I am giving the correct answers below:
One of the major disadvantages of a sole proprietorship is
C. that there is unlimited liability to the owner.
2) Corporate governance is the
C. relationship and exercise of oversight by the board of directors of the company
3) Maximization of shareholder wealth is a concept in which
A. optimally increasing the long-term value of the firm is emphasized.
4) Which of the following would represent a use of funds and, indirectly, a reduction in cash balances?
C. an increase in inventories
5) Which of the following is an inflow of cash?
D. the sale of the firm's bonds
6) An increase in investments in long-term securities will: <
B. decrease cash flow from investing activities.
7) The most rigorous test of a firm's ability to pay its short-term obligations is its
C. current ratio.
8) A quick ratio that is much smaller than the current ratio reflects
A. that the firm will have a high return on assets
9) In examining the liquidity ratios, the primary emphasis is the firm's
B. ability to pay short-term obligations on time
13) In general, the larger the portion of a firm's sales that are on credit, the
D. higher will be the firm's need to borrow
14) In the percent-of-sales method, an increase in dividends
A. more information is needed.
15) The percent-of-sales method of financial forecasting
A. provides a month-to-month breakdown of data.
16) The pro forma income statement is important to the overall process of constructing pro forma statements because it allows us to determine a value for:
D. gross profit
17) The key initial element in developing pro forma statements is
B. a sales forecast
18) The difference between total receipts and total payments is referred to as
B. net cash flow
19) Firms with a high degree of operating leverage are
B. significantly affected by changes in interest rates
20) The concept of operating leverage involves the use of __________ to magnify returns at high levels of operation.
B. fixed costs
C. variable costs
21) The degree of operating leverage is computed as
B. percent change in operating profit divided by percent change in net income
22) The break-even point can be calculated as
C. total costs divided by contribution margin
23) If TechCor has fixed costs of $80,000, variable costs of $1.20/unit, sales price/unit of $6, and depreciation expense of $25,000, what is their cash breakeven in units?
24) In break-even analysis, the contribution margin is defined as
B. price minus variable cost
25) When the yield curve is upward sloping, generally a financial manager should:
D. wait for future financing
26) During tight money periods
C. short-term rates are higher than long-term rates. <
27) Normally, permanent current assets should be financed by
A. internally generated funds.
28) Which of the following is not a condition under which a prudent manager would accept some risk in financing?
A. Easy access to capital markets
B. Predictable cash-flow patterns
29) Risk exposure due to heavy short-term borrowing can be compensated for by
B. carrying highly liquid assets.
30) Which of the following combinations of asset structures and financing patterns is likely to create the most volatile earnings?
A. Liquid assets and heavy short-term borrowing
31) "Float" takes place because
A. a customer writes "hot" checks.
32) The difference between the amount of cash on the firm's books and the amount credited to it by the bank is
33) Which of the following is not a valid reason for holding cash?
B. to earn the highest return possible
34) Variables important to credit scoring models include
A. all of these variables apply
35) When developing a credit scoring report, many variables would be considered. Which of the following best represent the major factors Dun & Bradstreet would examine?
C. The financial statements, satisfactory or slow payment experiences, negative public records (suits, liens, judgments, bankruptcies
36) Dun & Bradstreet is known for providing
B. credit scoring reports that rank a company's payment habits relative to its peer group
37) Compensating balances
D. are used by banks as a substitute for charging service fees
38) Large firms tend to be <
B. net suppliers of trade credit
39) Commercial paper that is sold without going through a broker or dealer is known as
D. direct paper
40) A large manufacturing firm has been selling on a 3/10, net 30 basis. The firm changes its credit terms to 2/20, net 90. What change might be expected on the balance sheets of its customers?
D. Decreased receivables and increased bank loans
41) Trade credit may be used to finance a major part of the firm's working capital when
D. the firm extends less liberal credit terms than the supplier.
42) General Rent-All's officers arrange a $50,000 loan. The company is required to maintain a minimum checking account balance of 10% of the outstanding loan. This practice is called
C. a discounted loan
43) In determining the future value of a single amount, one measures
B. the future value of an amount allowed to grow at a given interest rate.
44) An annuity may be defined as
B. a series of yearly payments.
45) As the discount rate becomes higher and higher, the present value of inflows approaches
46) Mr. Blochirt is creating a college investment fund for his daughter. He will put in $850 per year for the next 15 years and expects to earn an 8% annual rate of return. How much money will his daughter have when she starts college?
47) Ali Shah sets aside 2,000 each year for 5 years. He then withdraws the funds on an equal annual basis for the next 4 years. If Ali wishes to determine the amount of the annuity to be withdrawn each year, he should use the following two tables in this order:
B. future value of an annuity of $1; present value of a $1
48) The future value of a $1000 investment today at 8 percent annual interest compounded semiannually for 5 years is
I hope the above helps...