Bandamere Lighting Inc. uses the sales forecast to plan production. The company produces the magnetic light bulb called “Bright-1” one month in advance of the forecasted sale. The January sales forecast of 38 units of these bulbs will be scheduled for December production. However, the company also notes that sales forecasts and actual sales can […]
According to the traditional approach to capital structure, the value of a firm will be maximized when ________. A) the financial leverage is maximized B) the cost of debt is minimized C) the weighted average cost of capital is minimized D) the dividend payout is maximized ANSWER C
It is ________ of cash flow that is important to the financial manager. A) the timing and amount B) just the timing C) just the amount D) None of the above ANSWER Answer: A
Tryst Energy Inc has an average age of inventory of 65 days, an average collection period of 60 days and an average payment period of 65 days. The firm’s total annual outlays for operating cycle investments are $3.65 million. Assuming a 365-day year, how much financing is required to support its cash conversion cycle? A) […]
In 1982, the SEC adopted Rule 415, also known as the _ rule, which allows qualifying firms to register a bond offering and then sell it either as a whole or piecemeal at any time over several years. a. delayed registration b. deferred registration c. shelf registration d. piecemeal registration ANSWER C
Cash disbursements (expenditures) are not closely tied to the sales forecast as the sales forecasts are not typically used for scheduling production. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Cash disbursements (expenditures) ARE CLOSELY tied to the sales forecast as the sales forecasts ARE TYPICALLY used for scheduling […]
The timing and the amount of cash flow is important to the financial manager and estimating these cash outflows is part of the ________ process A) income forecasting B) revenue forecasting C) cash forecasting D) cost forecasting ANSWER Answer: C
In the traditional approach to capital structure, as the amount of debt increases in a firm’s capital structure, ________. A) the cost of equity rises faster than the cost of debt B) the cost of debt rises faster than the cost of equity C) debt becomes less risky D) equity cost is unaffected […]
Products, but not services, need to be available to customers at the time customers need them. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Products AND SERVICES need to be available to customers at the time customers need them.
Underwriter generally places non-solicitation advertisements in the Wall Street Journal and/or other important newspapers notifying the public of the availability of an issue. These are called _____. a. tombstone ads b. headstone ads c. notifications of availability d. bond issue schedules ANSWER A
