FINC 3610 FINAL EXAM DISMUKES EXAM 2026/2027 ||
CORPORATE FINANCE REVIEW | VERIFIED MULTIPLE-
CHOICE Q&A | EXAM PREP GUIDE | HIGH-SCORING STUDY
SET | GRADED A+
What are the 3 questions that corporate finance is focused on?
1. Capital budgeting - What should we invest in long-term?
2. Capital structure - How do we finance those investments?
3. Working capital management - How do we manage the day-to-day operations
of the firm?
What is capital budgeting?
The process of planning and managing the firm's long-term investments.
What is capital structure?
The mix of debt and equity describing how the firm is financed.
What is working capital management?
What does short-term cash flow management entail?
- Net working capital = Current assets - current liabilities
- Cash management
- Credit management
What is the formula for net working capital?
Net working capital = current assets - current liabilities
What are the forms of business organization?
- Sole propietorship
- Partnership
- Corporation
- Limited liability corporation (LLC)
What is the goal of financial management?
To maximize shareholder wealth
What is a primary market?
Stocks and bonds going from firm to investors and then money going back to
firm.
What is a secondary market?
, Investors (Bob and Sue) trading securities for money
Suggested problems for module 1
quiz and concepts 1, 3, 4, 6, 7, and 8
What are the financial statements in the annual report and form 10-k?
- Balance sheet
- Income statement
- Statement of cash flows
What is the balance sheet?
Assets = Liabilities + Stockholder's Equity
What is the income statement?
Revenues - Expenses = Income (profit)
expenses include non-cash expenses
What is the statement of cash flows?
There are 3 sections (Operating, Investing, Financing)
- Cash flow from Operating activities: Net income + non-cash items +/- changes
in assets and liabilities
- Cash flow from Investing activities: capital expenditures, net
- Cash flow from Financing activities: Net borrowings +/- net equity changes
What is Average (effective) Tax Rate?
Average Tax Rate = Total Tax / Taxable Income
Total tax divided by taxable income
What is Marginal Tax Rate?
Tax rate paid based on next dollar of earnings
What are some things to remember?
- Depreciation is not a cash flow
- Net income is not a cash flow
- Financial statements are backward looking, not forward looking
- The balance sheet shows book values, not market values
What are common-size financial statements?
CORPORATE FINANCE REVIEW | VERIFIED MULTIPLE-
CHOICE Q&A | EXAM PREP GUIDE | HIGH-SCORING STUDY
SET | GRADED A+
What are the 3 questions that corporate finance is focused on?
1. Capital budgeting - What should we invest in long-term?
2. Capital structure - How do we finance those investments?
3. Working capital management - How do we manage the day-to-day operations
of the firm?
What is capital budgeting?
The process of planning and managing the firm's long-term investments.
What is capital structure?
The mix of debt and equity describing how the firm is financed.
What is working capital management?
What does short-term cash flow management entail?
- Net working capital = Current assets - current liabilities
- Cash management
- Credit management
What is the formula for net working capital?
Net working capital = current assets - current liabilities
What are the forms of business organization?
- Sole propietorship
- Partnership
- Corporation
- Limited liability corporation (LLC)
What is the goal of financial management?
To maximize shareholder wealth
What is a primary market?
Stocks and bonds going from firm to investors and then money going back to
firm.
What is a secondary market?
, Investors (Bob and Sue) trading securities for money
Suggested problems for module 1
quiz and concepts 1, 3, 4, 6, 7, and 8
What are the financial statements in the annual report and form 10-k?
- Balance sheet
- Income statement
- Statement of cash flows
What is the balance sheet?
Assets = Liabilities + Stockholder's Equity
What is the income statement?
Revenues - Expenses = Income (profit)
expenses include non-cash expenses
What is the statement of cash flows?
There are 3 sections (Operating, Investing, Financing)
- Cash flow from Operating activities: Net income + non-cash items +/- changes
in assets and liabilities
- Cash flow from Investing activities: capital expenditures, net
- Cash flow from Financing activities: Net borrowings +/- net equity changes
What is Average (effective) Tax Rate?
Average Tax Rate = Total Tax / Taxable Income
Total tax divided by taxable income
What is Marginal Tax Rate?
Tax rate paid based on next dollar of earnings
What are some things to remember?
- Depreciation is not a cash flow
- Net income is not a cash flow
- Financial statements are backward looking, not forward looking
- The balance sheet shows book values, not market values
What are common-size financial statements?
