M-1 Finance

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

Capital structure

Which of the following statement about corporations is true?

Corporations can have an unlimited life

Which of the following questions is a working capital management decision

How much inventory should be on hand for immediate sale?

Which of the following actions by a financial manager is most to create an agency problem

Increasing current profits when doing so lowers the value of the company's equity

Which of the following statements concerning a sole proprietorship is correct?

The owner of a sole proprietorship is personally responsible for all of the company's debt

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

a capital structure decision

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

capital budgeting

A business created as a distinct legal entity and treated as a legal "person" is called a:

corporation

Which business form is best suited to raising large amounts of capital?

corporation

One disadvantage of the corporate form of business ownership is the

double taxation of distributed profits

A business formed by two or more individuals who each have unlimited liability for all the firm's business debt is called a

general partnership

Capital structure decisions include determining

how much debt should be assumed to fund a project

The growth of both sole proprietorships and partnerships is frequently limited by the firm's

inability to raise cash

A business partner whose potential financial loss in the partnership will not exceed his or her investment in that partnership is called a

limited partner

The Sarbanes-Oxley, Act of 2002 is a governmental response to

management greed and abuses

Financial managers should primarily focus on the interests of

shareholders

A business owned by a solitary individual who has unlimited liability for the firm's debt is called a

sole proprietorship

Corporate dividends are

taxable income of the recipient even though that income was previously taxed

An example of a capital budgeting decision is deciding

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

a firm's short-term assets and its short-term liabilities are referred to as the firm's

working capital