econ of corp finance homework problems

When preparing pro forma statements, which one of the following is an analyst most likely to estimate first?

Projected sales

Which one of the following is a primary market transaction?

Sale of a new share of stock from a corporation to an individual investor

Cash flow to stockholders is defined as:

dividend payments less net new equity raised.

Ivan's, Incorporated, paid $478 in dividends and $584 in interest this past year. Common stock increased by $194 and retained earnings decreased by $120. What is the net income for the year?

$358

Which one of the following is a source of cash?

Acquisition of debt

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

Which one of the following statements is generally correct?

Auction markets match buy and sell orders.

On a common-base year financial statement, inventory for the current year will be expressed relative to which one of the following?

Base-year inventory

Which form of business would be the best choice if it were necessary to raise large amounts of capital?

Corporation

Which one of the following statements regarding corporations is correct?

Corporations can have an unlimited life.

Which one of the following is a source of cash for a tax-exempt firm?

Increase in common stock

Public offerings of debt and equity must be registered with the:

Securities and Exchange Commission.

Which one of the following statements is correct concerning the NYSE?

The listing requirements for the NYSE are more stringent than those of Nasdaq.

The Natural Pet had sales of $763,500 in 2020, and $864,200 in 2021. The firm's current accounts remained constant. Given this information, which one of the following statements must be true?

The net working capital turnover rate increased.

Limited partners benefit from which of the primary advantages?

Their maximum loss cannot exceed the amount of their capital investment.

Deciding which long-term investment a firm should make is a ______ decision.

capital budgeting

A firm's mixture of debt and equity financing is the result of its ______ decisions.

capital structure

Determining the number of shares of stock to issue is an example of a ______ decision.

capital structure

A firm owned by two or more people who each have unlimited liability for all of the firm's debts is called a:

general partnership.

A limited liability company:

is taxed similarly to a partnership.

A firm's ______ is the firm's mix of short-term assets and short-term liabilities.

net working capital

Financial plans:

often contain alternative options based on economic developments.

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

operating cash flow.

A sole proprietorship:

requires the owner to be personally responsible for all of the company's debts.

Financial plans generally tend to ignore:

risks associated with cash flows.

If the tax rate is 21 percent in 2020. What is the average tax rate for a firm with taxable income of $122,013?

21.00%

Which of the following questions should be considered when developing a corporation's financial plan? I. How much net working capital will be needed? II. Will additional fixed assets be required? III. Will dividends be paid to shareholders? IV. How much new debt must be obtained?

I, II, III, and IV

Agency problems are most likely to be associated with:

corporations.

A firm's external financing need is met by:

debt and/or equity.

Hulsey Outdoor had a return on assets of 15 percent and a return on equity of 15 percent. Given this information, the firm:

has an equity multiplier of 1.0.

The maximum rate of growth a corporation can achieve can be increased by:

increasing the retention ratio.

A general partner:

is personally responsible for 100 percent of the debts of the partnership.

The financial planning method that uses the projected sales level as the basis for determining changes in balance sheet and income statement account values is referred to as the ______ method.

percentage of sales

If a firm equates its pro forma sales growth to the rate of sustainable growth, and has positive net income and excess capacity, then the:

retained earnings will increase.

Ultimately, the ______ control(s) the corporation.

shareholders

Financial managers should primarily focus on the interests of:

shareholders.

A firm owned by a single person who has unlimited liability for the firm's debt is called a:

sole proprietorship.