E. any person or entity other than a stockholder or creditor who potentially has a claim on the cash flows of a firm.

C. a person who initially founded a firm and currently has management control over that firm.

B. any person who has voting rights based on stock ownership of a corporation.

A. a person who owns shares of stock.

D. a creditor to whom a firm currently owes money.

Which one of the following is a capital budgeting decision?

B. deciding whether or not to purchase a new machine for the production line

C. deciding how to refinance a debt issue that is maturing

A. determining how many shares of stock to issue

E. determining how much money should be kept in the checking account

D. determining how much inventory to keep on hand

The average of a firm's cost of equity and aftertax cost of debt that is weighted based on the firm's capital structure is called the:

E. weighted average cost of capital

B. weighted capital gains rate.

A firm's cost of capital:

E. depends upon how the funds raised are going to be spent.

D. should be applied as the discount rate for any project considered by the firm.

A. will decrease as the risk level of the firm increases.

C. is independent of the firm's capital structure.

B. for a specific project is primarily dependent upon the source of the funds used for the project.

The weighted average cost of capital for a wholesaler:

C. is the return investors require on the total assets of the firm.

E. is unaffected by changes in corporate tax rates.

A. is equivalent to the aftertax cost of the firm's liabilities.

D. remains constant when the debt-equity ratio changes

B. should be used as the required return when analyzing a potential acquisition of a retail outlet.

A reverse stock split is defined as:

D. a decrease in the number of shares outstanding that does not affect owners' equity.

A. an increase in the number of shares outstanding that does not affect owners' equity.

B. a firm buying back existing shares of its stock on the open market.

C. a firm selling new shares of stock on the open market.

E. a decrease in both the number of shares outstanding and the price per share.

A firm's overall cost of equity is:

C. ignores the firm's risks when that cost is based on the dividend growth model.

B. increases as the unsystematic risk of the firm increases.

D. equals the risk-free rate plus the market risk premium.

A. tends to remain static for firms with increasing levels of risk.

E. equals the firm's pretax weighted average cost of capital.

The pre-tax cost of debt:

A. is based on the current yield to maturity of the firm's outstanding bonds.

B. is equal to the coupon rate on the latest bonds issued by a firm

C. is equivalent to the average current yield on all of a firm's outstanding bonds.

E. has to be estimated as it cannot be directly observed in the market

D. is based on the original yield to maturity on the latest bonds issued by a firm.

The capital structure weights used in computing the weighted average cost of capital:

B. are based on the market value of the firm's debt and equity securities.

A. are based on the book values of total debt and total equity

C. are computed using the book value of the long-term debt and the book value of equity.

D. remain constant over time unless the firm issues new securities.

E. are restricted to the firm's debt and common stock.

A stock repurchase program:

E. is essentially the same as a cash dividend program provided there are no taxes or other costs

A. requires all shareholders to sell a fraction of their shares.

B. is preferred over a high-dividend program only by tax-exempt shareholders.

C. decreases both the number of shares outstanding and the market price per share.

D. has no effect on a firm's financial statements.

Which one of the following is a capital structure decision?

D. determining how much debt should be assumed to fund a project

A. determining which one of two projects to accept

B. determining how to allocate investment funds to multiple projects

C. determining the amount of funds needed to finance customer purchases of a new product

E. determining how much inventory will be needed to support a project

The decision to issue additional shares of stock is an example of which one of the following?

B. net working capital decision

Which one of the following is a working capital management decision?

B. determining whether to pay cash for a purchase or use the credit offered by the supplier

A. determining the amount of equipment needed to complete a job

C. determining the amount of long-term debt required to complete a project

E. determining whether or not a project should be accepted

D. determining the number of shares of stock to issue to fund an acquisition

Which one of the following best describes the primary advantage of being a limited partner instead of a general partner?

E. maximum loss limited to the capital invested

B. active participation in the firm's activities

D. greater control over the business affairs of the partnership

Noncash items refer to:

D. expenses which do not directly affect cash flows.

B. inventory items purchased using credit.

C. the ownership of intangible assets such as patents.

E. sales which are made using store credit.

Cash flow to stockholders is defined as:

E. dividend payments less net new equity raised.

B. the change in total equity over the past year.

A. the total amount of interest and dividends paid during the past year.

C. cash flow from assets plus the cash flow to creditors.

D. operating cash flow minus the cash flow to creditors.

Which of the following are included in current liabilities? I. note payable to a supplier in eight months II. amount due from a customer next month III. account payable to a supplier that is due next week IV. loan payable to the bank in fourteen months

A. I and III only B. II and III only

Which one of the following statements concerning net working capital is correct?

