finance exam 1
Total Assets
common size financial statements present all balance sheet account values as a percentage of _____.
sells its entire inventory an average of 15 times each year
if a firm has an inventory turnover of 15, the firm:
cash flow from assets
involves three components: operating cash flow, capital spending, and change in net working capital
provide limited liability while avoiding double taxation
limited liability companies are primarily designed to
current assets minus current liabilities
net working capital is defined as
working capital
refers to a firms short term assets, such as inventory and its short term liabilities, such as money owed to suppliers.
operating cash flow
refers to the cash flow that results from the firm's day-to-day activities of producing and selling
capital spending
refers to the net spending on fixed assets (purchases of fixed assets less sales of fixed assets)
Capital Structure
refers to the specific mixture of long term debt and equity the firm uses to finance its operations.
Liqudity
refers to the speed and ease with which an asset can be converted to cash. Income statement includes non cash items
Capital Budgeting
the financial manager tries to identify investment opportunities that are worth more to the firm than they cost to acquire.
Balance Sheet
the financial statement that summarizes a firm's accounting value as a particular date is called the ____.
a perpetuity
the jones brothers recently established a trust fund that will provide annual scholarships of $12,000 indefinitely. These annual scholarships are:
sustainable growth rate
the maximum growth rate that can be achieved with no external equity financing while maintaining a constant debt equity ratio
internal growth rate
the maximum growth rate that can be achieved with no external financing of any kind.
risk
the uncertainty of the outcome of an investment
treasury bill
what always has a maturity of less than a year
Taco and cheif
what are his dogs names?
character, capital, collateral, conditions, capacity
what are the 5 C's of credit?
The controller reports directly to the chief financial officer.
what is a common chain of command within a corporation?
cash payment of an account payable
which of the following actions will increase the current ratio, all else constant? assume the current ratio is greater than 1.0.
under fractional reserve banking, banks lent out the money that people held in their accounts, so they had to make paper currency to represent the new money lent out
How did new paper currency come about?
profit margin, return on assets, return on equity
Outdoor gear reduced its general and administrative costs this year. This cost improvement will increase which of the following ratios?
agency
The potential conflict of interest between a firm's owners and its managers are referred to as which type of conflict?
Working Capital Management
Theo's BBQ has $48,000 in current assets and $39,000 in current liabilities. Decisions related to these accounts are referred to as
annuity
Travis is buying a car and will finance it with a loan that requires monthly payments of $265 for the next four years. His car payments can be described by what
Income Statement
the accounting statement that measures the revenues, expenses and net income of a firm over a period of time is called the ______.
