Additional Paid in Capital on the balance sheet equals the amount paid by investors for the company’s common stock that exceeds the market price of the stock at the time of purchase. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
John invested $1,000 in a risky investment and Bill invested $1,000 in a less risky investment. One year later, Bill’s investment is worth $1,030. Which of the following statements is MOST correct? A) John’s investment must be worth more than $1,030 because of the risk-return trade-off, given that John’s investment was more risky. B) If […]
Date: September 19th, 2020
Operating return on assets is equal to the operating profit margin times total asset turnover. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The balance sheet equation is Total Assets = Total Revenues – Total Liabilities. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
In order to reduce agency problems, managers may be provided compensation that includes A) a fixed salary so managers’ pay is not at risk, allowing managers to focus on the company’s business. B) an option to buy the company’s stock. C) a bonus based on the level of profit achieved during the year. D) incentive […]
Date: September 19th, 2020
Financial intermediaries A) offer indirect securities. B) usually are underwriting syndicates. C) constitute the various secondary markets. D) include the national and regional stock exchange. ANSWER A
Date: September 19th, 2020
Total asset turnover is equal to accounts receivable turnover plus inventory turnover plus fixed asset turnover. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The accounting book value of an asset represents the historical cost of the asset rather than its current market value or replacement cost. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
All of the following contributed to recent financial crises EXCEPT A) Relying on the efficiency of financial markets. B) Focusing on earnings instead of cash flow. C) Focusing on the short run. D) Excessive risk taking due to underestimation of risk. ANSWER A
Date: September 19th, 2020
Financial ratios are useful for measuring performance because maximizing the return on equity for common shareholders is the primary goal of financial managers. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
