The four basic sources of long-term funds for a firm are ________. A) current liabilities, long-term debt, common stock, and preferred stock B) current liabilities, long-term debt, common stock, and retained earnings C) long-term debt, paid-in capital in excess of par, common stock, and retained earnings D) long-term debt, common stock, preferred stock, and retained […]
The legal contract setting forth the terms and provisions of a corporate bond is a(n) ________. A) indenture B) debenture C) loan document D) promissory note ANSWER A
Current ratio provides a firm’s ability to meet its long-term obligations. Indicate whether the statement is true or false ANSWER FALSE
Average age of inventory is viewed as the average length of time inventory is held by a firm or as the average number of days’ sales in inventory. Indicate whether the statement is true or false ANSWER TRUE
Which of the following is true of long-term funds? A) They provide an easy way to reduce financing costs because they are relatively cheaper than short-term funds. B) They are a type of investment fund which invests in money market investments of high quality and low risk. C) They are the sources that supply the […]
Which of the following is a source of long-term funds? A) commercial paper B) retained earnings C) factoring D) money market instruments ANSWER B
A debt instrument indicating that a corporation has borrowed a certain amount of money and promises to repay it in the future under clearly defined terms is called a(n) ________. A) common stock B) corporate bond C) indenture D) preferred stock ANSWER B
Average age of inventory can be calculated as inventory divided by 365. Indicate whether the statement is true or false ANSWER FALSE
A(n) ________ is a paid individual, corporation, or a commercial bank trust department that acts as a third party to a bond indenture. A) trustee B) investment banker C) bond issuer D) bond rating agency ANSWER A
In a bond indenture, the term “security interest” refers to collateral pledged against the bond. Indicate whether the statement is true or false ANSWER TRUE
