Finance

Not an example of current assets

accounts receivable

Give 3 examples of current liabilities

accruals, accounts payable, notes payable

Which of the following financial instruments is not traded in the capital markets?

debt with a maturity of less than one year

The key role of the financial manager is

decision making

What best represents operating income?

earnings before interest and taxes

Generally indicates an IMPROVEMENT in a company's financial position, holding other things constant? the

equity multiplier decreases

Cross-sectional ratio analysis involves comparing the firm's ratios to those of firms in other industries at the same point in time. True or False?

false

Financial services are concerned with the duties of the financial manager. True or False?

false

Free cash flow is the amount of cash that if withdrawn would harm the firm's ability to operate and to produce future cash flows. True or False?

false

Primary markets are large and important, while secondary markets are smaller and less important. True or False?

false

The balance sheet is a statement which balances the firm's assets (what it owns) against its debt (what it has borrowed). True or False?

false

The more conservative a firm's management is, the higher its debt ratio is likely to be. True or False?

false

The operating margin measures operating income per dollar of assets? True or False?

false

The term IPO stands for "individual purchase order", as when an individual (as opposed to an institution) places an order to buy a stock. True or False ?

false

Career opportunities in financial services include all of the following EXCEPT

financial mgt

Operating profits are defined as

gross profits minus operating expenses

The ________ provides a financial summary of the firm's operating results during a specified period.

income statement

Financial management is about... The study of how people and businesses make

investment decisions and how to finance those decisions

To analyze the firm's financial performance, the following types of ratio analyses EXCEPT ________ may be used.

marginal analysis

Which of the following goals is in the best long-term interest of stockholders?

maximizing the market value of the existing shareholders common stock

Maximization of shareholder wealth as a goal is superior to accounting profit maximization because it considers the time value of the

money and accounting profits

The key activities of the financial manager include all of the following EXCEPT

record business transactions on financial statements

When a company pays a dividend on common stock, it appears as a

reduction in the amount of retained earnings

3 things included in operating income?

sales, cost of goods sold, operating expenses

Which of the following is NOT included in operating income?

taxes

Which of the following would indicate an IMPROVEMENT in a company's financial position, holding other things constant?

the debt ratio decreases

The market for short-term debt is known as

the money market

_______ involves comparison of current to past performance and the evaluation of developing trends.

trend analysis

Capital structure refers to the financing of long-term investments

true

Earnings per share represents amount earned during the period on each outstanding share of common stock. True or False?

true

Finance is concerned with the process institutions, markets, and instruments involved in the transfer of money among and between individuals, businesses and government. True or False?

true

Financial managers actively manage the financial affairs of many types of business-financial and non-financial, private and public, for-profit and not-for-profit. True or False?

true

Free cash flow (FCF) is, essentially, the cash flow that is available for interest and dividends after the company has made the investments in current and fixed assets that are necessary to sustain ongoing operations. True or False?

true

If a firm's assets turnover ratio is significantly higher than its industry average, this could indicate that it uses its assets very efficiently

true

If you decide to buy 100 shares of Google, you would probably do so by calling your broker and asking him or her to execute the trade for you. This would be defined as a secondary market transaction, not a primary market transaction. True or False?

true

In order to maximize its shareholders' value, a firm's management must attempt to maximize the stock price in the long run, or the stock's "intrinsic value". True or False?

true

Net fixed assets represent the difference between gross fixed assets and the total expense recorded for the depreciation over then entire lives of the firm's fixed assets. True or False?

true

Retained earnings represent the cumulative total of all earnings retained and reinvested in the firm since its inception? True or False?

true

Return on equity shows the combined effects of liquidity, asset management, and debt management on a firm's operating results. True or False?

true

The days sales outstanding tells us how long it takes, on average, to collect after a sale is made. The DSO can be compared with the firm's credit terms to get an idea of whether customers are paying on time. True or False?

true

The firm's creditors are primarily interested in the short-term liquidity of the company and its ability to make interest and principal payments. True or False?

true

The income statement is a financial summary of the firm's operating results during a specified period while the balance sheet is a summary statement of the firm's financial position at a given point in time. True or False?

true

The inventory turnover ratio and days sales outstanding (DSO) are two ratios that are used to assess how effectively a firm is managing its current assets. True or False?

true

Which of the following best describes a balance sheet? It reports the amount and composition of

assets and liabilities at a specified point in time

You observe that a firm's ROE is above the industry average, but its profit margin and equity multiplier are both below the industry average. It's total

assets turnover must be above the industry average

The area of finance that deals with long-term investment decisions is known as

capital budgeting

Total assets minus net fixed assets equals

current assets