The three basic types of leverage are ________. A) operating, production, and financial B) operating, production, and total C) production, financial, and total D) operating, financial, and total ANSWER D
Date: September 19th, 2020
“The Holiday Store” is a retail firm that is only open in the weeks prior to major American holidays. The rest of the year the store is closed to the public for in-store and on line sales. The store is well-managed and manages to sell a very high percentage of its inventory each holiday season. […]
Date: September 19th, 2020
Which of the following is NOT considered to be a factor that affects the industry in which a firm operates? A) Technology B) Credit conditions C) Interest rates D) Regulations ANSWER B
Date: September 19th, 2020
Initial public offerings are more frequently issued during which stage of the industry life cycle? A) Stage 1 – start-up stage B) Stage 2 – rapid growth and little competition stage C) Stage 3 – intense competition stage D) Stage 4 – stabilization and maturity stage ANSWER B
Date: September 19th, 2020
Revolving credit agreements are non-guaranteed loans that specify the minimum amount that a firm can owe the bank at any point in time. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Flyover Airlines Inc. has a cost of equity equal to 24.67%. If the firm is financed with 40% debt and 60% equity and has an average cost of capital of 18%, what is the cost of debt? Assume perfect capital markets. A) 8.00% B) 6.67% C) 10.00% D) 12.33% ANSWER A Explanation: A) […]
Date: September 19th, 2020
Generally, increases in leverage result in ________ return and ________ risk. A) decreased; increased B) decreased; decreased C) increased; increased D) increased; decreased ANSWER C
Date: September 19th, 2020
An interesting fact about commerce in America is that we tend to see very few differences in the age of accounts receivable across industries. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The author presents evidence that recently Southwest Airlines had a negative working capital gap. Which of the following reasons is likely to be primarily responsible for this enviable situation. A) Southwest borrows a lot of money short-term thus keeping their borrowing costs low. B) Southwest receives payment from customers in advance of most flights. C) […]
Date: September 19th, 2020
Stage 1 of the industry life cycle is characterized by all of the following EXCEPT: A) there is little demand for the company’s products and services. B) the firm’s revenue is low but there are high prospects for growth. C) competition is fierce and profit margins begin to narrow. D) firms need a significant amount […]
Date: September 19th, 2020
