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
If an asset’s disposal value is less than its ________, a loss on disposal occurs. A) original market value B) current book value C) initial cost or original book value D) current market value ANSWER Answer: B
Date: September 19th, 2020
If an asset’s ________ is greater than its current book value, a gain on disposal occurs. A) original book value B) amount of depreciation C) disposal value D) original market value ANSWER Answer: C
Date: September 19th, 2020
One examines concepts such as sunk costs, opportunity costs, and erosion costs to help understand how to estimate the incremental cash flow of a project. Indicate whether the statement is true or false. ANSWER Answer: TRUE
Date: September 19th, 2020
Net working capital is defined as ________. A) total assets minus total liabilities B) total liabilities minus total assets C) current liabilities minus current assets D) current assets minus current liabilities ANSWER D
Date: September 19th, 2020
Which of the following is true of net working capital? A) When current assets of a firm exceed its current liabilities,a firm is said to have negative net working capital. B) When current assets of a firm are less than its total assets,a firm is said to have positive net working capital. C) When current […]
Date: September 19th, 2020
