Finance 301 Exam 1 Questions with Correct Answers Latest Update 2025/2026
Finance - Answers It addresses how money is raised and used by individuals, businesses, and
governments.
Corporation - Answers This state-created entity is authorized to conduct business and offer its
owners an investment with an unlimited life.
Treasurer - Answers This corporate officer is responsible for managing the firm's cash and
short-term investments, pension fund, and risks.
Limited Liability - Answers This benefit is conferred by the corporate form of organization in
which an investor's personal responsibility for the debts of the business are limited to the
amount the investor has invested in the firm.
Business Ethics - Answers This code of behavior specifies how the firm and its employees will
treat employees and stakeholders.
Limited Partner - Answers This is a participant in a partnership, whose personal assets may no
be seized to satisfy the debts of the partnership.
Double Taxation of Dividends - Answers The US Internal Revenue Service taxes the taxable
income of corporations as well as the taxable investment income of the firms' shareholders
Shareholder Wealth Maximization - Answers This term describes the individuals and groups
whose needs and wants should be identified and addressed in order to generate higher returns
for the firm and ensure its viability.
Value - Answers This is the worth of a good or service as established by the discounted and
current value of the item's cash flows.
Capital Budgeting - Answers The Chief Financial Officer in a company is responsible for which
of the following departments?
Administration
Marketing
Capital Budgeting
Human Resources
Maximize; Common Stock - Answers According to finance theory firms should attempt to
________ the long-term price of the firm's ______. The benefit to this objective is that it provides
the best financial outcome for the firm's share holders.
, $10,300 - Answers To expand her portfolio, Piper recently purchased 400 shares of common
stock in the Sanger Machine Company. The current market price of Sanger's common stock is
$25.75 per share. Piper's total wealth from her investment in Sanger Machine Company is
$_______
The analysis likely includes incorrect statements and misleading conclusions. - Answers You
work as an analyst at a credit-rating agency, and you are comparing firms in the construction
and engineering sector. One company in the portfolio of companies you are analyzing is a
Chinese firm. THis firm stands out in the ratio analysis, because the company's financial ratios
are substantially lower than the identical financial ratios of the other firms in the sector. You do
not dissect the results of the ratio analysis and categorize report this firm as an under-
performing company.
Which of the following statements about your analysis is report is TRUE?
The analysis likely include incorrect and misleading conclusions
The ratios provide an accurate and thorough representation of the Chinese company's
performance.
True - Answers A company exhibiting a high liquidity ratio means it is likely to have enough
resources to pay off its short-term obligations.
True - Answers Asset management or activity ratios provide insights into management's
efficiency in using a firm's working capital and long-term assets.
False - Answers Debt or financial leverage ratios help analysts determine whether a company
has sufficient cash to repay its short-term debt obligations.
True - Answers One possible explanation for an increase in a firm's profitability ratios over a
certain time span is that the company's income has increased.
True - Answers Market-value or market based ratios help analysts figure out what investors and
the markets think about the firm's growth prospects of current and future operation
performance.
Different firms may use different accounting practices.
A firm may operate in multiple industries. - Answers Ratio analysis is an important component
Finance - Answers It addresses how money is raised and used by individuals, businesses, and
governments.
Corporation - Answers This state-created entity is authorized to conduct business and offer its
owners an investment with an unlimited life.
Treasurer - Answers This corporate officer is responsible for managing the firm's cash and
short-term investments, pension fund, and risks.
Limited Liability - Answers This benefit is conferred by the corporate form of organization in
which an investor's personal responsibility for the debts of the business are limited to the
amount the investor has invested in the firm.
Business Ethics - Answers This code of behavior specifies how the firm and its employees will
treat employees and stakeholders.
Limited Partner - Answers This is a participant in a partnership, whose personal assets may no
be seized to satisfy the debts of the partnership.
Double Taxation of Dividends - Answers The US Internal Revenue Service taxes the taxable
income of corporations as well as the taxable investment income of the firms' shareholders
Shareholder Wealth Maximization - Answers This term describes the individuals and groups
whose needs and wants should be identified and addressed in order to generate higher returns
for the firm and ensure its viability.
Value - Answers This is the worth of a good or service as established by the discounted and
current value of the item's cash flows.
Capital Budgeting - Answers The Chief Financial Officer in a company is responsible for which
of the following departments?
Administration
Marketing
Capital Budgeting
Human Resources
Maximize; Common Stock - Answers According to finance theory firms should attempt to
________ the long-term price of the firm's ______. The benefit to this objective is that it provides
the best financial outcome for the firm's share holders.
, $10,300 - Answers To expand her portfolio, Piper recently purchased 400 shares of common
stock in the Sanger Machine Company. The current market price of Sanger's common stock is
$25.75 per share. Piper's total wealth from her investment in Sanger Machine Company is
$_______
The analysis likely includes incorrect statements and misleading conclusions. - Answers You
work as an analyst at a credit-rating agency, and you are comparing firms in the construction
and engineering sector. One company in the portfolio of companies you are analyzing is a
Chinese firm. THis firm stands out in the ratio analysis, because the company's financial ratios
are substantially lower than the identical financial ratios of the other firms in the sector. You do
not dissect the results of the ratio analysis and categorize report this firm as an under-
performing company.
Which of the following statements about your analysis is report is TRUE?
The analysis likely include incorrect and misleading conclusions
The ratios provide an accurate and thorough representation of the Chinese company's
performance.
True - Answers A company exhibiting a high liquidity ratio means it is likely to have enough
resources to pay off its short-term obligations.
True - Answers Asset management or activity ratios provide insights into management's
efficiency in using a firm's working capital and long-term assets.
False - Answers Debt or financial leverage ratios help analysts determine whether a company
has sufficient cash to repay its short-term debt obligations.
True - Answers One possible explanation for an increase in a firm's profitability ratios over a
certain time span is that the company's income has increased.
True - Answers Market-value or market based ratios help analysts figure out what investors and
the markets think about the firm's growth prospects of current and future operation
performance.
Different firms may use different accounting practices.
A firm may operate in multiple industries. - Answers Ratio analysis is an important component
