FIN 440 midterm

An estimation of an organization's worth according to the stock market is __________.

Market value

Which of the following is a picture or snapshot of the financial condition of an organization at a specific point in time?

Balance sheet

lists the primary activities undertaken by a unit to achieve its goals and allocate dollar amounts to each.

Expense budget

Which ratio measures how often an organization sells and replaces its inventory over a specified period of time?

Inventory turnover ratio

When calculating the nominal interest rate, which of the following premiums is added to account for the risk of time and interest rate risk?

Maturity risk premium

Which of the following forms of budgeting is preferred in sport as it begins with a floor of expenses while also using cost behavior and cost identification techniques?

Modified zero based budgeting

For this type of bond, the annualized interest rate on the bonds is reset at auctions held every 7 to 35 days.

Auction-rate bonds

In general, the changes of receiving back an investment in a large market Major League Baseball team is ______ that for a small market team.

Greater than

The __________ shows the organization's income over a specified period of time.

Income statement

Last year's budget is increased or decreased by a percentage using this method of budgeting (a form of line-item budgeting

Incremental budgeting

What is determined by comparing the risk of one asset to another?

Level of risk

If it is expected that it will be hard to sell a security, which of the following will be added?

Liquidity premium

The choices that individuals and organizations make regarding financial management are influenced by which of the following?

All three-a, b, and c-are correct Answers: Demand Scarcity Price

Risk increases as the length of time funds are invested increases. What is this known as?

. Risk of time

Calculate the differences in total taxes paid if a $10,000 profit (that is disbursed to the shareholders) is realized for an S corp versus a C corp. Assume a 20% personal tax rate and a 20% corporate tax rate. Insert the difference between total amount of tax from C corp and total amount of tax from S corp (i.e., # C corp - # S corp). *Hints: S-corp (flow through taxation to the shareholder) C-corp (double taxation) tax = profit * tax rate *Note for answer format: insert number only (e.g., 1000 or 6000). Selected Answer: 200Correct Answer: 1,600Answer range +/-0 (1600 - 1600 )

1600

When the citizens of Hamilton County, Ohio, decided to raise their taxes to fund two new sports stadiums rather than to raise taxes for something like improving the educational system in the county, they missed a chance to improve the educational system. What is this known as?

An opportunity cost

The major disadvantages of forming a business under a _____ structure is that there is double taxation of profits, and the cost of forming the business and operating the business is higher than other structures.

C corporations

Which of the following budgets allows management to forecast future requirements related to property, facilities, and major equipment?

Capital expenditure budget

forecasts how much cash the organization will have on hand and how much it will need to meet expenses.

Cash budget

Which ratio is an indication of whether an organization can meet its current liabilities―those due within a year―with its current assets?

Current ratio

Which ratio measures how an organization finances its operation with debt and equity?

Debt ratio

When using zero-based budgeting, each part of the organization in which budget decisions are made is referred to as a __________.

Decision unit

Which of the following is the depreciation method that is most aggressive at allocating loss of useful life to the early years of the asset's use?

Double-declining balance

Which of the following is a profitability ratio that measures the percentage of an organization's total sales or revenues that was net profit or income?

Net profit margin

Which of the following was the first major professional sports team to declare bankruptch in the middle of a long-term facility lease?

Phoenix Coyotes

Which of the following is an estimate of how much money investors will pay for each dollar of the organization's earnings?

Price-to-earnings ratio

What is the interest rate that banks charge their best customers?

Prime rate

This budgeting system is associated with output budgeting in which specific goals and objectives form the framework for a strategic, goal oriented budgeting process.

Program planning budgeting systems

Which of the following measures the return rate an organization's owners or shareholders are receiving on their investments?

Return on equity

is a forecast because it is based on projecting future sales.

Revenue budget

Which of the following is the rate of return required over and above the risk-free-rate?

Risk premium

One source of risk is current economic conditions. Of the following, which is impacted by changes in current economic conditions?

a, b, and c are all impacted Answers:a. Capital finance b. Operating budgets c. League load pools

When sport leagues do not expand into a market that can support a franchise, or when they create rules to limit the movement of existing franchises, which of the following economic concepts is being applied?

Scarcity

he vast majority of for-profit businesses in the United States operate as which of the following?

Sole proprietorships

Which financial statement tracks cash in and cash out of an organization over a specified period of time?

Statement of cash flows

Which of the following methods of depreciation attempts to take the non-linear loss of a fixed asset's value into account with depreciation occurring late after purchase. Using this method, the denominator for a fixed asset with a useful life of five years is 15.

Sum-of-years digits, accelerating depreciation

Which of the following methods of depreciation attempts to take the non-linear loss of a fixed asset's value into account, with depreciation occurring quickly after purchase. Using this method, the denominator for a fixed asset with a useful life of five years is 15.

Sum-of-years digits, decelerating depreciation

Of the following, which is not an advantage of incremental budgeting?

The approach encourages managers to spend up to the budget to ensure that the budget is maintained the following year.

Which of the following is the nominal or quoted risk-free rate of interest?

The real-risk free rate plus an inflation premium b. The real-risk free rate plus a default risk premium c. The real-risk free rate plus a liquidity premium d. The real-risk free rate plus a maturity risk premium e. None of the above***

This budgeting system requires starting the budgeting process with a zero base.

Zero based budgeting