Finance ch. 1-6

Quick Ratio

(Current Assets-Inventory)/Current Liabilities

Which one of the following best illustrates that the management of a firm is adhering to the goal of financial management?

An increase in the market value per share

Your aunt has promised to give you $5,000 when you graduate from college. You expect to graduate three years from now. If you speed up your plans to enable you to graduate two years from now, the present value of the promised gift will:

increase

A positive cash flow to stockholders indicates which one of the following with certainty?

The dividends paid exceeded the net new equity raised.

Which of the following actions would be most likely to decrease agency costs for the firm?

Reward high performing employees with shares of stock

Andrew just calculated the present value of $15,000 bonus he will receive next year. The interest rate he used in his calculation is referred to as the:

discount rate

Which one of the following will decrease the value of a firm's net working capital?

Donating inventory to charity

The cash flow that is available for distribution to a corporation's creditors and stockholders is called the:

Cash flow from assets

Net Working Capital (NWC)

Current Assets- Current Liabilities

The relationship between the return on assets and the return on equity is identified by the:

DuPont identity

An ordinary annuity is best defined as:

Equal payments paid at the end of regular intervals over a stated time period

Perpetuity is defined as:

Unending equal payments paid at equal time intervals

Eduardo sold 500 shares of Northcutt Corporation stock on the New York Stock Exchange. This transaction:

occurred in the secondary market

The cash flow that results from a company's ongoing, normal business activities is called

operating cash flow