Finance quiz 1

limited partnership

A partnership with one or more general partners and one or more limited partners.

When a corporation is formed, it is granted which of the following rights. Choose all that apply

A.Legal power to enter into contracts B.Legal power to sue D.The ability to own stock in another corporation

If you hire a real estate company to sell your house, you are most apt to encounter which one of the following?

Agency problem

Which one of the following will increase the cash flow from assets, all else equal?

Decrease in the change in net working capital

Which one of these is a working capital management decision?

Determining the minimum level of cash to be kept in a checking account

Which one of these identifies the relationship between the return on assets and the return on equity?

DuPont identity

The higher the degree of financial leverage employed by a firm is, the:

Higher is the probability that the firm will encounter financial distress.

Which of the following questions are addressed by financial managers? I. How should a product be marketed? II. Should customers be given 30 or 45 days to pay for their credit purchases? III. Should the firm borrow more money? IV. Should the firm acquire new equipment?

II, III, IV

The growth of both sole proprietorships and partnerships is frequently limited by their:

Inability to raise cash.

Depreciation for a tax-paying firm:

Increases expenses and lowers taxes.

Which of the following are expenses for accounting purposes but are not for operating cash flow purposes?

Interest expense

Which of the following are advantages of the corporate form of business ownership?

Limited liability for firm debt III. Ability to raise capital .IV. Unlimited firm life.

Which one of the following best describes the primary advantage of being a limited partner instead of a general partner?

Maximum loss limited to the capital invested

NYSE

New York Stock Exchange •Organized auction market •Largest in the US

Which of the following represent cash outflows from a corporation

Payment of dividends and govt tax

Public offerings of debt and equity must be registered with which one of the following?

Securities and Exchange Commission

Which one of the following statements related to an income statement is correct?

Taxes reduce both net income and operating cash flow.

limited liablity company

The business (and not the owner) is liable for the company's debts

Which one of the following statements is correct concerning the NYSE?

The listing requirements for the NYSE are more stringent than those of NASDAQ

Net working capital may be a negative value.

Which one of the following statements concerning net working capital is correct?

A corporation receives cash from financial markets by selling ________ and _________.

bond and stocks

A business created as a distinct legal entity and treated as a legal "person" is called a

corporation

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

dividends and debt payment

Which of the following individuals have unlimited liability based on their ownership interest?

general partnership and sole proprietor

A business without separate legal authority formed by two or more people is known as a _____.

partnership

A common-size income statement is an accounting statement that expresses all of a firm's expenses as a percentage of:

sales

Which one of the following parties has ultimate control of a corporation?

shareholders

A sole proprietor has _________ personal liability for all business debts and obligations.

unlimited

A positive cash flow to stockholders indicates which of the following with certainty?

A.The dividends paid exceeded the net equity raised.

Which of the following is (are) included in the market value of a firm but is (are) excluded from the firm's book value?

I. Value of management skills. III. Value of the firm's reputation. IV. Value of employee's experience

Expenses which do not directly affect cash flows

Noncash items refer to

Which of the following are cash flows from a corporation into the financial markets?

Repayment of long-term debt III. Payment of loan interest. IV. Payment of quarterly dividend.