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Finance Flashcards

Finance 3715 Chapter 1

Which one of the following terms is defined as the management of afirm’s long-term investments? capital budgeting
Which one of the following terms is defined as the mixture of a firm’sdebt and equity financing? capital structure
Which one of the following is defined as a firm’s short-term assets andits short-term liabilities? working capital
A business owned by a solitary individual who has unlimited liability forits debt is called a: sole proprietorship
A business formed by two or more individuals who each have unlimitedliability for all of the firm’s business debts is called a: general partnership
A business partner whose potential financial loss in the partnership willnot exceed his or her investment in that partnership is called a: limited partner
A business created as a distinct legal entity and treated as a legal”person” is called a: corporation
Which one of the following terms is defined as a conflict of interestbetween the corporate shareholders and the corporate managers? agency problem
A stakeholder is: any person or entity other than a stockholder or creditor whopotentially has a claim on the cash flows of a firm.
Which of the following questions are addressed by financial managers?I. How should a product be marketed?II. Should customers be given 30 or 45 days to pay for their credit purchases?III. Should the firm borrow more money?IV. Should the firm acquire new equipment? II, III, and IV only
Which one of the following functions should be the responsibility of thecontroller rather than the treasurer? income tax returns
The controller of a corporation generally reports directly to the: vice president of finance
Which one of the following correctly defines the upward chain ofcommand in a typical corporate organizational structure? the treasurer reports to the vice president of finance
Which one of the following is a capital budgeting decision? deciding whether or not to purchase a new machine for theproduction line
Which of the following should a financial manager consider whenanalyzing a capital budgeting project?I. project start up costsII. timing of all projected cash flowsIII. dependability of future cash flowsIV. dollar amount of each projected cash flow I, II, III, and IV
Which one of the following is a capital structure decision? determining how much debt should be assumed to fund aproject
The decision to issue additional shares of stock is an example of whichone of the following? capital structure decision
Which of the following accounts are included in working capitalmanagement?I. accounts payableII. accounts receivableIII. fixed assetsIV. inventory I, II, and IV only
Which one of the following is a working capital management decision? determining whether to pay cash for a purchase or use thecredit offered by the supplier

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