Finance Final Exam

In addition to comparison with industry ratios, it is helpful to analyze ratios using trend analysis and historical comparisons
Interest rates are influenced by inflation, the money supply, and Federal Reserve activities
In managing cash and marketable securities, the managers primary concern should be liquidity and safety
In order to estimate production requirements, we: add projected sales in units to desired ending inventory and subtract beginning inventory
Permanent current assets should be financed by: Long-term funds
The economic order quantity: Provides the lowest inventory costs
Agency theory: the conflicts that arise between the viewpoints and motivations of a firms owners and managers
What is the primary goal of financial management? To maximize shareholder wealth
Steps to develop a pro forma income statement: 1. establish a sales projection2. determine a production schedule3. compute other expenses4. determine profit by creating actual pro forma statement
A short term creditor would be most interested in: Liquidity ratios
Total stockholders equity consists of: preferred stock, common stock, capital in excess of par, and retained earnings
Which of the following is not a valid quantitative measure for accounts receivable collection policies? Ratio of Debt to Equity
Working capital management is primarily concerned with the management and financing of: current assets and liabilities
An aggressive risk oriented firm will: Borrow short term and carry low levels of liquidity
A float takes place because: a lag exists between the time it takes to clear a check through the banking system
The percent of sales method assumes: the balance sheet accounts maintain a constant relationship to sales
If the yield to maturity on a bond is below the par value, you can assume: the price is below the par
The payback method: Does not consider the time value of money
A dollar today is worth more than a dollar in the future because: It can be invested today and earn interest
Negitive correlation: when one industry increases and the other decreases

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