The sizing up of the industry involves: A) an external assessment of the industry. B) identifying the industry life cycle stage. C) the nature and intensity of the competition. D) All of the above. ANSWER D
Date: September 19th, 2020
Which of the following statements is NOT correct? Under conditions of perfect capital markets: A) investors do not pay taxes, but firms do. B) firms do not pay taxes, but investors do. C) capital structure matters because it can change the value of the firm. D) capital structure does not matter because it cannot change […]
Date: September 19th, 2020
An industry analysis is critical to better understand a firm’s financial position because: A) it provides insight into how the firm’s financial needs might change as industry conditions change. B) it helps identify the key risks and opportunities facing the firm. C) it provides better insight into how maximize the firm’s current financial position relative […]
Date: September 19th, 2020
________ place some restrictions on the firm in such a way as to improve the odds that the bondholders will be repaid. A) Bond ratings B) Bond covenants C) Bond rating agencies D) Bond exchanges ANSWER B
Date: September 19th, 2020
Tangshan Mining borrowed $10,000 for one year under a line of credit with a stated interest rate of 8 percent and a 10 percent compensating balance. Thus, the firm keeps a balance of about $800 in its checking account. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Lines of credit are guaranteed loans that specify the maximum 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
One of the limitations of breakeven analysis is its short-term time horizon. A large outlay in the current financial period could significantly raise the firm’s breakeven point, while the benefits may occur over a period of years. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
In M&M Proposition II the cost of equity changes with changes in the amount of debt financing. Which of the following is the correct formula for Proposition II? A) Ke = Ku + (Ku – Kd) / ( ) B) Ke = Ku + (Ku – Kd) ( ) C) Ke = Ku + (Ku […]
Date: September 19th, 2020
The ultimate goal of sizing up the industry is to: A) identify the industry life cycle. B) identify the key success factors that are necessary for the firm to successfully compete in the industry. C) monitor the nature and intensity of the competition. D) All of the above. ANSWER C
Date: September 19th, 2020
Laminates Inc has as age of inventory of 43 days, an age of receivables of 47 days and an age of payables of 61 days. Their closest competitor, Natural Inc, has comparable numbers of 51 days, 32 days and 55 days. Which of the following statements is TRUE? A) Laminates has the shorter and more […]
Date: September 19th, 2020
