Finance
Not an example of current assets
accounts receivable
Give 3 examples of current liabilities
accruals, accounts payable, notes payable
Which of the following financial instruments is not traded in the capital markets?
debt with a maturity of less than one year
The key role of the financial manager is
decision making
What best represents operating income?
earnings before interest and taxes
Generally indicates an IMPROVEMENT in a company's financial position, holding other things constant? the
equity multiplier decreases
Cross-sectional ratio analysis involves comparing the firm's ratios to those of firms in other industries at the same point in time. True or False?
false
Financial services are concerned with the duties of the financial manager. True or False?
false
Free cash flow is the amount of cash that if withdrawn would harm the firm's ability to operate and to produce future cash flows. True or False?
false
Primary markets are large and important, while secondary markets are smaller and less important. True or False?
false
The balance sheet is a statement which balances the firm's assets (what it owns) against its debt (what it has borrowed). True or False?
false
The more conservative a firm's management is, the higher its debt ratio is likely to be. True or False?
false
The operating margin measures operating income per dollar of assets? True or False?
false
The term IPO stands for "individual purchase order", as when an individual (as opposed to an institution) places an order to buy a stock. True or False ?
false
Career opportunities in financial services include all of the following EXCEPT
financial mgt
Operating profits are defined as
gross profits minus operating expenses
The ________ provides a financial summary of the firm's operating results during a specified period.
income statement
Financial management is about... The study of how people and businesses make
investment decisions and how to finance those decisions
To analyze the firm's financial performance, the following types of ratio analyses EXCEPT ________ may be used.
marginal analysis
Which of the following goals is in the best long-term interest of stockholders?
maximizing the market value of the existing shareholders common stock
Maximization of shareholder wealth as a goal is superior to accounting profit maximization because it considers the time value of the
money and accounting profits
The key activities of the financial manager include all of the following EXCEPT
record business transactions on financial statements
When a company pays a dividend on common stock, it appears as a
reduction in the amount of retained earnings
3 things included in operating income?
sales, cost of goods sold, operating expenses
Which of the following is NOT included in operating income?
taxes
Which of the following would indicate an IMPROVEMENT in a company's financial position, holding other things constant?
the debt ratio decreases
The market for short-term debt is known as
the money market
_______ involves comparison of current to past performance and the evaluation of developing trends.
trend analysis
Capital structure refers to the financing of long-term investments
true
Earnings per share represents amount earned during the period on each outstanding share of common stock. True or False?
true
Finance is concerned with the process institutions, markets, and instruments involved in the transfer of money among and between individuals, businesses and government. True or False?
true
Financial managers actively manage the financial affairs of many types of business-financial and non-financial, private and public, for-profit and not-for-profit. True or False?
true
Free cash flow (FCF) is, essentially, the cash flow that is available for interest and dividends after the company has made the investments in current and fixed assets that are necessary to sustain ongoing operations. True or False?
true
If a firm's assets turnover ratio is significantly higher than its industry average, this could indicate that it uses its assets very efficiently
true
If you decide to buy 100 shares of Google, you would probably do so by calling your broker and asking him or her to execute the trade for you. This would be defined as a secondary market transaction, not a primary market transaction. True or False?
true
In order to maximize its shareholders' value, a firm's management must attempt to maximize the stock price in the long run, or the stock's "intrinsic value". True or False?
true
Net fixed assets represent the difference between gross fixed assets and the total expense recorded for the depreciation over then entire lives of the firm's fixed assets. True or False?
true
Retained earnings represent the cumulative total of all earnings retained and reinvested in the firm since its inception? True or False?
true
Return on equity shows the combined effects of liquidity, asset management, and debt management on a firm's operating results. True or False?
true
The days sales outstanding tells us how long it takes, on average, to collect after a sale is made. The DSO can be compared with the firm's credit terms to get an idea of whether customers are paying on time. True or False?
true
The firm's creditors are primarily interested in the short-term liquidity of the company and its ability to make interest and principal payments. True or False?
true
The income statement is a financial summary of the firm's operating results during a specified period while the balance sheet is a summary statement of the firm's financial position at a given point in time. True or False?
true
The inventory turnover ratio and days sales outstanding (DSO) are two ratios that are used to assess how effectively a firm is managing its current assets. True or False?
true
Which of the following best describes a balance sheet? It reports the amount and composition of
assets and liabilities at a specified point in time
You observe that a firm's ROE is above the industry average, but its profit margin and equity multiplier are both below the industry average. It's total
assets turnover must be above the industry average
The area of finance that deals with long-term investment decisions is known as
capital budgeting
Total assets minus net fixed assets equals
current assets