The payback method of capital budgeting does NOT incorporate opportunity costs. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Cash flows from assets will always be less than cash flows from financing due to dividends. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Which of the following adjustments net income is NOT correct if you want to calculate cash flow from operating activities? A) Add back depreciation B) Add increases in accounts payable C) Add increases in accounts receivable D) Deduct increases in inventory ANSWER C
Date: September 19th, 2020
Credit terms 2/10, net 30 means ________. A) a discount of 10% is granted if payments are done within 30 days B) a discount of 10% is granted if payments are done within 2 days, net 30 days available C) a discount of 2% is granted if payments are done within 10 days, net 30 […]
Date: September 19th, 2020
In an annual report, who writes the letter to shareholders and what purpose is served by the letter? What will be an ideal response? ANSWER The letter to shareholders is written by a firm’s chief executive officer or board chair and is usually fairly brief (a few pages). It describes how the firm […]
Date: September 19th, 2020
A stock split commonly increases the stock’s per share par value. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Paying a stock dividend ________. A) decreases the retained earnings account B) has no effect on the retained earnings account C) increases the retained earnings account D) reorganizes the income ANSWER B
Date: September 19th, 2020
By allowing partial year values, the payback method is implying that cash flows occur evenly throughout the year. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The single most important and desirable of aspect of the payback method is the fact that the maximum acceptable length of the payback period is arbitrary Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
If a firm gives up the cash discount on goods purchased on credit, the firm should pay the bill ________. A) as per its will B) on the last day of the discount date C) after the credit period D) on the last day of the credit period ANSWER D
Date: September 19th, 2020
