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
The remaining book value when a project is terminated is the ________ minus accumulated depreciation over the life of the project. A) original cost B) ending cost C) salvage cost D) sunk cost ANSWER Answer: A
Date: September 19th, 2020
Economies of scale are present where the cost of producing each unit declines as the quantity of product produced increases. In this environment, large-scale firms have a cost advantage. Thus, economies of scale serve to _ the cost of entry into an industry. a. increase b. decrease ANSWER A
Date: September 19th, 2020
In this problem, we admit only one real-world factor in an otherwise ideal capital market. This real world factor is corporate taxation; specifically that interest payments on debt are deductible while dividend payments are not deductible. Suppose Delaware East, Inc has until now been an all-equity firm with a market value of $100 mn. Now, […]
Date: September 19th, 2020
The inexpensive nature of long-term debt in a firm’s capital structure is due to the fact that ________. A) the equity holders are the true owners of the firm B) equity capital has a fixed return C) interest payments are tax-deductible D) equity holders have a higher position in the priority of claims […]
Date: September 19th, 2020
An increase in current assets increases net working capital, thereby reducing the risk of insolvency. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The conversion of current assets ________. A) from cash to receivables to inventory provides the cash used to pay non-current liabilities B) from inventory to receivables to marketable securities provides the cash used to buy plant and equipment C) from inventory to receivables to cash provides the cash used to pay current liabilities D) from […]
Date: September 19th, 2020
A firm’s ________ is the mix of long-term debt and equity utilized by the firm, which may significantly affect its value by affecting return and risk. A) dividend policy B) capital budget C) capital structure D) working capital ANSWER C
Date: September 19th, 2020
Capacity surpluses result in (i) product prices and (ii) profit margins. (i) (ii) a. lower higher b. higher lower c. lower lower d. higher higher ANSWER C
Date: September 19th, 2020
