Which of the following is a basic source of capital for a firm? A) short-term debt B) discounts from suppliers C) current liabilities D) common stock ANSWER D
Date: September 19th, 2020
A decrease in fixed financial costs will result in a(n)________. A) increase in financial risk B) decrease in financial risk C) increase in operating leverage D) decrease in operating leverage ANSWER B
Date: September 19th, 2020
A financial manager examines concepts such as sunk costs, opportunity costs, and erosion costs to help understand how to estimate the incremental cash flow of a project, which is ________. A) the extra money the firm pays from taking on more inventory B) the additional money the firm receives from taking on a new project […]
Date: September 19th, 2020
Which of the following is true of current assets? A) The time of conversion of current assets to more liquid form is relatively unpredictable. B) They are used to fund long-term operations and pay long-term expenses. C) They are more profitable because they add more value to the product than that provided by fixed assets. […]
Date: September 19th, 2020
The building of the ________ cash flow of a project is the cornerstone of the financial decision models. A) depreciation B) incremental C) accounting D) tax ANSWER Answer: B
Date: September 19th, 2020
The _ hypothesis posits that a firm may choose low leverage as a competitive strategy to squeeze other, more highly levered, firms out of its industry. a. having a long-purse b. strategic capital structure c. competitive leverage d. leverage aggressiveness ANSWER A
Date: September 19th, 2020
In a theoretical paper, Williams (1995) develops a model of industry equilibrium that incorporates agency costs due to both creditor-shareholder and management-shareholder conflicts. His model has implications for the distribution of firms within an industry in equilibrium. Which of the following statements correctly describes Williams’ depiction of industry equilibrium? a. Each industry has a core […]
Date: September 19th, 2020
In general, the more net working capital a firm has, ________. A) the greater its risk B) the lower its risk C) the less likely are creditors to lend to the firm D) the lower its level of long-term funds ANSWER B
Date: September 19th, 2020
Current liabilities can be viewed as ________. A) debts that mature in a period of one year or less B) liabilities which represent a firm’s long-term financing C) sources of cash inflows from the operating activities of a firm D) funds used to finance the noncurrent assets’ portion of a firm ANSWER A
Date: September 19th, 2020
Cash flow at disposal of an asset can be calculated as the disposal value plus the ________ on the loss. A) alternative minimum tax B) statutory tax C) tax shield D) tax credit ANSWER Answer: D
Date: September 19th, 2020
