In general, non-U.S. companies have much higher debt ratios than their U.S. counterparts because financial markets are much more developed in the United States than elsewhere. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
All of the following were mentioned in the text as means by which the manager of a firm may decrease the his or her personal exposure to the firm’s risk (on a self-serving basis) EXCEPT: a. excessive corporate diversification b. bias toward investments with near-term payoffs c. securing his or her lifetime compensation with a […]
Date: September 19th, 2020
________ involve(s) a cash flow that never occurs, but we need to add it as a cost or outflow of a new project. A) Cost recovery of divested assets B) Capital expenditures C) Sunk costs D) Opportunity costs ANSWER Answer: D
Date: September 19th, 2020
________ cash flow is the increase in cash generated by a new project above the current cash flow without the new project. A) Future B) Current C) Discounted D) Incremental ANSWER Answer: D
Date: September 19th, 2020
________ are an accounting measure of performance during a specific period of time, while ________ is the actual inflow or outflow of money. A) Profits; cash flow B) Cash flows; profit C) Dividends; cash flow D) Profits; a dividend ANSWER Answer: A
Date: September 19th, 2020
Operating Cash Flow (OCF) = EBIT + Depreciation + Taxes. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Operating Cash Flow (OCF) = EBIT + Depreciation – Taxes
Date: September 19th, 2020
Business risk is the risk to the firm of being unable to cover required financial obligations. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
A firm can spend its reported profits. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: A firm can only spend cash. Profits are an accounting measure of performance during a specific period of time.
Date: September 19th, 2020
The revenue is $24,000, the cost of goods sold is $12,000, other expenses (from selling and administration) are $6,000, and depreciation is $2,000. What is the EBIT? A) $12,000 B) $6,000 C) $4,000 D) $2,000 ANSWER Answer: C Explanation: C) EBIT = Revenue – Cost of Goods Sold – Other Expenses – Depreciation […]
Date: September 19th, 2020
To get the operating cash flow, given the net income, we add back ________. A) cost of goods sold B) depreciation C) taxes D) EBIT ANSWER Answer: B
Date: September 19th, 2020
