hw 1

Which one of the following is a current liability?

An invoice payable to a supplier in 45 days

Which one of the following questions involves a capital budgeting decision?

Should the firm purchase a new machine for the production line?

Which form of business would be the best choice if it were necessary to raise large amounts of capital?

corporation

A firm's liquidity is measured with which one of the following ratios?

current ratio

Cash flow to stockholders is defined as:

dividend payments less net new equity raised

For a firm that must pay income taxes, depreciation expense:

increases expenses and lowers taxes

The cash coverage ratio directly measures the ability of a company to meet its obligation to pay:

interest to a lender.

The ______ tax rate is the percentage of the last dollar you earned that must be paid in taxes.

marginal

Ratios that measure how efficiently a firm manages its assets and operations to generate net income are referred to as ______ ratios.

profitability

The most acceptable method of evaluating the financial statements is to compare the company's current financial:

ratios to the company's historical ratios

A common size income statement is an accounting statement that expresses all of a firm's expenses as a percentage of

sales

Ultimately, the ______ control(s) the corporation.

shareholders

You recently purchased a restaurant that had equal market and book values. The purchase included the building, fixtures, and inventory. Which one of the following would be most likely to cause the market value of the restaurant to fall below its book value?

A pandemic that required restaurants to limit the number customers allowed inside

Which of the following actions would be considered an agency problem?

A shareholder in a corporation sells shares of the company's stock when the price rises

Which one of the following best states the primary goal of financial management?

Maximize the current value per share