Business Finance Exam 1

E

11. Cash flow to stockholders is defined as: A) the total amount of interest and dividends paid during the past year. B) the change in total equity over the past year. C) cash flow from assets plus the cash flow to creditors. D) operating cash flow minus the cash flow to creditors. E) dividend payments less net new equity raised.

A

A positive cash flow to stockholders indicates which one of the following with certainty? A) The dividends paid exceeded the net new equity raised. B) The amount of the sale of common stock exceeded the amount of dividends paid. C) No dividends were distributed, but new shares of stock were sold. D) Both the cash flow to assets and the cash flow to creditors must be negative. E) Both the cash flow to assets and the cash flow to creditors must be positive.

working capital management

How do we manage the day-to-day finances of the firm?

B

Net capital spending: A) is equal to ending net fixed assets minus beginning net fixed assets. B) is equal to zero if the decrease in the net fixed assets is equal to the depreciation expense. C) reflects the net changes in total assets over a stated period of time. D) is equivalent to the cash flow from assets minus the operating cash flow minus the change in net working capital. E) is equal to the net change in the current accounts.

cash flow from assets

The cash flow of a firm that is available for distribution to a firm's creditors and shareholders is known as:

CFO

The top financial manager within a firm is usually the

capital budgeting

What long-term investments or projects should the business take on?

payment of government taxes and dividends

Which of the following represent cash outflows from a corporation?

B

Which one of the following is classified as a tangible fixed asset? A) Accounts receivable B) Production equipment C) Cash D) Patent E) Inventory

C

Which one of the following statements related to the cash flow to creditors must be correct? A) If the cash flow to creditors is positive, then the firm must have borrowed more money than it repaid. B) If the cash flow to creditors is negative, then the firm must have a negative cash flow from assets. C) A positive cash flow to creditors represents a net cash outflow from the firm. D) A positive cash flow to creditors means that a firm has increased its long-term debt. E) If the cash flow to creditors is zero, then a firm has no long-term debt.

capital structure

Which one of the following terms is defined as the mixture of the firm's debt and equity financiang?

investment

includes changes in fixed assets - kind of activity

financing

includes changes in notes payable, long-term debt, and equity accounts, as well as dividends - type of activity

operating activity

includes net income and changes in most current accounts - kind of activity

treasurer

oversees cash management, credit management, capital expenditures, and financial planning

controller

oversees taxes, cost accounting, financial accounting and data processing