D. A decrease in the cash balance may or may not decrease net working capital.

B. Net working capital must be a positive value.

A. Net working capital increases when inventory is purchased with cash.

C. Total assets must increase if net working capital increases.

E. Net working capital is the amount of cash a firm currently has available for spending.

Shareholders' equity:

E. represents the residual value of a firm.

C. decreases whenever new shares of stock are issued.

B. is equal to total assets plus total liabilities.

D. includes long-term debt, preferred stock, and common stock.

A. increases in value anytime total assets increases.

A. reduces both taxes and net income.

B. increases the net fixed assets as shown on the balance sheet.

C. reduces both the net fixed assets and the costs of a firm.

E. decreases net fixed assets, net income, and operating cash flows.

D. is a noncash expense which increases the net income.

Which one of the following statements related to an income statement is correct?

C. Net income is distributed to dividends and paid-in surplus.

A. Interest expense increases the amount of tax due.

B. Depreciation does not affect taxes since it is a non-cash expense.

C. Net income is distributed to dividends and paid-in surplus.

Which one of the following will increase the cash flow from assets, all else equal?

E. decrease in net capital spending

C. increase in the change in net working capital

A. decrease in cash flow to stockholders

D. decrease in cash flow to creditors

B. decrease in operating cash flow

Net capital spending:

B. is equal to zero if the decrease in the net fixed assets is equal to the depreciation expense

A. is equal to ending net fixed assets minus beginning net fixed assets.

C. reflects the net changes in total assets over a stated period of time.

D. is equivalent to the cash flow from assets minus the operating cash flow minus the change in net working capital

E. is equal to the net change in the current accounts.

Which one of the following statements related to the cash flow to creditors is correct?

C. A positive cash flow to creditors represents a net cash outflow from the firm.

E. If the cash flow to creditors is zero, then a firm has no long-term debt.

A. If the cash flow to creditors is positive then the firm must have borrowed more money than it repaid

B. If the cash flow to creditors is negative then the firm must have a negative cash flow from assets.

D. A positive cash flow to creditors means that a firm has increased its long-term debt

Which one of the following will increase the value of a firm's net working capital?

E. selling inventory at a profit

A. using cash to pay a supplier

D. purchasing inventory on credit

C. collecting an accounts receivable

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which one of the following terms is defined as the management of a firm's long-term investments?

A. working capital management

B. financial allocation

C. agency cost analysis

D. capital budgeting

E. capital structure

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which one of the following terms is defined as the mixture of a firm's debt and equity financing?

A. working capital management

B. cash management

D. capital budgeting

C. cost analysis

E. capital structure

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A business owned by a solitary individual who has unlimited liability for its debt is called a:

C. general partnership.

E. limited liability company.

D. limited partnership.

B. sole proprietorship.

A. corporation.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A business formed by two or more individuals who each have unlimited liability for all of the firm's business
debts is called a:

A. corporation.

C. general partnership.

E. limited liability company.

B. sole proprietorship.

D. limited partnership.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which one of the following is defined as a firm's short-term assets and its short-term liabilities?

D. net capital

A. working capital

E. capital structure

B. debt

C. investment capital

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A business partner whose potential financial loss in the partnership will not exceed his or her investment in
that partnership is called a:

B. sole proprietor.

A. generally partner.

D. corporate shareholder.

E. zero partner.

C. limited partner.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A business created as a distinct legal entity and treated as a legal "person" is called a:

B. sole proprietorship.

D. limited partnership.

A. corporation.

E. unlimited liability company.

C. general partnership.

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Bài Quiz không có tiêu đề

Which one of the following terms is defined as the management of a firm's long-term investments?

Which one of the following terms is defined as the mixture of a firm's debt and equity financing?

A business owned by a solitary individual who has unlimited liability for its debt is called a:

A business formed by two or more individuals who each have unlimited liability for all of the firm's businessdebts is called a:

Which one of the following is defined as a firm's short-term assets and its short-term liabilities?

A business partner whose potential financial loss in the partnership will not exceed his or her investment inthat partnership is called a:

A business created as a distinct legal entity and treated as a legal "person" is called a:

A stakeholder is:

Which one of the following is a capital budgeting decision?

The average of a firm's cost of equity and aftertax cost of debt that is weighted based on the firm's capitalstructure is called the:

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A business formed by two or more individuals who each have unlimited liability for all of the firm's business
debts is called a:

A business partner whose potential financial loss in the partnership will not exceed his or her investment in
that partnership is called a:

The average of a firm's cost of equity and aftertax cost of debt that is weighted based on the firm's capital
structure is called the: