To address distress, any of the following changes in the focal firm’s board structure are consistent with theory EXCEPT: a. replacing insiders with outsiders. b. limiting the ability of the board to veto the CEO’s proposals. c. requiring directors to hold equity shares. d. limiting the tenure of directors e. ending the staggering of board […]
In the ABC system of inventory management, the ________ method could be utilized to control C items. A) basic economic order quantity B) materials requirement planning C) two-bin D) just-in-time ANSWER C
A popular extension of materials requirement planning is manufacturing resource planning II, which integrates data from numerous areas such as finance, accounting, marketing, engineering, and manufacturing using a sophisticated computer system. Indicate whether the statement is true or false ANSWER TRUE
Empirical evidence indicates that the majority of distressed public firms that do not remain public: a. file for Chapter 11 bankruptcy (reorganization). b. file for Chapter 7 bankruptcy (liquidation). c. are acquired. d. undergo a going-private transaction (i.e., a buyout). ANSWER C
Empirical evidence indicates that for distressed firms, higher pre-distress leverage increases the probability of operational actions (e.g., asset restructuring and employee layoffs) and financial actions (e.g., dividend cuts). This evidence is consistent with the: a. disciplinary role of debt. b. wasteful cuts hypothesis. c. managerial discretion hypothesis. d. leverage aggressiveness hypothesis. ANSWER A
In the ABC system of inventory management, the ________ method or system is appropriate for managing B items. A) basic economic order quantity B) materials requirement planning C) two-bin D) just-in-time ANSWER A
The objective for managing inventory is to ________. A) turn over inventory as quickly as possible without losing sales from stockouts B) improve the average collection period without affecting the sales C) make payment for the inventory as slowly as possible without losing suppliers D) reduce the time taken to process inventory into finished goods […]
The ________ is an inventory technique that takes into account various operating and financial costs to determine the order quantity for a specific inventory item. A) JIT system B) ABC system C) EOQ model D) LIFO model ANSWER C
In a(n) _, the parent of a multiple-subsidiary firm issues, via an IPO, equity shares for a particular subsidiary, though the parent usually keeps majority ownership of the shares, and thus control of the subsidiary. a. asset sale b. spin-off c. equity carve-out d. targeted stock issuance ANSWER C
TRUE or FALSE: Among publicly traded U.S. nonfinancial firms, most bankruptcy announcements are complete surprises to the market, as indicated by the fact that, for over 90% of such firms, their announcement-month market equity value (MEQ) is at least as high as their MEQ at month –12 relative to the announcement. a. TRUE b. FALSE […]
