The ability to identify the key industry drivers of success is a fundamental concept that a nonfinancial manager should understand in order to: A) better assess the current environment in which the firm operates. B) better assess future financing requirements. C) better understand the role of capital markets in raising long-term funds. D) better measure […]
A cash budget is often more valuable as a LONG-term rather than a SHORT-TERM financial forecasting vehicle. Indicate whether the statement is true or false ANSWER FALSE
Which of the following forms is used to insure buildings that are under construction? A) builders risk coverage form B) floor plan coverage form C) new construction coverage form D) labor and materials coverage form ANSWER Answer: A
Limited partnerships are not as prevalent as corporations because A) it is easier to transfer ownership by selling common stock than it is to sell partnership. B) limited partnerships have the disadvantage of double taxation. C) limited partners can lose up to three times the amount they invested in the partnership if the business goes […]
Creative Industries Inc is looking to finance a new project with either debt or equity. The firm anticipates that its breakeven EPS-EBIT point is when EBIT reaches $3,000,000. If the projected EBIT are $3,500,000 for the foreseeable future, then to maximize EPS the firm should issue: A) equity. B) debt C) preferred shares. D) a […]
Based on the information in Table 4-1, the total asset turnover ratio is A) 1.41. B) 1.11. C) 2.33. D) 4.45. ANSWER B
Juanita has the following three ratios: 1. debt service coverage = 2.5, 2. debt ratio = 0.5, and 3 . liquidity ratio = 0.8. We can say that Juanita has A) poor solvency and poor liquidity. B) strong solvency and strong liquidity. C) strong liquidity but poor solvency. D) strong solvency but poor liquidity. […]
You can buy a $50 savings bond today for $25 and redeem the bond in 10 years for its full face value of $50. You could also put your money in a money-market account that pays 7% interest per year. Which option is better, assuming they are of equal risk? A) The money-market account is […]
Unique security risk can be eliminated from an investor’s portfolio through diversification. Indicate whether the statement is true or false ANSWER TRUE
Which of the following types of forms is used to insure fluctuations in business personal property, such as inventory and finished goods? A) accounts receivable coverage form B) a value reporting form C) difference in conditions insurance D) business income insurance ANSWER Answer: B
