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FINC 3610 Final Exam Dismukes (NEW UPDATED VERSION) LATEST ACTUAL
EXAM QUESTIONS AND CORRECT ANSWERS (VERIFIED QUESTIONS AND
ANSWERS) | GUARANTEED PASS A+ [2026-2027]
Three questions that corporate finance focused on? - CORRECT ANSWER 1.
capital budgeting
2. capital structure
3. working capital management
QUESTION :capital budgeting - CORRECT ANSWER what should we invest
in long-term?
QUESTION :capital structure - CORRECT ANSWER how do we finance those
investments?
QUESTION :working capital structure - CORRECT ANSWER how do we
manage the day-to-day operation
of the firm?
QUESTION :Forms of business organization - CORRECT ANSWER sole
proprietorship, partnership, corporation
2026 2027 GRADED A+
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QUESTION :sole proprietorship - CORRECT ANSWER one single person-->
high risk, high reward, unlimited liability, easy to start-up, taxed as personal
income, difficult to transfer ownership corpo
QUESTION :partnership - CORRECT ANSWER -general: run the business,
making decisions, and accepting more risk, easy to startup, taxed as personal
income
-limited: there for money and investing, limited liability, life limited of that of
owners, equity limited to combined wealth, difficulty transferring ownership
QUESTION :corporation - CORRECT ANSWER a business created as a
distinct legal entity composed of one or more individual entities
-separation of ownership and control
-shareholders: anyone who owns stock in company
-directors: voted on by shareholders (proxy vote), ultimate oversight
-managers: run the company
QUESTION :What is the goal of financial management? - CORRECT ANSWER
*maximize shareholder wealth*
QUESTION :Agency problem/conflict - CORRECT ANSWER The possibility
of conflict of interest between the stockholders (the principal) and management
(the agent) of a firm
QUESTION :Financial markets and the corporation - CORRECT ANSWER
firm: invest in assets, current and fixed
financial markets: short and long term debt, equity shares
-ultimately the firm must be a cash generating activity
2026 2027 GRADED A+
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-cash flows from the firm must exceed the cash flows from the financial markets
QUESTION :The balance sheet - CORRECT ANSWER -snapshot of the
company at a point in time
-assets= liabilities + stockholders equity
QUESTION :The income statement - CORRECT ANSWER -performance of a
company over a period of time
-revenues - expenses= income
-the bottom line: net income or EPS (earnings per share)
QUESTION :The statement of cash flows - CORRECT ANSWER operating,
investing, financing activities
QUESTION :operating activities - CORRECT ANSWER includes cash
receipts and cash payments for transactions relating to revenue and expense
activities
QUESTION :investing activites - CORRECT ANSWER Includes cash
transactions involving the purchase and sale of long-term assets and current
investments
QUESTION :financing activites - CORRECT ANSWER borrowing or paying
back money to lenders and receiving additional funds from stockholders or
paying them dividends
QUESTION :average tax rate - CORRECT ANSWER total tax divided by
taxable income
2026 2027 GRADED A+
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QUESTION :marginal tax rate - CORRECT ANSWER tax rate paid based on
next dollar of income
QUESTION :Is depreciation a cash flow? - CORRECT ANSWER no
QUESTION :Is net income a cash flow? - CORRECT ANSWER no
QUESTION :Are financial statements forward or backward looking? - CORRECT
ANSWER backward
QUESTION :Does the balance sheet show book values or market values? -
CORRECT ANSWER book values
QUESTION :Ratio analysis - CORRECT ANSWER -short term solvency or
liquidity, ratios: ability to pay off
-long-term solvency ratios: financial leverage (debt)
-asset management or turnover, ratios: how efficiently are we using our assets
-profitability ratios: accounting profit
-market value ratios: price per share of stock *put on sheet*
QUESTION :Diluted EPS - CORRECT ANSWER Net income - preferred
dividends / outstanding shares + diluted shares
2026 2027 GRADED A+
FINC 3610 Final Exam Dismukes (NEW UPDATED VERSION) LATEST ACTUAL
EXAM QUESTIONS AND CORRECT ANSWERS (VERIFIED QUESTIONS AND
ANSWERS) | GUARANTEED PASS A+ [2026-2027]
Three questions that corporate finance focused on? - CORRECT ANSWER 1.
capital budgeting
2. capital structure
3. working capital management
QUESTION :capital budgeting - CORRECT ANSWER what should we invest
in long-term?
