MGF 405

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False

The Gramm-Leach-Biley Act of 1999 recently overturned the Glass-Steagall Act of 1933, thereby strengthening the regulation of the US financial industry

False

A firm is considering a project which would - Increase accounts receivable by $10,000 - Increase account payable by $55,000 - & increase inventory by $30,000 in year 1 : Cash flow from assets (free cash flow) has increased in year 1

True

A firm is considering a project which would - Increase accounts receivable by $10,000 - Increase account payable by $55,000 - & increase inventory by $30,000 in year 1 : Net working capital has decreased in year 1

False

A firm is considering a project which would - Increase accounts receivable by $10,000 - Increase account payable by $55,000 - & increase inventory by $30,000 in year 1 : Net working capital has increased in year 1

False

A firm is considering a project which would - Increase accounts receivable by $10,000 - Increase account payable by $55,000 - & increase inventory by $30,000 in year 1 : Payments to creditors will slow in year 2

False

A firm is considering a project which would - Increase accounts receivable by $10,000 - Increase account payable by $55,000 - & increase inventory by $30,000 in year 1 : Sales will increase in year 2

False

Additions to net working capital are not considered a relevant, incremental cash flow in capital budgeting analysis

False

Advantages the corporate form of business has over sole proprietorship/partnerships is its unlimited liability

Capital, Flexibility

Advantages the corporate form of business has over sole proprietorship/partnerships is its: - Ability to raise large ______ - _________ in the change of ownership

False

Both partnerships and corporations incur double taxations

True

Both sole proprietorships and partnerships are taxed in a similar fashion

True

Erosion costs are considered a relevant, incremental cash flow in capital budgeting analysis

Agency

Extravagant use of perquisites by managers is an example of the ________ problem

True

Fixed asset salvage values are considered a relevant, incremental cash flow in capital budgeting analysis

Beginning

Interest payment = loan __________ balance * interest rate

False

Key requirement of the Sarbanes-Oxley Act: - Annual reports must be filed w/ the SEC within 30 days of year end

True

Key requirement of the Sarbanes-Oxley Act: - Officers (CEO/CFO) of a corp must personally vouch for the accounting statements

False

Key requirement of the Sarbanes-Oxley Act: - Officers of a corporation must now own more than 5% of the firm's stocl

False

Key requirement of the Sarbanes-Oxley Act: - The audit committee of a corp should include only inside directors, who have better information on the businesses of the corp

False

LLCs are usually taxed like corporations

Principal

Loan end balance = loan beginning balance - ________ payment

True

Opportunity costs are considered a relevant, incremental cash flow in capital budgeting analysis

False

Partnerships are the most complicated type of business

False

Partnerships have limited liability for general partners

Interest

Principal payment = Total payment - _______ payment

False

Sunk costs are considered a relevant, incremental cash flow in capital budgeting analysis

False

The major factors that directly determine the market value of a company's share of stock include book value of its assets

Risk, Timing, Size

The major factors that directly determine the market value of a company's share of stock include: - _____ of its cash flows - ______ of its cash flows - ____ of its cash flows

Accrues

The matching principle of GAAP dictates that the income statement records revenue when it ______

False

The primary goal of financial management is to avoid financial distress

False

The primary goal of financial management is to maintain steady earnings growth

False

The primary goal of financial management is to maximize current sales

True

The primary goal of financial management is to maximize the value per share of the stock

False

The primary goal of financial management is to minimize operational costs

Matching principle

The_________ __________ of GAAP dictates that the income statement records revenue when it accrues

Principal

Total payment = Interest payment + __________ payment


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