We can interpret the optimal level of debt as the firm’s ________, or the highest amount the firm can borrow before the value of the firm begins to decline. A) equity capacity B) equity multiplier C) debt capacity D) interest tax shield ANSWER C
Date: September 19th, 2020
A firm has fixed operating costs of $150,000, total sales of $1,500,000, and total variable costs of $1,275,000. The firm’s operating breakeven point in dollars is ________. A) $150,000 B) $176,471 C) $1,000,000 D) $1,425,000 ANSWER D
Date: September 19th, 2020
A firm is considering whether to out source some aspects of the manufacturing of its products. Which one of the Six P’s of Operations is the firm addressing? A) Product quality B) Process C) Plant D) People ANSWER B
Date: September 19th, 2020
________ are the residual claimants of a firm’s cash flows. A) Preferred shareholders B) Common shareholders C) Bondholders D) Bankers ANSWER B
Date: September 19th, 2020
Most commercial paper is UNSECURED. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
One important principle that financial managers try to follow is to match short-term sources of funds with long-term uses of funds. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
In the United States, a corporation’s board of directors is elected by: A) bondholders only. B) bondholders and preferred stockholders C) bondholders, preferred stockholders, and common stockholders. D) common stockholders only. ANSWER D
Date: September 19th, 2020
________ describes a legal state whereby a firm cannot pay its creditors A) Capital distress B) Bankruptcy C) Liquification D) Capital structure ANSWER B
Date: September 19th, 2020
Sizing up operation management involves: A) identifying the firm’s strengths and weaknesses related to operations. B) an external assessment of the industry. C) an internal assessment of the firm’s strengths and weaknesses. D) All of the above. ANSWER A
Date: September 19th, 2020
________ ensure that money lent under a line of credit agreement is actually being used to finance seasonal needs. A) Operating-change restrictions B) Annual cleanups C) Compensating balances D) Commitment fees ANSWER B
Date: September 19th, 2020
