finance 318

Capital Budgeting

Tim has been promoted and is now in charge of all fixed asset purchases. In other words, Tim is in charge of:

Corporation

Todd and Cathy created a firm that is a separate legal entity and will share ownership of that firm on a 50-50 basis. Which type of entity did they create if they have no personal liability for the firm's debts?

Noncash Item

Which one of the following decreases net income but does not affect the operating cash flow of a firm that owes no taxes for the current year?

Internal Growth Rate

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

Marginal Tax Rate

Which one of the following is the tax rate that applies to the next dollar of taxable income that a firm earns?

Decrease in the tax rate

Which one of the following will increase the profit margin of a firm, all else constant

General Partnership

Will and Bill both enjoy sunshine, water, and surfboards. Thus, the two friends decided to create a business together renting surfboards, paddle boats, and inflatable devices in California. Will and Bill will equally share in the decision making and in the profits or losses. Which type of business did they create if they both have full personal liability for the firm's debts?

if changes are occurring in a firms mix of assets

A common-size balance sheet helps financial managers determine:

Has positive net working capital

A firm has a current ratio of 1.4 and a quick ratio of 0.9. Given this, you know for certain that the firm

Sole Proprietorship

Margie opened a used bookstore and is both the 100 percent owner and the store's manager. Which type of business entity does Margie own if she is personally liable for all the store's debts?

I, II, III, and IV

Maria is the sole proprietor of an antique store that she has operated at the same location for the past 16 years. The store rents the space in which it is located but does own all of the inventory and fixtures. The store has an outstanding loan with the local bank but no other debt obligations. There are no specific loan covenants or assets pledged as security for the loan. Due to a sudden and unexpected downturn in the economy, the store is unable to generate sufficient funds to pay the loan payments due to the bank. Which of the following options does the bank have to collect the money it is owed? I. Sell the inventory and use the cash raised to apply to the debt II. Sell the store fixtures and use the cash raised to apply to the debt III. Take funds from Maria's personal account at the bank to pay the store's debt IV. Sell any assets Maria personally owns and apply the proceeds to the store's debt

had to decrease

Over the past year, a firm decreased its current assets and increased its current liabilities. As a result, the firm's net working capital

Income Statement

The accounting statement that measures the revenues, expenses, and net income of a firm over a period of time is called the:

ability of a firm to pay the interest on its debt

The cash coverage ratio is used to evaluate the

Working Capital

The daily financial operations of a firm are primarily controlled by managing the

Agency

The potential conflict of interest between a firm's owners and its managers is referred to as which type of conflict?