Chapter 01 – 9ce Ross
1) The balance sheet is made up of what five key components:
A) fixed assets, current liabilities, long term debt, tangible current assets and
shareholders' equity.
B) intangible fixed assets, current liabilities, long term debt, net income and current
assets.
C) fixed assets, long term debt, current assets, current liabilities and shareholders' equity.
D) current assets, fixed assets, long term debt, shareholders equity and retained earnings.
2) In terms of the balance sheet model of the firm, the value of the firm in financial markets
is equal to:
A) tangible fixed assets plus intangible fixed assets.
B) sales minus costs.
C) cash inflow minus cash outflow.
D) the value of the debt plus the value of the equity.
E) the value of the debt minus the value of the equity.
3) Inventory is a component of:
A) current assets.
B) current liabilities.
C) equity.
D) fixed assets.
4) Using the balance sheet model of the firm, finance may be thought of as analysis of three
primary subject areas. Which of the following groups correctly lists these three areas?
Version 1 1
, A) Capital budgeting, capital structure, net working capital.
B) Capital budgeting, capital structure, security marketing.
C) Capital budgeting, net working capital, tax analysis.
D) Capital budgeting, tax analysis, security marketing.
E) Net working capital, tax analysis, security marketing.
5) Which of the following is not considered one of the basic questions of corporate finance?
A) What long-lived assets should the firm invest?
B) How much inventory should the firm hold?
C) How can the firm raise cash for required capital expenditures?
D) How should the short-term operating cash flows be managed?
E) What amount of long term debt and equity should the company issue to the market in
the following years?
6) The need to manage net working capital arises because:
A) financial management is naturally broken into those areas.
B) shareholders want to ensure they receive dividend payments.
C) there is a mismatch between the timing of cash inflows and cash outflows.
D) the sum of current assets and current liabilities usually is zero.
E) the capital structure pie is limited in size.
7) Which one of these is a cash outflow from a corporation?
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1) The balance sheet is made up of what five key components:
A) fixed assets, current liabilities, long term debt, tangible current assets and
shareholders' equity.
B) intangible fixed assets, current liabilities, long term debt, net income and current
assets.
C) fixed assets, long term debt, current assets, current liabilities and shareholders' equity.
D) current assets, fixed assets, long term debt, shareholders equity and retained earnings.
2) In terms of the balance sheet model of the firm, the value of the firm in financial markets
is equal to:
A) tangible fixed assets plus intangible fixed assets.
B) sales minus costs.
C) cash inflow minus cash outflow.
D) the value of the debt plus the value of the equity.
E) the value of the debt minus the value of the equity.
3) Inventory is a component of:
A) current assets.
B) current liabilities.
C) equity.
D) fixed assets.
4) Using the balance sheet model of the firm, finance may be thought of as analysis of three
primary subject areas. Which of the following groups correctly lists these three areas?
Version 1 1
, A) Capital budgeting, capital structure, net working capital.
B) Capital budgeting, capital structure, security marketing.
C) Capital budgeting, net working capital, tax analysis.
D) Capital budgeting, tax analysis, security marketing.
E) Net working capital, tax analysis, security marketing.
5) Which of the following is not considered one of the basic questions of corporate finance?
A) What long-lived assets should the firm invest?
B) How much inventory should the firm hold?
C) How can the firm raise cash for required capital expenditures?
D) How should the short-term operating cash flows be managed?
E) What amount of long term debt and equity should the company issue to the market in
the following years?
6) The need to manage net working capital arises because:
A) financial management is naturally broken into those areas.
B) shareholders want to ensure they receive dividend payments.
C) there is a mismatch between the timing of cash inflows and cash outflows.
D) the sum of current assets and current liabilities usually is zero.
E) the capital structure pie is limited in size.
7) Which one of these is a cash outflow from a corporation?
Version 1 2
