FNAN 300 Exam 1 PRACTICE PROBLEMS

Which one of the following entities is considered a legal "person"?

corporation

The primary goal of corporate financial management is to maximize the:

current value per share of the existing stock.

Which one of the following functions is generally under the control of the corporate treasurer?

financial planning

A limited partner:

has minimal control, if any, over the daily operations of the partnership.

Which of the following accounts represent key differences between a firm's net income and its operating cash flow?

interest expense and depreciation

Blooming Gardens has an inventory turnover of 16. This means the firm:

sells its inventory an average of 16 times each year.

Who has the ultimate control over a corporation?

shareholders

Which one of the following provides you with the greatest control over a firm's daily operations?

sole proprietor

Which one of the following forms of management compensation best addresses the agency problem?

stock options

Which one of the following best describes the liability a general partner has for the partnership debts?

unlimited

The decision concerning the types and amounts of items to be held in inventory is a _____ decision.

working capital management

If a firm has a 100 percent dividend payout ratio, then the internal growth rate of the firm is:

zero percent.

Which one of the following is a measure of long-term solvency?

Equity multiplier

Which one of the following is the maximum growth rate that a firm can achieve without any additional external financing?

Internal growth rate

Which one of the following is a capital structure decision?

Should debt or equity financing be used to purchase a building?