Other factors remaining constant, an increase in the average collection period will result in ________. A) an increase in the operating cycle B) an increase in the average payment period C) a decrease in the operating cycle D) a decrease in the average payment period ANSWER A
Date: September 19th, 2020
If the company has some fixed costs, as sales increase then a/an ________ of sales dollars flows to the bottom line if these costs are truly fixed and do not vary with production or sales. A) lower percentage B) higher percentage C) equal percentage D) much lower percentage ANSWER Answer: B
Date: September 19th, 2020
An aspect of short-term financial planning is forecasting operating cash flow and ultimately the profitability of the company in the coming period. This type of financial planning typically uses forecasted ________. A) earnings B) income statements C) working capital statements D) All of these ANSWER Answer: B Explanation: B) An aspect of short-term […]
Date: September 19th, 2020
An adjustment in the pro forma statement may be necessary for ________ expenses in line with known changes to these expenses that may not correspond directly with sales or production. A) cash B) credit C) selling, general, and administrative D) cash and credit ANSWER Answer: C
Date: September 19th, 2020
The basic shortcoming of EBIT-EPS analysis is that this model focuses on the maximization of stock returns rather than on the maximization of share price. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Suppose a venture requires $7 mn. in equity financing to move to the next stage of development. The firm’s management is negotiating with a venture capital firm (VC) for the funding. Assuming that the firm’s business goals are achieved, it will generate earnings of $21 mn. per year into perpetuity starting beginning on the harvest […]
Date: September 19th, 2020
A firm has an average age of inventory of 101 days, an average collection period of 49 days, and an average payment period of 60 days. The firm’s cash conversion cycle is ________ days. A) 150 B) 90 C) 109 D) 11 ANSWER B
Date: September 19th, 2020
If a firm attempts to call an outstanding convertible bond, the bondholders: a. have the preemptory right to convert the bonds into stock. b. must tender their bonds immediately and receive the call price. c. must challenge management’s decision to call the bonds via a proxy contest. d. have the option to keep their bonds […]
Date: September 19th, 2020
TRUE or FALSE. Yield spreads on new convertible bonds generally are negative. a. TRUE b. FALSE ANSWER A
Date: September 19th, 2020
A firm can reduce its cash conversion cycle by ________. A) increasing the average age of inventory B) increasing the average collection period C) increasing the operating cycle D) increasing the average payment period ANSWER D
Date: September 19th, 2020
