chapter 1 FRL 300

Which one of the following best states the primary goal of financial management?

Maximize the current value per share

Which of the following accounts are included in working capital management

accounts payable, accounts receivable, and inventory

Which one of the following terms is defined as a conflict of interest between the corporate shareholders and the corporate managers?

agency problem

Which one of the following terms is defined as the management of a firm's long-term investments?

capital budgeting

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

capital structure

The decision to issue additional shares of stock is an example of which one of the following?

capital structure decision

Which one of the following is a capital budgeting decision?

deciding whether or not to purchase a new machine for the production line

Which one of the following is a capital structure decision?

determining how much debt should be assumed to fund a project

Which one of the following is a working capital management decision?

determining whether to pay cash for a purchase or use the credit offered by the supplier

Which of the following are advantages of the corporate form of business ownership?

limited liability for firm debt, ability to raise capital, unlimited firm life

Which one of the following best describes the primary advantage of being a limited partner instead of a general partner?

maximum loss limited to the capital invested

T/F? Both sole proprietorship and partnership income is taxed as individual income

true

T/F? Corporations can raise large amounts of capital generally easier than partnerships can.

true

Which one of the following is defined as a firm's short-term assets and its short-term liabilities?

working capital

Are corporations best suited to raising large amounts of capital?

yes

Which of the following should a financial manager consider when analyzing a capital budgeting project?

I. II III. IV. / project start up costs II. timing of all projected cash flows III. dependability of future cash flows IV. dollar amount of each projected cash flow