Which of the following actions could INCREASE a firm’s working capital gap? A) reduce the age of inventory B) increase the age of accounts payable C) increase the age of accounts receivable D) All actions listed would increase a firm’s working capital gap. ANSWER C
Date: September 19th, 2020
A firm has three independent projects under consideration each with a required rate of return of 10%/ The total projects budget is only $2,000. Project X has an initial investment of $2,000 and a single cash flow in year one of $2,360. Project Y has an initial investment of $1,000 and a single cash flow […]
Date: September 19th, 2020
Modigliani and Miller each won a Nobel prize in economics in at least in part because of their work with capital structure. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Generally in the short run, a county’s actual output of goods and services increases the same rate as the country’s capacity. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The contribution margin is defined as the percent of each sales dollar that remains after satisfying fixed operating costs. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
________ are financial creditors for the firm whereas ________ are the firm owners. A) Bankers; bondholders B) Bondholders; stockholders C) Stockholders; bondholders D) Stockholders; bankers ANSWER B
Date: September 19th, 2020
Which of the following definitions of working capital gap (WCG) is accurate? A) WCG = age of inventory – age of receivables – age of payables B) WCG = Age of receivables – age of inventory – age of payables C) WCG = age of payables – age of inventory – age of receivables D) […]
Date: September 19th, 2020
Modigliani and Miller (M&M) Proposition II states: A) the cost of equity does not change when a firm takes on a greater proportion of debt. B) the cost of equity increases when a firm takes on a greater proportion of debt. C) the cost of debt increases when a firm takes on a greater proportion […]
Date: September 19th, 2020
Operating-change restrictions gives the bank a right to revoke the line of credit if any major changes occur in a firm’s financial condition or operations. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Capital market conditions affect the timing of a new equity issue. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
