided by the par value of the common stock. c. gross income multiplied by the par value of the common stock. d. operating income divided by the par value of the common stock. e. net income divided by total shareholders' equity. - answers net income divided by the total number of shares outstanding. Activities of the firm that generate cash are known as: a. sources of cash. b. uses of cash. c. cash payments. d. cash receipts. e. cash on hand. - answers sources of cash. Activities of the firm in which cash is spent are known as: a. sources of cash. b. uses of cash. c. cash payments. d. cash receipts. e. cash on hand. - answers uses of cash. The financial statement that summarizes the sources and uses of cash over a specified period of time is the: a. income statement. b. balance sheet. c. tax reconciliation statement. d. statement of cash flows. e. statement of operating position. - answers statement of cash flows. An increase in which one of the following is a source of cash? a. accounts payable b. cash c. inventory d. fixed assets e. accounts receivable - answers accounts payable Which one of the following is a use of cash? a. payment received from a customer on their account b. sale of inventory c. decrease in the cash balance d. sale of common stock e. payment to a supplier - answers payment to a supplier