Chapter 1

A current liability is defined as debt that must be repaid within which period of time?

1 year

Balance sheet shows a snapshot of the firms finances________

@ a single point in time

Why would it not make sense for a firm to set financial goals like "maximize profits" or "minimize costs"?

A sole focus on items like this may lead to ignoring what is in the stockholders' long-term best interests.

Cash flow sent from the financial market to the firm in forms of stock is used to invest in:

Assets

The left side of a balance sheet shows...

Assets

Equipment, warehouses, and machinery are examples of..

Fixed assets

A good financial decision will do which of the following?

Increase market value of shareholders' equity, Increase the value of the firm's existing stock

Which of the following, according to the textbook, are possible financial goals for a company?

Maximize profits, Minimize costs, survive

What happens when a firm creates value?

Shareholder's wealth increases

Shareholders' Equity

Total assets - total debt

The controller is responsible for:

accurate financial accounting

cash, accounts receivable, and inventory

current assets

The primary responsibility of financial managers is to increase the value of _______

current shares of stock

current liability

debt that must be paid within one year (accounts payable)

A bad financial decision is defined as a decision that ______ owners' equity.

decreases

some of the cash flow generated by a firm goes back to the financial markets in the form of

dividends and debt payments

Some of the cash flow generated by a firm goes back to the financial markets in the form of ______.

dividends and debt payments.

What determines when a sale is recorded for accounting purposes?

generally accepted accounting principles

Fixed Assets

last a long time, tangible and intangible

A ______ liability does not have to be paid within 1 year

long term

Corporate bonds are generally classified as:

long term debt

Assuming interest rates are positive, one dollar received today is worth ______ one dollar received next year.

more than

As the amount and timing of cash flows are not known with certainty, this means that investors carry a certain amount of _____, which firms should be aware of.

risk

Most investors have an aversion to :

risk

The primary responsibility of financial managers is to increase the value of______

the current shares of stock

The goal of financial management is to maximize the current value (per share) of the existing stock.

true