The two key external factors that impact the firm’s cash flows are: A) the overall economy and future financing needs. B) the overall economy and the nature and structure of the industry. C) the level of interest rates and working capital requirements. D) working capital requirements and growth projections. ANSWER B
Date: September 19th, 2020
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
