FINC 201 Midterm Chapters 1-6 with
answers
The process of planning and managing a firm's long-term investments is called:
a. working capital management.
b. financial depreciation.
c. agency cost analysis.
d. capital budgeting.
e. capital structure. - answers capital budgeting.
The mixture of debt and equity used by a firm to finance its operations is called:
a. working capital management.
b. financial depreciation.
c. cost analysis.
d. capital budgeting.
e. capital structure. - answers capital structure.
The management of a firm's short-term assets and liabilities is called:
a. working capital management.
b. debt management.
c. equity management.
d. capital budgeting.
e. capital structure. - answers working capital management.
The goal of financial management is to maximize the current:
a. net income of the firm.
b. dividends per share.
c. resources of the firm.
d. value of the existing stock. - answers value of the existing stock.
A conflict of interest between the stockholders and management of a firm is called:
a. stockholders' liability.
b. corporate breakdown.
c. the agency problem.
d. corporate activism.
e. legal liability. - answers the agency problem.
Net working capital is defined as:
a. total liabilities minus shareholders' equity.
b. current liabilities minus shareholders' equity.
c. fixed assets minus long-term liabilities.
d. total assets minus total liabilities.
, e. current assets minus current liabilities. - answers current assets minus current
liabilities.
Financial leverage refers to the:
a. amount of debt used in a firm's capital structure.
b. ratio of retained earnings to shareholders' equity.
c. ratio of paid-in surplus to shareholders' equity.
d. ratio of cost-of-goods-sold to total sales.
e. amount of receivables present in the firm's asset structure. - answers amount of
debt used in a firm's capital structure.
Noncash items refer to:
a. the credit sales of a firm.
b. the accounts payable of a firm.
c. the costs incurred for the purchase of intangible fixed assets.
d. expenses charged against revenues that do not directly affect cash flow.
e. all accounts on the balance sheet other than cash on hand. - answers expenses
charged against revenues that do not directly affect cash flow.
Your _____ tax rate is the amount of tax payable on the next taxable dollar you earn.
a. deductible
b. residual
c. total
d. average
e. marginal - answers marginal
_____ refers to the cash flow that results from the firm's ongoing, normal business
activities.
a. Operating cash flow
b. Capital spending
c. Net working capital
d. Cash flow from assets
e. Cash flow to creditors - answers Operating cash flow
_____ refers to the net total cash flow of the firm available for distribution to its
creditors and stockholders.
a. Operating cash flow
b. Capital spending
c. Net working capital
d. Cash flow from assets
e. Cash flow to creditors - answers Cash flow from assets
Earnings per share is equal to:
a. net income divided by the total number of shares outstanding.
answers
The process of planning and managing a firm's long-term investments is called:
a. working capital management.
b. financial depreciation.
c. agency cost analysis.
d. capital budgeting.
e. capital structure. - answers capital budgeting.
The mixture of debt and equity used by a firm to finance its operations is called:
a. working capital management.
b. financial depreciation.
c. cost analysis.
d. capital budgeting.
e. capital structure. - answers capital structure.
The management of a firm's short-term assets and liabilities is called:
a. working capital management.
b. debt management.
c. equity management.
d. capital budgeting.
e. capital structure. - answers working capital management.
The goal of financial management is to maximize the current:
a. net income of the firm.
b. dividends per share.
c. resources of the firm.
d. value of the existing stock. - answers value of the existing stock.
A conflict of interest between the stockholders and management of a firm is called:
a. stockholders' liability.
b. corporate breakdown.
c. the agency problem.
d. corporate activism.
e. legal liability. - answers the agency problem.
Net working capital is defined as:
a. total liabilities minus shareholders' equity.
b. current liabilities minus shareholders' equity.
c. fixed assets minus long-term liabilities.
d. total assets minus total liabilities.
, e. current assets minus current liabilities. - answers current assets minus current
liabilities.
Financial leverage refers to the:
a. amount of debt used in a firm's capital structure.
b. ratio of retained earnings to shareholders' equity.
c. ratio of paid-in surplus to shareholders' equity.
d. ratio of cost-of-goods-sold to total sales.
e. amount of receivables present in the firm's asset structure. - answers amount of
debt used in a firm's capital structure.
Noncash items refer to:
a. the credit sales of a firm.
b. the accounts payable of a firm.
c. the costs incurred for the purchase of intangible fixed assets.
d. expenses charged against revenues that do not directly affect cash flow.
e. all accounts on the balance sheet other than cash on hand. - answers expenses
charged against revenues that do not directly affect cash flow.
Your _____ tax rate is the amount of tax payable on the next taxable dollar you earn.
a. deductible
b. residual
c. total
d. average
e. marginal - answers marginal
_____ refers to the cash flow that results from the firm's ongoing, normal business
activities.
a. Operating cash flow
b. Capital spending
c. Net working capital
d. Cash flow from assets
e. Cash flow to creditors - answers Operating cash flow
_____ refers to the net total cash flow of the firm available for distribution to its
creditors and stockholders.
a. Operating cash flow
b. Capital spending
c. Net working capital
d. Cash flow from assets
e. Cash flow to creditors - answers Cash flow from assets
Earnings per share is equal to:
a. net income divided by the total number of shares outstanding.
