Your personal balance sheet provides A) an estimate of your net worth at a point in time. B) an illustration of how your wealth has changed over time. C) a summary estimate of your expenses and income over the previous year. D) a pro forma budget for the coming year. ANSWER A
Its ability to raise capital by selling stock makes the corporation the best form of organization in terms of raising capital. Indicate whether the statement is true or false ANSWER TRUE
A pro forma balance sheet typically begins with the assets and then we estimate the liabilites and equity. Indicate whether the statement is true or false ANSWER TRUE
If the interest rate is positive, a six-year ordinary annuity of $500 per year must have a present value over $3,000. Indicate whether the statement is true or false ANSWER FALSE
In general, financial managers are concerned with which of the following? A) Creating economic wealth B) Making investment decisions that optimize economic value C) Making business decisions that optimize economic wealth D) All of the above ANSWER D
Which of the following best describes the role of financial managers? A) Maximization of the total market value of the firm’s common stock B) Profit maximization C) Risk minimization D) None of the above ANSWER A
Perils insured under Dwelling Property 1 (basic form) include which of the following? I. Earthquake II. Smoke A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: B
A firm’s ending equity equals the firms beginning equity less any change in long-term debt. Indicate whether the statement is true or false ANSWER FALSE
Siskiyou Corp. has cash of $75,000; short-term notes payable of $100,000; accounts receivables of $275,000; accounts payable of $135,000: inventories of $350,000; and accrued expenses of $75,000. What is the firm’s net working capital? A) $700,000 B) $175,000 C) $210,000 D) $390,000 ANSWER D
The current ratio of a firm would equal its quick ratio whenever A) the firm’s current ratio is equal to one. B) the firm’s inventory is equal to its current liabilities. C) the firm has no inventory. D) the firm’s inventory is equal to its other current assets. ANSWER C