The least frequently issued capital financial instruments listed herein are: A) preferred shares. B) common shares. C) bonds. D) In reality, these instruments are issued in similar magnitude. ANSWER A
A PEST analysis involves an analysis of which of these factors? A) Technological, societal, economic factors, and potential threats B) Societal, technological, political, and economic factors C) Strengths, threats, economic and political factors D) Strengths, threats, potential opportunities, and external environment factors ANSWER B
Breakeven analysis is used by a firm ________. A) to determine the level of operations necessary to cover all fixed operating costs B) to determine the least cost of producing goods and services C) to evaluate the profitability associated with various levels of sales D) to determine the demand of a product ANSWER […]
What are the Earnings after tax for the Equity and Debt firm? A) $240,000 B) $300,000 C) $560,000 D) $0 ANSWER C Explanation: C) EAT = EBT – Taxes Payable = $800,000 – $240,000 = $560,000.
Which of the following are the three basic ways of lending unsecured, short-term funds by commercial banks? A) mortgage-backed securities, T-bonds, and commercial paper B) single-payment note, lines of credit, and revolving credit agreements C) T-bills, municipal bonds, and commercial paper D) commercial paper, real estate bonds, and corporate bonds ANSWER B
A supplier to your firm offers credit terms of 2/15 net 45 however, your firm never takes advantage of the discount but instead always pays full price on day 45. Your finance intern claims that your firm would be better off borrowing money from an existing but little used line of credit at a current […]
In case of a manufacturing organization, which of the following is a variable cost that varies directly with the sales volume? A) interest cost B) dividend cost C) shipping cost D) rental cost ANSWER C
The major real-world benefit of debt is that interest payments are: A) made after tax considerations. B) a tax-deductible expense. C) always less than 10% of the firm’s profit. D) smaller than the dividend payments. ANSWER B
Bond covenants place some restrictions on the firm in such a way as to improve the odds that the bondholders will be repaid. Indicate whether the statement is true or false ANSWER TRUE
Empirical evidence suggests that retail firms such as Safeway have a shorter working capital gap than a heavy manufacturing firm such as Boeing. Indicate whether the statement is true or false ANSWER TRUE