QUESTION Which of the following, if true, strengthens the case that determining the return on owners’ equity ratio would be helpful to Matheson? A) Matheson wants to know how profitable its business is overall. B) Matheson wants to know how well it is performing for its stockholders. C) Matheson wants to know how efficiently it […]
QUESTION Santos’s executives are most interested in seeing the company’s liquidity ratios. Based on this information, what question do they most likely want to have answered? A) Can the company pay its short-term debts without obtaining further loans? B) Does the company have enough inventory to meet sales demands? C) How much inventory on hand […]
QUESTION There were no warning signs prior to the financial crisis of 2008. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: There were ample warning signs in 2006-2007 that a financial meltdown might be coming.
QUESTION Financial management is the job of acquiring funds for a firm and managing them to accomplish the firm’s objectives. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Financial management is the job of acquiring funds for a firm and managing them to accomplish the firm’s objectives. An important aspect […]
QUESTION The top financial manager in a firm often holds the title of chief financial officer (CFO). Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: The people responsible for planning and controlling the acquisition and uses of funds are called financial managers, and the top such manager in a firm […]
QUESTION Land is one example of a tangible asset. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Tangible assets are defined as land, buildings, and equipment.
QUESTION A financial plan always looks one year ahead. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: A financial plan may be as short as one month or as long as ten years.
QUESTION Cash flow forecasts are based on anticipated sales and on anticipated expenses. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Cash flow forecasts are predictions about how money will come in and go out of a firm in the near future. Such forecasts are based on anticipated sales and […]
QUESTION Operating budgets of production and sales are based on the sales budget. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: The other operating budgets indicate the labor, materials, and other costs required to produce that number of products and to sell them.
QUESTION Which of the following does Kershner assume? A) High revenues equate to a healthy income statement. B) Many factors must be taken into account to calculate the income statement. C) The company’s revenue next year will be as good as this year’s. D) Operating expenses have been relatively high this year. E) Net sales […]
