Business finance

Capital budgeting includes the evaluation of which of the following? Size and timing of future cash flows only Size of future cash flows only Risk and size of future cash flows only Timing and risk of future cash flows only Size, timing, and risk of future cash flows

Size, timing, and risk of future cash flows

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

agency

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: a working capital decision. a capital structure issue. an agency conflict. a corporate takeover. a compensation issue.

an agency conflict

Jenna has been promoted and is now in charge of all external financing. In other words, she is in charge of: capital structure management. working capital management. asset allocation. risk management. capital budgeting.

capital structure management

The goal of financial management is to increase the: number of shares outstanding. future value of the firm's total equity. book value of equity. current market value per share. dividends paid per share.

current market value per share

An agency issue is most apt to develop when: the control of a firm is separated from the firm's ownership. a firm encounters a period of stagnant growth. a firm downsizes. a firm is structured as a general partnership. the firm's owner is also its key manager.

the control of a firm is separated from the firm's ownership.

The primary goal of financial management is to maximize: revenue growth. current dividends. market share. current profits. the market value of existing stock.

the market value of existing stock

Working capital management includes which one of the following? Determining how many new shares of stock should be issued Deciding which new projects to accept Establishing the target debt-equity ratio Deciding whether to purchase a new machine or fix a currently owned machine Determining which customers will be granted credit

Determining which customers will be granted credit

Theo's BBQ has $48,000 in current assets and $39,000 in current liabilities. Decisions related to these accounts as referred to as: fixed account structure. capital structure decisions. working capital management. capital budgeting decisions. operating management.

Working capital management

Probably the least effective means of aligning management goals with shareholder interests is: the threat of a takeover of the firm. automatically increasing management salaries on an annual basis. basing all management bonuses on performance goals. holding management salaries steady while increasing stock option grants. the potential for a proxy fight by an unhappy segment of shareholders.

automatically increasing management salaries on an annual basis

Which one of the following situations is most apt to create an agency conflict? Giving all employees a bonus if a certain level of efficiency is maintained Compensating a manager based on his or her division's net income Laying off employees during a slack period Basing management bonuses on the length of employment Hiring an independent consultant to study the operating efficiency of the firm

Basing management bonuses on the length of employment

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: asset allocation. risk structure. capital budget. working capital. capital structure.

Capital structure

Which one of the following is most apt to align management's priorities with shareholders' interests? Holding corporate and shareholder meetings at high-end resort-type locations preferred by managers Allowing employees to retire early with full retirement benefits Increasing the number of paid holidays that long-term employees are entitled to receive Compensating managers with shares of stock that must be held for a minimum of three years Paying a special management bonus on every fifth year of employment

Compensating managers with shares of stock that must be held for minimum of 3 years

The Sarbanes-Oxley Act in 2002 was primarily prompted by which one of the following from the 1990s? Increased use of tax loopholes Increased stock market volatility Increased executive compensation Increased foreign investment in U.S. stock markets Corporate accounting and financial fraud

Corporate accounting and financial fraud

Which one of the following is a capital structure decision? Selecting new equipment to purchase Establishing the preferred debt-equity level Setting the terms of sale for credit sales Determining the optimal inventory level Determining when suppliers should be paid

Establishing the preferred debt-equity level

Which one of the following is a working capital decision? How much cash should the firm keep in reserve? What debt-equity ratio is best suited to the firm? How should the firm raise additional capital to fund its expansion? What is the cost of debt financing? Should the firm borrow money for five or for ten years?

How much cash should the firm keep in reserve?

Which one of the following best describes the primary intent of the Sarbanes-Oxley Act of 2002? Increase the protections against corporate fraud Decrease the number of corporations that can be publicly traded Increase the dividends paid to shareholders Increase the number of firms that "go dark" Limit secondary issues of corporate securities

Increase protections against corporate fraud

The Sarbanes-Oxley Act: places total responsibility for the financial statements of a firm on the auditor who certifies the statements. requires all corporations to fully disclose its financial dealings to the general public. requires that the board of directors be solely responsible for the firm's financial dealings. require the corporate officers to personally attest that the financial statements are a fair representation of the company's financial results. places the responsibility for a firm's financial statements solely on the chief financial officer.

require the corporate officers to personally attest that the financial statements are a fair representation of the company's financial results.