Final Exam Financial management

Which one of the following terms is defined as the mixture of a firm's debt and equity financing? - correct answer Capital Structure Which one of the following is defined as a firm's short-term assets and its short-term liabilities? - correct answer Working Capital Which one of the following terms is defined as a conflict of interest between the corporate shareholders and the corporate managers? - correct answer Agency Problem Which of the following questions are addressed by financial managers? I. How should a product be marketed? II. Should customers be given 30 or 45 days to pay for their credit purchases? III. Should the firm borrow more money? IV. Should the firm acquire new equipment? - correct answer II, III, and IV only Which of the following apply to a partnership that consists solely of general partners? I. Double taxation of partnership profits. II. Limited partnership life. III. Active involvement in the firm by all the partners. IV. Unlimited personal liability for all partnership debts. - correct answer II, III, and IV only Which of the following are advantages of the corporate form of business ownership? I. Limited liability for firm debt. II. Double taxation. III. Ability to raise capital. IV. Unlimited firm life. - correct answer I, III, and IV only Which one of the following best states the primary goal of financial management? - correct answer Maximize the current value per share. Which of the following help convince managers to work in the best interest of the stockholders? Assume there are no golden parachutes. I. Compensation based on the value of the stock. II. Stock option plans. III. Threat of a company takeover. IV. Threat of a proxy fight. - correct answer I, II, III, and IV Which one of the following grants an individual the right to vote on behalf of a shareholder? - correct answer Proxy. Which one of the following is the financial statement that shows the accounting value of a firm's equity as of a particular date? - correct answer Balance Sheet Which one of these sets forth the common set of standards and procedures by which audited financial statements are prepared? - correct answer Generally Accepted Accounting Principles Noncash items refers to: - correct answer Expenses which do not directly affect cash flows. The percentage of the next dollar you earn that must be paid in taxes is referred to as the ________ tax rate. - correct answer Marginal Which term relates to the cash flow that results from a firm's ongoing business activities? - correct answer Operating cash flow. Which of the following is (are) included in the market value of a firm but is (are) excluded from the firm's book value? I. Value of management skills. II. Value of a copyright. III. Value of the firm's reputation. IV. Value of employee's experience. - correct answer I, III, and IV only. Andre's Bakery has sales of $613,000 with costs of $479,000. Interest expense is $26,000 and depreciation is $42,000. The tax rate is 25 percent. What is the net income? - correct answer $49,500 RTF Oil has total sales of $911,400 and costs of $787,300. Depreciation is $52,600 and the tax rate is 34 percent. The firm does not have any interest expense. What is the operating cash flow? - correct answer $99,790 Nielsen Auto Parts had beginning net fixed assets of $218,470 and ending net fixed assets of $209,411. During the year, assets with a combined book value of $6,943 were sold. Depreciation for the year was $42,822. What is the amount of net capital spending? - correct answer $33,763 A firm generated net income of $912. The depreciation expense was $47 and dividends were paid in the amount of $25. Accounts payables increased by $15, accounts receivables increased by $28, inventory decreased by $14, and net fixed assets decreased by $8. There was no interest expense. What was the net cash flow from operating activity? - correct answer $959 Which one of the following terms is applied to the financial planning method that uses the projected sales level as the basis for determining changes in balance sheet and income statement account values? - correct answer Percentage of sales method. The basic factors to be evaluated in the credit evaluation process, the five Cs of credit, are: - correct answer Character, capacity, capital, collateral, and conditions. Which one of the following standardizes items on the income statement and balance sheet relative to their values as of a chosen point in time? - correct answer Common-base year statement. On a common-size balance sheet all accounts for the current year are expressed as a percentage of: - correct answer Total assets for the current year. Which one of the following accounts is the most liquid? - correct answer Accounts Receivable. Ratio