FIN 320 EXAM 1 QUESTIONS &
ACCURATE COMPLETE SOLUTIONS
PASSED 100%
Capital structure - Correct Answer ✔✔ mixture of long-term debt and equity the firm
uses to finance its operations.
Forms of businesses - Correct Answer ✔✔ ...
Agency conflicts - Correct Answer ✔✔ Potential conflict between owner and its
managers.
Primary goal of financial management - Correct Answer ✔✔ maximize the market value
of existing stock for a corporation.
Sarbanes-Oxley Act (2002) - Correct Answer ✔✔ Corporate accounting and financial
fraud.
Net working capital - Correct Answer ✔✔ current assets - current liabilities
Average tax rate - Correct Answer ✔✔ total tax paid divided by the total taxable income.
Marginal tax rate - Correct Answer ✔✔ Extra tax you would pay if you earned one more
dollar.
Cash flow from assets - Correct Answer ✔✔ Operating cash flow - change in NWC - net
capital spending
Liquidity - Correct Answer ✔✔ Speed and ease with which an asset can be converted to
cash.
Decrease liquidity?:
1) Cash purchase of inv.
2) Credit sale of inv.
3) Cash sale of inv.
4) Collection of an A/R
5) Proceeds from a long-term loan - Correct Answer ✔✔ 1) Cash purchase of inventory
Financial leverage - Correct Answer ✔✔ increases the potential return to the
shareholders.
Income statement prepared according to GAAP - Correct Answer ✔✔ records expenses
based on matching principle.
ACCURATE COMPLETE SOLUTIONS
PASSED 100%
Capital structure - Correct Answer ✔✔ mixture of long-term debt and equity the firm
uses to finance its operations.
Forms of businesses - Correct Answer ✔✔ ...
Agency conflicts - Correct Answer ✔✔ Potential conflict between owner and its
managers.
Primary goal of financial management - Correct Answer ✔✔ maximize the market value
of existing stock for a corporation.
Sarbanes-Oxley Act (2002) - Correct Answer ✔✔ Corporate accounting and financial
fraud.
Net working capital - Correct Answer ✔✔ current assets - current liabilities
Average tax rate - Correct Answer ✔✔ total tax paid divided by the total taxable income.
Marginal tax rate - Correct Answer ✔✔ Extra tax you would pay if you earned one more
dollar.
Cash flow from assets - Correct Answer ✔✔ Operating cash flow - change in NWC - net
capital spending
Liquidity - Correct Answer ✔✔ Speed and ease with which an asset can be converted to
cash.
Decrease liquidity?:
1) Cash purchase of inv.
2) Credit sale of inv.
3) Cash sale of inv.
4) Collection of an A/R
5) Proceeds from a long-term loan - Correct Answer ✔✔ 1) Cash purchase of inventory
Financial leverage - Correct Answer ✔✔ increases the potential return to the
shareholders.
Income statement prepared according to GAAP - Correct Answer ✔✔ records expenses
based on matching principle.
