fin 125 chapter 1

GolfMerch Lehigh Valley is owned by two people who provided the initial capital to launch the business. One person, however, does not participate in any of the managing activities. This is an example of: A. Corporation B. Sole proprietorship C. General partnership D. Limited partnership E. Limited liability company

D. Limited partnership

Which one of the following best states the primary goal of financial management? A. Maximize the current value per share B. Minimize operational costs while maximizing firm efficiency C. Maximize current dividends per share D. Maintain steady growth while increasing current profits E. Increase cash flow and avoid financial distress

A. Maximize the current value per share

Capital structure decisions include determining: A. how much debt should be spent to fund a project. B. how much inventory will be needed to support a project. C. which one of two projects to accept. D. the amount of funds needed to be raised to finance big purchases. E. how to allocate investment funds to multiple projects.

A. how much debt should be spent to fund a project.

which one of the following questions is a working capital management decision? A. Should be the company update or replace its older equipment? B. How much inventory should be on hand for immediate sale? C. Should the company close one of its current stores? D. How much should the company borrow to buy a new building?

C. How much should be on hand for immediate sale?

Which one of the following is a working capital management decision? A. What amount of long-term debt is required to complete a project? B. What type(s) of equipment is (are) needed to complete a current project? C. Should the firm pay cash for a purchase or use the credit offered by the supplier? D. How many shares of stock should the firm issue to fund an acquisition? E. Should a project should be accepted?

C. Should the firm pay cash for a purchase or use the credit offered by the supplier?

The growth of both sole proprietorships and partnerships is frequently limited by the firm's: A. double taxation. B. bylaws. C. inability to raise funds. D. limited liability. E. agency problems.

C. inability to raise funds.

The decision to issue additional shares of stock is an example of: A. a net working capital decision. B. capital budgeting. C. a controller's duties. D. a capital structure decision. E. working capital management.

D. a capital structure decision.

Which one of the following parties has ultimate control of a corporation? A. Board of directors B. Chairman of the board C. Chief operating officer D. Chief executive officer E. Creditors F. Shareholders

F. Shareholders

In the US, financial managers primarily focus on the interests of: A. their immediate supervisor. B. stakeholders C. the board of directors. D. the vice president of finance. E. creditors F. shareholders.

F. shareholders.

ch. 2 Which statement is incorrect? a. Startups pay more dividends than mature firms to encourage shareholders to buy more of their stocks. b. When the firm starts paying dividends, its stock price increases in response to that. c. Dividend policy is set by the managers of the firm rather than its owners. d. When the firm starts increases its current dividends, its stock price increases in response to that. e. Any change in the dividend policy of the firm leads to the immediate stock price reaction.

a. Startups pay more dividends than mature firms to encourage shareholders to buy more of their stocks.

An example of a capital budgeting decision is deciding: a. how many shares of stock to issue. b. whether or not to purchase a new machine for the production line. c. how to refinance a debt issue that is maturing. d. how much inventory to keep on hand. e. how much money should be kept in the checking account.

b. whether or not to purchase a new machine for the production line.