exam 1 quizzes
Which one of the following terms is defined as the total tax paid divided by the total taxable income?
Average tax rate
Which one of the following is directly related to increases in a firm's current assets?
Carrying costs
Moore & Moore has just finished projecting its expected cash receipts and expenditures for next year. What is this projection called?
Cash budget
Which one of the following has nearly the same meaning as free cash flow?
Cash flow from assets
Which one of the following is a graphical representation of the operating and cash cycles?
Cash flow time line
Which one of the following occupations best fits into the corporate area of finance?
Chief financial officer
Builder's Outlet just hired a new chief financial officer. To get a feel for the company, she wants to compare the firm's sales and costs over the past three years to determine if any trends are present and also determine where the firm might need to make changes. Which one of the following statements will best suit her purposes? - Common-size balance sheet - Statement of cash flows - Income statement - Common-size income statement - Balance sheet
Common-size income statement
Which one of the following is an intangible fixed asset?
Copyright
Which one of these transactions will increase the liquidity of a firm?
Credit sale of inventory at cost
Which of these is a use of cash?
Decreasing accounts payable
Which of these activities is a source of cash?
Decreasing accounts receivable
The DuPont identity can be accurately defined as:
Equity multiplier × Return on assets.
Which one of the following is a working capital decision?
How much cash should the firm keep in reserve?
The DuPont identity can be used to help a financial manager determine the: I. degree of financial leverage used by a firm. II. operating efficiency of a firm. III. utilization rate of a firm's assets. IV. rate of return on a firm's assets.
I, II, III, and IV
Which one of the following is the maximum growth rate that a firm can achieve without any additional external financing?
Internal growth rate
Which one of the following forms of business organization offers liability protection to some of its owners but not to all of its owners?
Limited partnership
Which one of the following commences on the day inventory is purchased and ends on the day the payment for the sale of that inventory is collected? Assume all sales and purchases are on credit.
Operating cycle
Leon is the owner of a corner store. Which ratio should he compute if he wants to know how long the store can pay its bills given its current level of cash and accounts receivable? Assume all receivables are collectible when due. - Current ratio - Cash ratio - Quick ratio - Debt ratio - Cash coverage ratio
Quick ratio
Which one of the following is the abbreviation for the U.S. government coding system that classifies a firm by its specific type of business operations? SIC SED SBC BID BEC
SIC
Which of these best describes a line of credit?
Short-term prearranged bank loan that can be either committed or non committed
Margie opened a used bookstore and is both the 100 percent owner and the store's manager. Which type of business entity does Margie own if she is personally liable for all the store's debts?
Sole proprietorship
The Wood Shop generates $.97 in sales for every $1 invested in total assets. Which one of the following ratios would reflect this relationship? - Profit margin - Equity multiplier - Total asset turnover - Receivables turnover - Return on assets
Total asset turnover
The length of time a retailer owes its supplier for an inventory purchase is called the:
accounts payable period.
The operating cycle is equal to the:
accounts receivable period plus the inventory period.
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: an agency conflict. a capital structure issue. a working capital decision. a corporate takeover. a compensation issue.
an agency conflict.
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.
Net working capital is defined as:
current assets minus current liabilities.
The operating cycle:
describes how a product moves through the current asset accounts.
When conducting a financial analysis of a firm, financial analysts:
frequently use accounting information.
A common-size balance sheet helps financial managers determine:
if changes are occurring in a firm's mix of assets.
The accounting statement that measures the revenues, expenses, and net income of a firm over a period of time is called the:
income statement.
Shareholders' equity is equal to:
net fixed assets minus long-term debt plus net working capital.
The market value:
of an asset tends to provide a better guide to the actual worth of that asset than does the book value.
Cash flow from assets is defined as:
operating cash flow minus the change in net working capital minus net capital spending.
Limited liability companies are primarily designed to:
provide limited liability while avoiding double taxation.
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.
Operating cash flow is defined as:
the cash that a firm generates from its normal business activities.
The matching principle states that:
the costs of producing an item should be recorded when the sale of that item is recorded as revenue.
Common-size financial statements present all balance sheet account values as a percentage of:
total assets.
Theo's BBQ has $48,000 in current assets and $39,000 in current liabilities. Decisions related to these accounts as referred to as: capital budgeting decisions. capital structure decisions. fixed account structure. working capital management. operating management.
working capital management.