You have been provided financial statements for Bacon Signs. With this information you are able to calculate a number of financial ratios. However, financial ratios, while often very useful, alone are insufficient for a thorough financial analysis. Identify at least 5 types of useful financial information you would like to use in conjunction with the […]
Which of the following is NOT a source of cash from financing activities? A) Repayment of long-term debt B) Proceeds from issuance of common stock C) Proceeds for long-term borrowing D) Both A and C ANSWER A
Which of the following is likely to be a part of the firm’s annual report? A) The 10-K report B) A letter from senior management to the shareholders C) Footnotes to the financial statements D) All of the above ANSWER D
________ measures such as debt-to-capital along with coverage ratios focus on a firm’s ability to meet its long-term debt obligations, as well as its optimal use of debt. A) Liquidity B) Leverage C) Profitability D) Resource management ANSWER B
Freightway Trucking Inc uses the CAPM to help estimate their cost of equity. Given the following information, what is the firm’s estimated cost of equity? The risk-free return in the market is currently 3%, the market risk premium is 8%, the expected return on the market portfolio if 11% and the firm has a beta […]
The market risk premium represents the expected difference between: A) the return on AAA bonds and Treasury bonds. B) the prime rate and the 3-month Treasury bill rate. C) the return on the stock market and the return on preferred shares. D) the return on the stock market investment and the risk-free return. […]
The payment of a stock dividend is a shifting of funds between stockholders’ equity accounts rather than an outflow of funds. Indicate whether the statement is true or false ANSWER TRUE
What is the Internal Rate of Return (IRR) for the cash flows provided in the table below? Note: The negative cash flow for year 0 is the initial investment for the project. The required rate of return is 8%. Year Cash Flow 0 -$100,000 1 $45,000 2 $45,000 3 $45,000 A) 8.00% B) 9.70% C) […]
Accruals and accounts payable are ________. A) negotiated and secured sources of long-term financing B) negotiated and unsecured sources of short-term financing C) secured sources of short-term financing D) spontaneous and unsecured sources of short-term financing ANSWER D
Which of the following is NOT a use of cash from investing activities? A) Proceeds from the sale of a business B) Investment in fixed assets C) Payment of dividends D) Both A and C ANSWER D
