Demand risk refers to: A) the probability that actual supply for the products or services will exceed anticipated supply. B) the probability that actual supply for the products or services will fall short of anticipated supply. C) the probability that actual demand for the products or services will exceed anticipated demand. D) the probability that […]
Whenever the percentage change in earnings before interest and taxes resulting from a given percentage change in sales is greater than the percentage change in sales, operating leverage exists. Indicate whether the statement is true or false ANSWER TRUE
Common shares are perpetual instruments, lasting as long as the firm itself lasts. Indicate whether the statement is true or false ANSWER TRUE
Marketing analysis involves all of the following EXCEPT: A) distinguishing between who buys the product and who consumes it. B) determining the channel through which the product or service is purchased. C) assessing the firm’s plant capacities. D) determining the unique features of the target market. ANSWER C
According to data presented by the author, corporate tax rates in the United States are among the lowest across major economies. Indicate whether the statement is true or false ANSWER FALSE
For firms that are able to raise funds through the sale of commercial paper, it is generally cheaper than borrowing from a commercial bank. Indicate whether the statement is true or false ANSWER TRUE
According to Modigliani and Miller (M&M), in a world of perfect capital markets, except that interest on debt is tax deductible, what will be the expected equity return (or cost of equity) for a firm that has a cost of capital of 14 percent, a cost of debt of 8 percent, a tax rate of […]
Global Logistics purchased a new machine on October 20th, 2014 for $1,000,000 on credit. The supplier has offered A&A terms of 2/10, net 45. The current interest rate the bank is offering is 16 percent. (a) Compute the cost of giving up cash discount. (b) Should the firm take or give up the cash discount? […]
The firm’s demand risk can best be analyzed by examining: A) the components of the firm’s marketing plan. B) the components of the firm’s marketing management compared with the key industry success factors. C) the key industry success factors and their impact on profitability. D) the behavior of the firm’s major competitors. ANSWER […]
Revolving credit agreements are ________. A) guaranteed loans that specify the maximum amount that a firm can owe the bank at any point in time B) non-guaranteed loans that specify the maximum amount that a firm can owe the bank at any one time C) credit arrangements made in cooperation with suppliers that allows a […]
