Unit 1 milestone

Consider the P/E ratios of the following companies: Company A: 7.4 Company B: 11.3 Company C: 14.8 Company D: 9.1 Among these four companies, Company C has the __________.

highest relative value

If a balance sheet shows owner's equity of $10 million, current liabilities of $6 million and long-term liabilities of $15 million, then what are the total assets of the company?

$31 million

By appropriately preparing a forecast budget, a company can avoid __________.

insolvency

Ratios that measure a company's ability to manage its long-term debt are _________.

leverage ratios

In the United States, the role of corporate governance is to maximize __________.

market value and shareholder value

Finance is most concerned with __________.

determining how much assets and investments will be worth over time

Which method of depreciation calculation gives a company an equal tax benefit from one year to the next?

Straight line

If operating income is $155,000 and total revenue is $577,000, then the operating margin is __________.

26.80%

The pro forma balance sheet shows how the __________ resulting from a strategic plan will be financed.

AFN

Select the true statement about the concept of agency cost.

An agency cost is one that is incurred when an agent's actions deviate from the principal's interests.

Consider the following information: Total current assets$78,632 Deferred income taxes$3,210 Inventories$9,823 Prepaid expenses$1,050 Other assets$3,890 Total current liabilities$32,043 What is the quick ratio?

2.15

For which company can trend analysis be most useful?

A software company whose business model and accounting practices have remained stable over time

Under GAAP, how would the sale of company-owned land be accounted for on the statement of cash flows?

As an increase in cash flow from investment

Betina is trying to convince a buyer to purchase her company. The buyer wants to know what the company's overall financial condition was on December 31, 2018.What type of financial statement should Betina provide?

Balance sheet

Haley is expanding her tax preparation business and wants to reorganize it. She wants to better protect her assets from any liabilities associated with the business, and she wants to pay a lower tax rate on her business income. She also believes her business will benefit from oversight from a board of directors. Which form of business structure would clearly meet Haley's needs?

Corporation

Capacity planning answers the question "__________"

How can we be most efficient?

Using the DuPont equation, how can a company determine if it has an acceptable ROE?

If it is at least 15%.

Which market is intended to benefit from the recent trend of microfinance?

Impoverished individuals

Xander is looking for ways to reduce his non-operating expenses to improve his company's overall financial performance, so he consults his most recent income statement.Which of the following should he focus on?

Income taxes

After a significant economic recession, prices and investing activity in the stock market began trending consistently upward six years ago. In the last three months, this trend has reversed and prices have fallen steadily.How are the past three months of the stock market classified?

Primary bear market

What must be forecasted first in order to prepare the pro forma income statement?

Sales

Select the option that reflects how revenue is typically organized on an income statement.

Sales Cost of goods sold Other revenue

Which of the following would explain a company's day sales outstanding ratio falling from 37.3 to 25?

The company's accounts receivable has decreased while total sales has increased.

Which of the following is true of ethics and its application to the business environment?

The ethical norms and values of a business can have a powerful influence on its employees.

What was one outcome of the Sarbanes-Oxley Act of 2002?

Top management of U.S. companies must now individually and personally certify the accuracy of financial information.

What is a question that should be asked about inventory when forecasting?

What are the current storage costs?

If Company A has a lower debt ratio than Company B, then Company A is likely to have __________ than Company B.

a greater ability to borrow