The decision rule for the profitability index is that any project with ________ is an acceptable project. A) a ratio less than one B) a ratio greater than one C) a ratio greater than zero D) a ratio less than zero ANSWER B
Date: September 19th, 2020
For a capital project to be accepted, the ________ should exceed the ________. A) IRR; hurdle rate. B) NPV; hurdle rate C) MIRR; IRR D) MIRR; NPV ANSWER A
Date: September 19th, 2020
Generally, increases in leverage result in increased return and risk. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Self-liquidating loans are intended merely to carry a firm through seasonal peaks in financing needs that are due primarily to buildups of accounts receivable and inventory. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
________ are liabilities for services received for which payment has yet to be made. A) Notes payable B) Accruals C) Accounts payable D) Accounts receivable ANSWER B
Date: September 19th, 2020
Survey data indicates that the profitability index method of project evaluation is preferred to: A) NPV. B) IRR. C) MIRR. D) None of the above. ANSWER D
Date: September 19th, 2020
Information for the sizing-up process for publicly traded firms can be obtained from: A) the firm’s annual report. B) the firm’s 10-K report filed with the Securities & Exchange Commission. C) industry reports. D) All of the above. ANSWER D
Date: September 19th, 2020
The financial management framework focuses on which three areas of decision-making? A) Operating, investing, and profitability. B) Profitability, financing, and investing. C) Investing, financing, and operating. D) Operating, financing, and profitability. ANSWER C
Date: September 19th, 2020
Your firm decides to increase equity by $1,000,000. Which of the following sets of transactions could NOT be appropriate ledger entries? A) Increase equity by $1,000,000 and increase long-term assets by $1,000,000 B) Increase equity by $1,000,000, decrease long-term debt by $500,000, and increase inventory by $500,000 C) Increase equity by $1,000,000 and increase inventory […]
Date: September 19th, 2020
Leverage results from the use of equity to magnify returns to a firm’s owners. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
