C214 Financial Management Final Exam Questions With Answers

C214 Financial Management Final Exam Questions With Answers Accounting - ANSWER- The business function responsible for creating the historical financial statements. Accounts Payable - ANSWER- A current liability that represents any money the firm owes suppliers and other firms. Typically the firm does not pay interest on accounts payable. Accounts Receivable (AR) - ANSWER- A type of current asset which represents any money owed to the firm for services rendered. Accounts Receivable (AR) Turnover - ANSWER- Credit Sales/AR, a liquidity ratio. Accredited Investors - ANSWER- Investors deemed by the SEC to be sophisticated enough to purchase non-public securities. Accrual Accounting - ANSWER- Accounting system based on recording accounts based on historical prices and the matching principle. Accruals - ANSWER- Non-cash accounting accounts representing money either owed or due, typically in the short term. Accrued Wages - ANSWER- Wages that the company owes to employees, but has not paid yet. Accumulated Depreciation - ANSWER- The total amount of depreciation claimed against the fixed assets of the firm Additional Paid-in Capital (APIC) - ANSWER- An equity item on the balance sheet representing the proceeds (price at which stock is initially sold) minus the par value of the stock (note: par is usually $1 per share). Affirmative Covenants - ANSWER- A bond covenant that requires the firm to do something. Agency Costs - ANSWER- Costs that are incurred when management does not act in the best interests of shareholders.The costs that result from the principle-agent problem. American Depository Receipts (ADRs) - ANSWER- Certificates issued by U.S. banks and traded on U.S. markets but represent shares of foreign stocks Angels - ANSWER- Wealthy individuals who invest in new ventures for the return, thrill, and to help entrepreneurs. Annual Percentage Rate (APR) - ANSWER- The stated annual rate (but ignores compounding) Annual Percentage Yield (APY) - ANSWER- The actual yield including compounding. Also known as effective annual rate. Annuity - ANSWER- A series of payments or receipts. Annuity Due - ANSWER- An annuity that pays at the beginning of each period. Asset Pricing - ANSWER- The process of valuing assets Auction Market - ANSWER- A market with a physical location and where prices are determined by investors' willingness to pay. Average Collection Period (ACP) - ANSWER- AR/Daily Credit Sales, a liquidity ratio. Balance Sheet Equation - ANSWER- Assets = Liabilities + Equity Balance Sheets - ANSWER- One of the three main financial statements. It is a snapshot of the firm's assets, liabilities, and equity at any point in time. Bank Holding Company Act of 1956 - ANSWER- Federal regulation designed to protect the banking industry from competition. Beta - ANSWER- A measure of systematic risk for a particular security (or portfolio) that quantifies the security's (or portfolio's) price sensitivity to price changes in the market. Bond Indenture - ANSWER- The legal document detailing a bond. Bond Ratings - ANSWER- A rating assigned to a firm to measure the probability of default by a company like S&P or Moody's. Bonds - ANSWER- Vehicles by which corporations and governments raise debt capital. Book Value - ANSWER- The accounting value recorded on the balance sheet. Bulldog Bonds - ANSWER- Bonds issued in the UK and denominated in British pounds Business Risk - ANSWER- The variability associated with operating income. CAPEX - ANSWER- Capital Expenditures, how much the firm spends on fixed assets.