FIN 338 Exam 1 Devydanks Questions
With Correct Answers
Which of the following statements is CORRECT? - ANSWER The balance sheet gives
us a picture of the firm's financial position at a point in time.
Which of the following items is NOT included in current assets? - ANSWER Bonds.
Which of the following items cannot be found on a firm's balance sheet under current
liabilities? - ANSWER Cost of goods sold.
Considered alone, which of the following would increase a company's current ratio? -
ANSWER An increase in accounts receivable
Which of the following would, generally, indicate an improvement in a company's
financial position, holding other things constant? - ANSWER The EBITDA coverage
ratio increases.
A firm wants to strengthen its financial position. Which of the following actions would
increase its quick ratio? - ANSWER Offer price reductions along with generous credit
terms that would (1) enable the firm to sell some of its excess inventory and (2) lead to
an increase in accounts receivable.
Which of the following is NOT one of the steps taken in the financial planning process? -
ANSWER Consult with key competitors about the optimal set of prices to charge, i.e.,
the prices that will maximize profits for our firm and its competitors.
Which of the following statements is CORRECT? - ANSWER A negative AFN indicates
that retained earnings and spontaneous liabilities are far more than sufficient to finance
the additional assets needed.
Burnham Brothers Inc. has no retained earnings since it has always paid out all of its
earnings as dividends. This same situation is expected to persist in the future. The
With Correct Answers
Which of the following statements is CORRECT? - ANSWER The balance sheet gives
us a picture of the firm's financial position at a point in time.
Which of the following items is NOT included in current assets? - ANSWER Bonds.
Which of the following items cannot be found on a firm's balance sheet under current
liabilities? - ANSWER Cost of goods sold.
Considered alone, which of the following would increase a company's current ratio? -
ANSWER An increase in accounts receivable
Which of the following would, generally, indicate an improvement in a company's
financial position, holding other things constant? - ANSWER The EBITDA coverage
ratio increases.
A firm wants to strengthen its financial position. Which of the following actions would
increase its quick ratio? - ANSWER Offer price reductions along with generous credit
terms that would (1) enable the firm to sell some of its excess inventory and (2) lead to
an increase in accounts receivable.
Which of the following is NOT one of the steps taken in the financial planning process? -
ANSWER Consult with key competitors about the optimal set of prices to charge, i.e.,
the prices that will maximize profits for our firm and its competitors.
Which of the following statements is CORRECT? - ANSWER A negative AFN indicates
that retained earnings and spontaneous liabilities are far more than sufficient to finance
the additional assets needed.
Burnham Brothers Inc. has no retained earnings since it has always paid out all of its
earnings as dividends. This same situation is expected to persist in the future. The
