Foundations of Business Finance (Peregrine) Exam Questions with Complete Answers

Foundations of Business Finance (Peregrine) Exam Questions with Complete Answers __________ __________ equals the number of outstanding common shares multiplied by the par value per share. - Answer-Common stock __________ __________ (often $1) is an artifact of earlier pre-computer accounting methods used to track the number of outstanding shares. It has no relation to the actual value of the shares. - Answer-Par value __________ __________ are the cumulative total of the earnings that the firm has reinvested in its assets and operations since its inception. - Answer-Retained earnings The combined value of __________ __________ and __________-__________-__________ equals the proceeds the firm received when it originally sold shares to investors (including initial public offerings and rights offerings). - Answer-common stock, paid-in-capital The __________ __________ entry on a balance sheet records the value of common shares that a firm currently holds in reserve. - Answer-treasury stock The __________ __________ __________ __________ provides a summary of what cash has gone into and out of a firm because of its operations, investments, and financing activities during a year. It isolates the firm's operating, investment, and financing cash flows and reconciles them with changes in its cash and marketable securities during the year. - Answer-statement of cash flows A firm's total cash flows can be conveniently divided into three categories. These include __________ flows, __________ flows, and __________ flows. - Answer-operating, investment, financing Operating flows - Answer-Cash inflows and outflows directly related to the production and sale of products or services Investment flows - Answer-Cash flows associated with the purchase or sale of fixed assets and business equity Financing flows - Answer-Cash flows which result from debt and equity financing transactions __________ __________ __________ is the amount of cash flow available to investors - the providers of debt and equity capital. It represents the net amount of cash flow remaining after the firm has met all operating needs and has made all required payments on both long-term (fixed) and short-term (current) investments. - Answer-Free cash flow