MBA 5333

Rank the ease (from easiest to hardest) of turning the following assets into cash.

1. cash equivalents 2. accounts receivable 3. inventory 4. plant and equipment

The controller is responsible for which of the following tasks?

Financial accounting and tax payments

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

Inability to raise cash

Book value of assets is generally

not what the assets are actually worth

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

- the life of a sole proprietorship is limited - owner is personally responsible for all of the company's debts - Easy to create

Which of the following is equal to an effective annual rate of 12.36 percent?

12%, compounded semiannually

Rock construction has current assets of 45 million, total liabilities and equity of 67 million, and sales of 59 million. How would current assets be expressed on a common-size balance sheet?

67%

Corporation

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

Sole Proprietorship

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

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

Capital Budgeting

The decision to issue additional shares of stock is an example of

Capital Structure decision

Net Working Capital (NWC)

Current Assets - Current Liabilities

Which of the following individuals have unlimited liability for a firm's debts based on their ownership interest?

General partner and sole proprietor

Which one of the following is an agency cost?

Hiring outside accounts to audit the company's financial statements

When evaluation the timing of a project's projected cash flows, a financial manager is analyzing

When each cash flow is expected to occur

balloon or bullet

a lump sum payment to pay off the balance of a partially amortized loan.

Which of the following is the simplest form of loan?

a pure discount loan

The cash flow identity states that cash flows from (blank) should equal cash flows from creditors and equity investors

assets

One disadvantage of the corporate form of business ownership is the

double taxation of distributed profits

In financial markets, debt and (blank) securities are bought and sold.

equity

A growing annuity has a(n)

finite number of growing cash flows

A perpetuity is a constant stream of cash flows for a(n) (blank) period of time.

infinite

The use of financial leverage can

- Increase the chance of financial distress and business failure - Greatly magnify both gains and losses - Increase the potential reward for investors

Financial statements are used to

- assess a company's current financial position - communicate financial information within the firm - communicate financial information to outsiders

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

Increase in the market value per share

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

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

Which on of the following grants an individual the right to vote on behalf of a shareholder?

Proxy

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

Should the firm pay cash for a purchase or use the credit offered by the supplier?

(blank) financial statements provide for comparison of firms that differ in size

Standardized

A limited liability company

Taxed similar to a partnership