Finance Final Exam COB 300 JMU |Questions with
detailed Solutions
The Primary goal of financial management is to maximize? - -The market value of
owners equity
-Characteristics of a corporation? Owner liability and control? - -Owner has limited
liability and owner has no operating control
-Which one has double taxation? - -C-corp
-Dividends are determined by? - -Corporations board of directors
-Investors capital is best characterized as? - -The sum of the market value of debt
and market value of equity
-The rate of tax on the next dollar earned is? - -marginal tax rate
-How to calculate tax on sale: - -Price sold for - Book value = Gain * Marginal tax
rate = Tax on sale
-The Cash Conversion Cycle - -Days sale outstanding + days in inventory - the days
payable outstanding
-Which financial statement reports a company's capital expenditures during a
particular time period? - -Statement of Cash Flows
-What would decrease shareholders equity on a corporations Balance Sheet? - -The
payment of dividends
-As a company loosens its credit standards the investment in accounts receivable is
expected to? - -increase
-A plastics manufacturing company has decided to decrease inventory turnover from
10 times to 4 times per year. Assuming a constant sales level, which statement is
true? - -The chance of spoilage increases
-The NPV investment decision criteria typically assumes that cash flows are
reinvested at? - -The projects cost of capital
-A decrease in a projects cost of capital tends to cause what to increase? - -NPV
-When evaluating mutually exclusive projects the recommended method of
evaluation is? - -NPV
-As a general rule, at the optimal capital structure the: - -weighted average cost of
capital is minimized.
detailed Solutions
The Primary goal of financial management is to maximize? - -The market value of
owners equity
-Characteristics of a corporation? Owner liability and control? - -Owner has limited
liability and owner has no operating control
-Which one has double taxation? - -C-corp
-Dividends are determined by? - -Corporations board of directors
-Investors capital is best characterized as? - -The sum of the market value of debt
and market value of equity
-The rate of tax on the next dollar earned is? - -marginal tax rate
-How to calculate tax on sale: - -Price sold for - Book value = Gain * Marginal tax
rate = Tax on sale
-The Cash Conversion Cycle - -Days sale outstanding + days in inventory - the days
payable outstanding
-Which financial statement reports a company's capital expenditures during a
particular time period? - -Statement of Cash Flows
-What would decrease shareholders equity on a corporations Balance Sheet? - -The
payment of dividends
-As a company loosens its credit standards the investment in accounts receivable is
expected to? - -increase
-A plastics manufacturing company has decided to decrease inventory turnover from
10 times to 4 times per year. Assuming a constant sales level, which statement is
true? - -The chance of spoilage increases
-The NPV investment decision criteria typically assumes that cash flows are
reinvested at? - -The projects cost of capital
-A decrease in a projects cost of capital tends to cause what to increase? - -NPV
-When evaluating mutually exclusive projects the recommended method of
evaluation is? - -NPV
-As a general rule, at the optimal capital structure the: - -weighted average cost of
capital is minimized.
