BOEING FINANCE EXAM 1
QUESTIONS AND ANSWERS
Which one of the following must be true if a firm had a negative cash flow from
assets? - ANSWER-The firm utilized outside funding.
A positive cash flow to stockholders indicates which one of the following with
certainty? - ANSWER-The dividends paid exceeded the net new equity raised.
Which one of the following is included in a firm's market value but yet is excluded
from the firm's accounting value? - ANSWER-Good reputation of the company
Which one of the following statements concerning net working capital is correct? -
ANSWER-Net working capital may be a negative value.
Mortgage lenders probably have the most interest in the ______ ratios. - ANSWER-
long-term debt and times interest earned
The Corner Hardware has succeeded in increasing the amount of goods it sells while
holding the amount of inventory on hand at a constant level. Assume that both the
cost per unit and the selling price per unit also remained constant. This
accomplishment will be reflected in the firm's financial ratios in which one of the
following ways? - ANSWER-Decrease in the day's sales in inventory
During the year, Al's Tools decreased its accounts receivable by $160, increased its
inventory by $115, and decreased its accounts payable by $70. How did these three
accounts affect the firm's cash flows for the year? - ANSWER-Net change in cash =
160 - 115 - 170 = -25
Net use of cash of $25
In 2019 a firm has sales of $4,300, net income of $320, total assets of $4,800, and
total equity of $2,950. Interest expense is $65. What is the common-size statement
value of the interest expense? - ANSWER-65/4300 = 1.51%
which of the following is a source of cash? - ANSWER-decrease in inventory
Which one of the following is least apt to help convince managers to work in the best
interest of the stockholders? Assume there are no golden parachutes - ANSWER-
increasing managers base salaries
Which one of the following terms is defined as the mixture of a firm's debt and equity
financing? - ANSWER-capital structure
Which one of the following terms is defined as a conflict of interest between the
corporate shareholders and the corporate managers? - ANSWER-Agency problem
Which one of the following is a capital structure decision? - ANSWER-Determine
how much debt should be assumed to fund a project.
QUESTIONS AND ANSWERS
Which one of the following must be true if a firm had a negative cash flow from
assets? - ANSWER-The firm utilized outside funding.
A positive cash flow to stockholders indicates which one of the following with
certainty? - ANSWER-The dividends paid exceeded the net new equity raised.
Which one of the following is included in a firm's market value but yet is excluded
from the firm's accounting value? - ANSWER-Good reputation of the company
Which one of the following statements concerning net working capital is correct? -
ANSWER-Net working capital may be a negative value.
Mortgage lenders probably have the most interest in the ______ ratios. - ANSWER-
long-term debt and times interest earned
The Corner Hardware has succeeded in increasing the amount of goods it sells while
holding the amount of inventory on hand at a constant level. Assume that both the
cost per unit and the selling price per unit also remained constant. This
accomplishment will be reflected in the firm's financial ratios in which one of the
following ways? - ANSWER-Decrease in the day's sales in inventory
During the year, Al's Tools decreased its accounts receivable by $160, increased its
inventory by $115, and decreased its accounts payable by $70. How did these three
accounts affect the firm's cash flows for the year? - ANSWER-Net change in cash =
160 - 115 - 170 = -25
Net use of cash of $25
In 2019 a firm has sales of $4,300, net income of $320, total assets of $4,800, and
total equity of $2,950. Interest expense is $65. What is the common-size statement
value of the interest expense? - ANSWER-65/4300 = 1.51%
which of the following is a source of cash? - ANSWER-decrease in inventory
Which one of the following is least apt to help convince managers to work in the best
interest of the stockholders? Assume there are no golden parachutes - ANSWER-
increasing managers base salaries
Which one of the following terms is defined as the mixture of a firm's debt and equity
financing? - ANSWER-capital structure
Which one of the following terms is defined as a conflict of interest between the
corporate shareholders and the corporate managers? - ANSWER-Agency problem
Which one of the following is a capital structure decision? - ANSWER-Determine
how much debt should be assumed to fund a project.
