When evaluating a new project, the firm should consider all of the following factors EXCEPT A) previous expenditures associated with a market testing. B) changes in working capital attributable to the project. C) the current market value of any equipment to be replaced. D) the resulting difference in depreciation expense if the project involves replacement. […]
Laurie wants to buy a used sports car. She is looking at three: (1 ) a 3-year old Porsche 911 Turbo Cabriolet; (2 ) a 4-year old Ferrari F430; or (3 ) a 4-year old Lamborghini Gallardo. The purchase price, annual operating costs and resale value for each car is given in the table, below. […]
Which of the following is not included in a cash flow statement? A) Labor productivity B) Interest earnings C) Cash flow from operations D) Depreciation expense E) The increase in long-term debt ANSWER A
Cash-2-Day currently trades for $13. Analysts regard it as fairly valued at its current price. The company has announced that it intends to spend $180 million on an open market repurchase. Management claims that the company’s shares are occasionally undervalued and that buying shares at undervalued prices represents a good investment. Assume that the company […]
The cash conversion cycle is found within the: A) Operating period B) Accounts payable period C) Average collection period D) Holding period ANSWER A
If a U.S. non-profit makes a large gift to an Israeli agency, how is it handled in the balance of payments? What will be an ideal response? ANSWER Answer: The gift is handled as an import of goodwill. If a domestic non-profit gives a gift to a foreign agency, the value of the […]
The collection period is: A) The time it takes to acquire and sell inventory B) The time from the sale of the product until funds are actually received C) The time creditors give to pay D) The time between ordering inventory and having a full inventory ANSWER B
In cross-sectional analysis, a firm’s financial ratios are A) judged against the performance of firms in the same industry. B) compared with the firm’s ratios from the most recent period. C) compared with ratios from all firms. D) compared with a general standard. E) plotted over time to isolate trends. ANSWER A
Equal annual annuities assume projects are renewable indefinitely. Indicate whether the statement is true or false ANSWER TRUE
What is the equation for the cash conversion cycle? A) Operating Period + Accounts Payable B) Operating Period × Accounts Payable C) Operating Period – Accounts Payable D) Operating Period / Accounts Payable ANSWER C
