Finance Terms - Ch 1

limited liability company

A business entity operated and taxed like a partnership, but with limited liability for the owners, is called a

agency problem

A conflict of interest between the stockholders and management of a firm is referred to as the

proportions of financing from current and long-term debt and equity

A firm's capital structure refers to the firm's

other than a stockholder or creditor who potentially has a financial interest in the firm

A stakeholder is any person or entity

different because of GAAP rules regarding the recognition of income

Accounting profits and cash flows are generally

investing in assets that generate cash in excess of their cost

Financial managers primarily create firm value by

create more cash flow than it uses

For a firm to create value it must:

unlimited; total

In a general partnership, the general partners have _____ liability and have _____ control over day-to-day operations

protect investors from corporate abuses

One intent of the Sarbanes Oxley Act of 2002 is to

the issuance of new securities

The Securities Act of 1933 focuses on

maximize the current value per share of the existing stock

The primary goal of financial management is to

capital budgeting

The process of planning and managing a firm's long-term assets is called

agreeing to expand the company at the expense of stockholders' value

Which one of the following actions by a financial manager creates an agency problem?

liability for firm debts is limited to the capital invested

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

deciding whether or not a new production facility should be built

Which one of the following is a capital budgeting decision?

pay raises based on length of service

Which one of the following is least apt to help convince managers to work in the best interest of the stockholders?

Sole proprietorships and partnerships are taxed in a similar fashion.

Which one of the following statements is correct?

inventory

Which one of these accounts is included in net working capital?

dividend payment

Which one of these is a cash outflow from a corporation?

The value of an investment by a firm depends on the size, the timing, and the risk of the investment's cash flows

Which one of these statements is correct?