Asymmetric information results when managers of a firm have more information about the firm’s operations and future prospects than investors have. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Most businesses fail because their ________ dries up. A) net working capital B) cash flow C) liabilities D) tax shield ANSWER Answer: B
Date: September 19th, 2020
A floating inventory lien is most attractive when the firm has a stable level of inventory that consists of a diversified group of relatively inexpensive merchandise. Indicate whether the statement is true or false ANSWER TRUE
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
A trust receipt inventory loan is an arrangement in which the lender receives control of the pledged inventory collateral, which is stored by a designated agent. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
