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MGT-181 Midterm 1 [UCSD Buchanan]
Questions with Correct Answers | Updated
(100% Correct Answers)
Capital Budgeting Answer: Process of planning and managing a
firm's long-term investments
Capital Structure Answer: The mixture of deb and equity maintained
by a firm
Working Capital Answer: A firm's short-Term assets and liabilities.
Sole Proprietor Answer: Owned by single individual
Partnership Answer: Owned by 2+ individuals
Corporation Answer: Distinct legal entity composed of one or more
individual or entities
Agency Problem Answer: The possibility of conflict of interest
between the stockholders and management of a firm.
Stakeholder Answer: Someone other than a stockholder or creditor
who potentially has a claim on the cash flows of the firm
Balance Sheet Answer: Financial statement showing a firm's
accounting value on a particular date.
© 2025 All rights reserved
, 2
Net Working Capital Answer: Current assets less current liabilities
Liquidity Answer: Refers to speed and easy with which an asset can
be converted to cash.
GAAP - Generally Accepted Accounting Principles Answer: The
common set of standards and procedures by which audited financial
statements are prepared.
Income Statement Answer: Financial statement summarizing a firm's
performance over a period of time
Noncash Items Answer: Expense charged against revenue that do
not directly affect cash flow, such as depreciation
Average Tax Rate Answer: Total Taxes divided by total taxable
income
Marginal Tax Rate Answer: Amount of tax payable on the next
dollar earned
Cash flow from assets Answer: The total cash flow to creditors and
cash flow to stockholders, consisting of the following: operating
cash flow, capital spending, and change in net working capital
Operating cash flow Answer: Cash generate from a firm's normal
business activities
Free Cash Flow Answer: Another name for cash flow from assets
© 2025 All rights reserved
MGT-181 Midterm 1 [UCSD Buchanan]
Questions with Correct Answers | Updated
(100% Correct Answers)
Capital Budgeting Answer: Process of planning and managing a
firm's long-term investments
Capital Structure Answer: The mixture of deb and equity maintained
by a firm
Working Capital Answer: A firm's short-Term assets and liabilities.
Sole Proprietor Answer: Owned by single individual
Partnership Answer: Owned by 2+ individuals
Corporation Answer: Distinct legal entity composed of one or more
individual or entities
Agency Problem Answer: The possibility of conflict of interest
between the stockholders and management of a firm.
Stakeholder Answer: Someone other than a stockholder or creditor
who potentially has a claim on the cash flows of the firm
Balance Sheet Answer: Financial statement showing a firm's
accounting value on a particular date.
© 2025 All rights reserved
, 2
Net Working Capital Answer: Current assets less current liabilities
Liquidity Answer: Refers to speed and easy with which an asset can
be converted to cash.
GAAP - Generally Accepted Accounting Principles Answer: The
common set of standards and procedures by which audited financial
statements are prepared.
Income Statement Answer: Financial statement summarizing a firm's
performance over a period of time
Noncash Items Answer: Expense charged against revenue that do
not directly affect cash flow, such as depreciation
Average Tax Rate Answer: Total Taxes divided by total taxable
income
Marginal Tax Rate Answer: Amount of tax payable on the next
dollar earned
Cash flow from assets Answer: The total cash flow to creditors and
cash flow to stockholders, consisting of the following: operating
cash flow, capital spending, and change in net working capital
Operating cash flow Answer: Cash generate from a firm's normal
business activities
Free Cash Flow Answer: Another name for cash flow from assets
© 2025 All rights reserved
