Finance Exam 1

Which one of the following is a working capital decision?

How much cash should the firm keep in reserve?

Beginning in 2011, the Dodd-Frank Wall Street Reform and Consumer Protection Act requires corporations with a market value over ________ to allow a nonbinding shareholder vote on executive pay.

$75,000,000

Which one of the following situations is most apt to create an agency conflict?

Basing management bonuses on the length of employment

Which one of the following has nearly the same meaning as free cash flow

Cash Flow from assets

Which one of the following is a graphical representation of the operating and cash cycles?

Cash flow Time Line

An auction market:

has a physical trading floor

Which one of the following statements related to securities dealers is correct?

Dealers buy and sell from their own inventory

Working capital management includes which one of the following?

Determining which customers will be granted credit

Which one of the following is a capital structure decision?

Establishing the preferred debt-equity level

Which statement related to a cash budget is correct?

Financially healthy firms can have a negative quarterly net cash inflow.

The T-shirt Hut successfully managed to reduce its general and administrative costs this year. This cost improvement will increase which of the following ratios?

I. Profit margin II. Return on assets IV. Return on equity

Which one of the following indicates that a firm has generated sufficient internal cash flow to finance its entire operations for the period?

Positive cash flow form assets

Accounts receivable financing is the term used to describe which one of the following types of loans that involve either the assignment or the factoring of a firm's accounts receivable?

Secured Short Term Loan

A firm is less apt to face financial distress if it adopts a flexible financial policy rather than a restrictive policy. (T/F)

True

Shareholders' equity is the residual value of a firm. (T/F)

True

mixture of debt and equity is referred to as the firm's:

capital structure

Jenna has been promoted and is now in charge of all external financing. In other words, she is in charge of:

capital structure management

The Sarbanes-Oxley Act of 2002 has:

essentially made officers of publicly traded firms personally responsible for the firm's financial statements. -Increase the protections against corporate fraud

An agency issue is most apt to develop when:

the control of a firm is separated from the firm's ownership.

Financial leverage:

the use of borrowed funds to increase the return on owners' equity

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

working capital

Theo's BBQ has $48,000 in current assets and $39,000 in current liabilities. Decisions related to these accounts as referred to as:

working capital management.