QUESTION :capital structure - CORRECT ANSWER how do we finance those
investments?
QUESTION :working capital structure - CORRECT ANSWER how do we
manage the day-to-day operation
of the firm?
QUESTION :Forms of business organization - CORRECT ANSWER sole
proprietorship, partnership, corporation
2026 2027 GRADED A+
,2|Page
QUESTION :sole proprietorship - CORRECT ANSWER one single person-->
high risk, high reward, unlimited liability, easy to start-up, taxed as personal
income, difficult to transfer ownership corpo
QUESTION :partnership - CORRECT ANSWER -general: run the business,
making decisions, and accepting more risk, easy to startup, taxed as personal
income
-limited: there for money and investing, limited liability, life limited of that of
owners, equity limited to combined wealth, difficulty transferring ownership
QUESTION :corporation - CORRECT ANSWER a business created as a
distinct legal entity composed of one or more individual entities
-separation of ownership and control
-shareholders: anyone who owns stock in company
-directors: voted on by shareholders (proxy vote), ultimate oversight
-managers: run the company
QUESTION :What is the goal of financial management? - CORRECT ANSWER
*maximize shareholder wealth*
QUESTION :Agency problem/conflict - CORRECT ANSWER The possibility
of conflict of interest between the stockholders (the principal) and management
(the agent) of a firm
QUESTION :Financial markets and the corporation - CORRECT ANSWER
firm: invest in assets, current and fixed
financial markets: short and long term debt, equity shares
-ultimately the firm must be a cash generating activity
2026 2027 GRADED A+
,3|Page
-cash flows from the firm must exceed the cash flows from the financial markets
QUESTION :The balance sheet - CORRECT ANSWER -snapshot of the
company at a point in time
-assets= liabilities + stockholders equity
QUESTION :The income statement - CORRECT ANSWER -performance of a
company over a period of time
-revenues - expenses= income
-the bottom line: net income or EPS (earnings per share)
QUESTION :The statement of cash flows - CORRECT ANSWER operating,
investing, financing activities
QUESTION :operating activities - CORRECT ANSWER includes cash
receipts and cash payments for transactions relating to revenue and expense
activities
QUESTION :investing activites - CORRECT ANSWER Includes cash
transactions involving the purchase and sale of long-term assets and current
investments
QUESTION :financing activites - CORRECT ANSWER borrowing or paying
back money to lenders and receiving additional funds from stockholders or
paying them dividends
QUESTION :average tax rate - CORRECT ANSWER total tax divided by
taxable income
2026 2027 GRADED A+
, 4|Page
QUESTION :marginal tax rate - CORRECT ANSWER tax rate paid based on
next dollar of income
QUESTION :Is depreciation a cash flow? - CORRECT ANSWER no
QUESTION :Is net income a cash flow? - CORRECT ANSWER no
QUESTION :Are financial statements forward or backward looking? - CORRECT
ANSWER backward
QUESTION :Does the balance sheet show book values or market values? -
CORRECT ANSWER book values
QUESTION :Ratio analysis - CORRECT ANSWER -short term solvency or
liquidity, ratios: ability to pay off
-long-term solvency ratios: financial leverage (debt)
-asset management or turnover, ratios: how efficiently are we using our assets
-profitability ratios: accounting profit
-market value ratios: price per share of stock *put on sheet*
QUESTION :Diluted EPS - CORRECT ANSWER Net income - preferred
dividends / outstanding shares + diluted shares
2026 2027 GRADED A+
