BUSN 1003: Ch.9 Assignment

can contribute to a more profitable company.

A commitment to meeting social responsibilities:

present value of the expected cash flows from a project is greater than the cost of the project.

A positive net present value (NPV) means that the:

highly leveraged firm

A(n) _____ is one that relies heavily on debt.

do not receive the full amount their customers owe.

Firms that use factors:

maximize the value of a firm to its owners.

Historically, the most widely accepted goal of financial management has been to:

It is only offered by firms with excellent credit ratings.

Identify a true statement about commercial paper.

It does not yield the same tax benefits as debt financing.

Identify a true statement about equity financing.

term loan

In the context of the sources of funds for a business, a _____ calls for a regular schedule of fixed payments sufficient to ensure that the principal and interest are repaid by the end of the tenure for which the money has been borrowed.

profitability ratios

Return-on-equity (ROE) and earnings per share (EPS) are both classified as _____.

average collection period

The _____ is computed by dividing accounts receivable by average daily credit sales.

risk-return tradeoff

The _____ suggests that sources and uses of funds that offer the potential for high rates of return tend to be riskier than sources and uses of funds that offer lower returns.

adding the present values of all of its estimated future cash flows and subtracting the initial cost of the investment from the sum.

The net present value (NPV) of an investment proposal is found by:

most firms experience uneven inflows and outflows of cash over the course of a year.

Understanding of the timing of cash flows within the planning period is important because:

employee turnover is likely to be lower

When a firm provides its employees with a good work environment, _____.

Both are marketable.

Which of the following is a similarity between corporate stocks and corporate bonds?

Cash budgets show projected cash inflows and outflows for each month.

Which of the following statements is true in the context of cash budgets?

A guaranteed line of credit.

Which of the following statements is true of a revolving credit agreement?

It is normally unsecured.

Which of the following statements is true of commercial paper?

It measures the net income per share of common stock outstanding.

Which of the following statements is true of earnings per share (EPS)?

It is more flexible than debt financing.

Which of the following statements is true of equity financing?

It indicates earnings per dollar invested by the owners of a company.

Which of the following statements is true of return on equity (ROE)?

It is a way of measuring the degree of financial leverage.

Which of the following statements is true of the debt-to-assets ratio?

Inventories

_____ are stocks of finished goods, work-in-process, parts, and materials that firms hold as a part of doing business.

Trade credit

_____ is sometimes called spontaneous financing because it is granted when a company places its orders without requiring any additional paperwork or special arrangements.

Accounts receivable

_____ represents what customers who buy on credit owe the firm.