FNAN 320 FINAL EXAM QUESTIONS WITH VERIFIED
ANSWERS
The mixture of debt and equity used to finance a firms operations is called: - Answers -
Capital Structure
Which of the following is not a type of agency cost? - Answers - The cost of financing
the firm.
Define the Agency Problem: - Answers - Conflict of interests between the oweners and
managers of a firm.
Increase of which of the following will decrease the Operating Cash Flow? - Answers -
Taxes Paid.
Define OCF - Answers - Cash generated from a firms normal business activities
An increase in Net Working Capital is: - Answers - a cash inflow for the firm
Define Net Working Capital: - Answers - Current Assets less Current Liabilities
An American dollar deposited in a London bank is a: - Answers - Eurodollar deposit
Define Eurocurrency: - Answers - Money deposited in a financial center outside of the
country whose currency is involved.
Which of the following will increase the length of a firms cash cycle? - Answers -
Accounts Recieveable period increase & Accounts Payable Turn Over increase
Sustainable growth will decrease with increases in: - Answers - Dividend payouts
Define Sustainable Growth Rate: - Answers - The maximum possible growth rate a firm
can achieve without external equity financing while retaining a constant debt-equity
ratio.
Which of the following is a source of cash? - Answers - Collecting Accounts Receivable
If the US dollar strengthens against the Japanese Yen, what will occur? - Answers -
Japanese imports will be less expensive in the United States.
What will increase cash? - Answers - Increases in: Long term debt, equity, current
liabilities.
Decreases in: Current assets & fixed assets
ANSWERS
The mixture of debt and equity used to finance a firms operations is called: - Answers -
Capital Structure
Which of the following is not a type of agency cost? - Answers - The cost of financing
the firm.
Define the Agency Problem: - Answers - Conflict of interests between the oweners and
managers of a firm.
Increase of which of the following will decrease the Operating Cash Flow? - Answers -
Taxes Paid.
Define OCF - Answers - Cash generated from a firms normal business activities
An increase in Net Working Capital is: - Answers - a cash inflow for the firm
Define Net Working Capital: - Answers - Current Assets less Current Liabilities
An American dollar deposited in a London bank is a: - Answers - Eurodollar deposit
Define Eurocurrency: - Answers - Money deposited in a financial center outside of the
country whose currency is involved.
Which of the following will increase the length of a firms cash cycle? - Answers -
Accounts Recieveable period increase & Accounts Payable Turn Over increase
Sustainable growth will decrease with increases in: - Answers - Dividend payouts
Define Sustainable Growth Rate: - Answers - The maximum possible growth rate a firm
can achieve without external equity financing while retaining a constant debt-equity
ratio.
Which of the following is a source of cash? - Answers - Collecting Accounts Receivable
If the US dollar strengthens against the Japanese Yen, what will occur? - Answers -
Japanese imports will be less expensive in the United States.
What will increase cash? - Answers - Increases in: Long term debt, equity, current
liabilities.
Decreases in: Current assets & fixed assets
