________ look at a firm’s ability to meet its long-term obligations, as well as its overall optimal use of debt. A) Leverage measures B) Profitability measures C) Liquidity measures D) Efficiency measures ANSWER A
Date: September 19th, 2020
The risk that can be eliminated through the practice of diversification is known as ________ risk. A) unsystematic B) systematic C) nondiversifiable D) speculative ANSWER A
Date: September 19th, 2020
The level of dividends a firm expects to pay is often directly related to how rapidly it expects to grow and expand its operations. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Earnings before interest and taxes: A) is the same as EBITDA. B) refers to the gross profit minus operating expenses minus interest. C) refers to gross profit minus operating expenses. D) Both A and C. ANSWER C
Date: September 19th, 2020
A firm’s age of accounts receivable: A) measures the average time between credit-based sales and the collection of payments for those sales. B) is likely to be greater for firms within the same industry with more generous credit terms. C) is in part a function of the type of industry in which the firm operates. […]
Date: September 19th, 2020
Which of the following is an accurate list of risky securities ranked from most risky to the least? A) speculative stocks, blue-chip stocks, government bonds, corporate bonds B) corporate bonds, speculative stocks, blue-chip stocks, government bonds C) government bonds, corporate bonds, blue-chip stocks, speculative stocks D) speculative stocks, blue-chip stocks, corporate bonds, government bonds […]
Date: September 19th, 2020
The author describes three interpretations of the cost of capital; one as a value driver, one from the investor’s view point, and one from the viewpoint of the entrepreneur. Explain these three different interpretations, provide an example of each, and confirm why each is an appropriate interpretation of the cost of capital. ANSWER […]
Date: September 19th, 2020
The market rewards firms that adopt a constant dividend payout policy rather than a fixed or increasing level of dividends through higher share prices. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
A firm that has an average age of accounts receivable that is significantly lower than the industry average: A) may have higher credit standards and offer credit to only the most highly qualified customers. B) may have credit terms that allow fewer days to pay before beginning to charge interest. C) may offer a larger […]
Date: September 19th, 2020
Which of the following statements is TRUE? A) The lower a firm’s debt-to-equity ratio, the LESS room it has to take on additional debt. B) More stable industries, such as utilities, tend to have LOWER debt-to-equity ratios. C) Leverage ratios focus on INCOME STATEMENT items. D) There is NO GENERAL BENCHMARK FOR LEVERAGE RATIOS, and […]
Date: September 19th, 2020
