In agency theory, the owners of the business are referred to as __________, and the managers are referred to as __________ .
________ is the typical title of the corporate executive charged with determining the best repayment structure for borrowed funds to ensure timely repayment and sufficient cash for daily operations.
The means by which a company is financed refers to the firm's __________ .
The sale of "new" securities, where the financial asset is being traded for the very first time, is said to take place in the __________ market.
Options are bought and sold in ________ markets.
Which of the following best identifies the four main areas of finance?
Bonds are bought and sold in __________ markets.
Stocks are bought and sold in __________ markets.
__________ are the forums where buyers and sellers of financial assets and commodities meet.
Sale of new common stock in the primary market is regulated by the ________, and sale of used common on the secondary market is regulated by the ________.
"Concern with the multinational elements of financial activities" best describes which of the four main areas of finance?
________ is NOT a main category of financial management.
Managing the firm's short-term financing activities is known a(n. __________ .
Of the following, which group would be considered EXTERNAL PLAYERS of the firm?
Which of the following is NOT an activity of a financial institution or market?
__________ is the name given to the processes surrounding recognition of the principal-agent problem and ways to align agents with the interests of the principals.
Of the following, which is the most recent example of legislation passed by the federal government to deal with a major economic or highly visible corporate event?
The problem of motivating one party to act in the best interest of another party is known as the __________ .
Of the following activities, which is NOT likely to be an interaction between the financial manager and the marketing manager?
Currencies are bought and sold in ________ markets.
A current ratio greater than one can tell us that the company __________.
A. should be able to cover the current liabilities
B. should be able to keep away from short-term cash problems
C. may have too much capital tied up in current assets
D. all of these
In finance, we separate operating decisions from financing decisions and thus exclude __________ as a part of operating income from the income statement.
A. cash flow
B. dividends
C. interest expense
D. earnings
The DuPont Model measures ROE by multiplying __________.
A. the current ratio x total asset turnover x the equity multiplier
B. the profitability ratio x times interest earned x the equity multiplier
C. the profitability ratio x total asset turnover x the equity multiplier
D. the current ratio x times interest earned x the equity multiplier
__________ can be helpful for managers to understand short-term cash obligations.
A. Profitability ratios
B. Asset management ratios
C. Solvency ratios
D. Liquidity ratios
Which of the statements below is FALSE?
A. The income statement summarizes and categorizes a company's revenues and expenses for that period.
B. Typically, income statements are prepared quarterly and annually for distribution outside the company, but usually monthly for internal managers.
C. The income statement begins with revenue and subtracts various operating expenses until arriving at Earnings Before Interest and Taxes (EBIT..
D. The balance sheet reports the performance of the firm over the past period. It summarizes and categorizes a company's revenues and expenses for that period
__________ help(s. us analyze whether a company is moving toward financial stress or is using debt to benefit the company and ultimately, the owners of the company.
A. Financial leverage ratios
B. Asset management ratios
C. Days' sales in inventory
D. Total asset turnover
The purpose of studying financial statements is__________.
A. to mechanically build portfolio analysis
B. to understand those portions of the statements that have relevance for financial decision making
C. to primarily investigate all portions of the statements that have relevance for dividend policy
D. to mechanically learn how to read and understand footnotes
Which of the following address the question of whether a company can meet its obligations over the long term?
A. liquidity ratios
B. asset utilization ratios
C. debt ratios
D. financial
Which of the statements below is FALSE?
A. When the current ratio is greater than one, we are also saying that net working capital is positive as current assets are greater than current liabilities.
B. Financial leverage ratios deal with long-term solvency and the use of debt as a financing tool.
C. The debt ratio is total assets minus total equity divided by equity.
D. Times interest earned equals EBIT divided by interest expense
Because financial ratios can vary across industries, it is __________ these ratios by industry.
A. not necessary to study
B. unimportant to benchmark
C. important to benchmark
D. futile to examine
Which of the following are liquidity ratios?
A. current ratio
B. the quick ratio
C. the cash ratio
D. all of the above
Computing liquidity ratios is ________ but interpreting them is ________.
A. complex, even more complex
B. complex, more straightforward
C. straightforward, more complex
D. none of these
The income statement begins with revenue and subtracts various operating expenses until arriving at__________.
A. earnings after taxes
B. net income
C. taxable income
D. EBIT
Which of the statements below is FALSE?
A. Officers of a company or others who have a fiduciary responsibility to the owners can trade on their acquired private information about the company prior to the information being made public.
B. One potential problem in the world of finance can arise when some owners or potential owners have access to more information about a company than do others.
C. Regulation Fair Disclosure (or Reg FD. requires companies to release all material information to all investors at the same time.
D. The 10-K must be filed within sixty days after the end of the company's fiscal year.
Which of the statements below is FALSE?
A. Financial statements are a collection of historical and current activities of the company.
B. The collection of value over time found in financial statements requires us to pay attention to how we construct financial ratios so as to glean information for analysis.
C. All financial statements are constructed with the same accounting principles, so you can always compare different firms based solely on these statements.
D. We want to analyze financial statements so as to compare different companies and their performance relative to our company.
Which of the following address the question of whether a company can meet its obligations over the short term?
A. liquidity ratios
B. asset utilization ratios
C. debt ratios
D. financial leverage ratios
Which of the following statements is TRUE?
A. The finance manager uses the framework of the income statement to find the operating income of the company (an accounting measure., which is also the true cash flow from operations.
B. In accrual-based accounting, revenue is recorded at the time of sale if the revenue has been received in cash.
C. Three fundamental issues separate net income and cash flow: accrual accounting, non-cash expense items, and interest expense.
D. Generally Accepted Accounting Principles (GAAP. in the United States do not allow the use of accrual accounting to record revenue
The income statement begins with revenue and subtracts various operating expenses until arriving at Earnings Before Interest and Taxes. Next, interest expense is subtracted to find the __________ for the period.
A. EBIT
B. after-tax income
C. net income
D. taxable income
There are four primary financial statements that are used to measure the performance of a firm. Which of the choices below are included among these four?
A. the balance statement and income statement
B. the income sheet and statement of retained earnings
C. the statement of cash flow and statement of balance
D. the balance sheet and statement of cash flow
The income statement begins with revenue and subtracts various operating expenses until arriving at Earnings Before Interest and Taxes. Next, interest expense is subtracted to find the taxable income for the period. Then the appropriate taxes are calculated and subtracted. We finally arrive at the __________, the so-called bottom line of the income statement.
A. after-tax income
B. before-tax income
C. net income
D. EBIT
Answer will be sent by email as attachment.
