Finance Quiz

A sole proprietorship:

A business owned by one person, its profits taxed as personal income.

Which one of the following is an advantage of being a limited partner?

Losses limited to capital invested

capital spending

net spending on fixed assets

The potential conflict of interest between a firm's owners and its managers is referred to as which type of conflict?

Agency

current assets

Assets that companies expect to convert to cash or use up within one year or the operating cycle, whichever is longer.

Operating Cash Flow

EBIT + Depreciation - Taxes

Capital Structure

a firm's mix of debt and equity financing

The shareholders of Weil's Markets would benefit if the firm were to be acquired by Better Foods. However, Weil's board of directors rejects the acquisition offer. This is an example of:

agency conflict

fixed assets

assets that are relatively permanent, such as land, buildings, and equipment

Uptown Markets is financed with 45 percent debt and 55 percent equity. This mixture of debt and equity is referred to as the firm's:

capital structure.

Total Assets

current assets + fixed assets

Net Working Capital

current assets - current liabilities

An employee has a claim on the cash flows of Martin's Machines. This claim is defined as a claim by one of the firm's:

stakeholders.

Liquidity

the ease with which an asset can be converted into cash

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

working capital

Will and Bill will equally share in the decision making and in the business profits or losses. Which type of business did they create if they both have full personal liability for the firm's debts?

general partnership

Jamie is employed as a currency trader in the Japanese yen market. Her job falls into which one of the following areas of finance?

international finance

If you accept a job as a domestic security analyst for a brokerage firm, you are most likely working in which one of the following financial areas?

investments