corporate finance

share of ______ are units of ownership interest, or equity, in a corporation common stock
the _______ is the financial market in which securities are initially issued primary market
what is the principal – agent problem? when an agent does not maximize the utility of the principal
which of the following features of a corporation is LEAST accurate? earnings from a corporation are taxed only once
a limited liability company is essentially a limited partnership without a general partner
how do the shareholders of most corporations exercise their control of that corporation? by electing members of a board of directors
in most corporations, to whom does the chief financial officer report? the board of directors
which of the following is a major duty of the financial manager -to make investment decisions-to make financing decisions-to manage cash flow from operating activities
cash is a current asset
accounts payable is a current liability
a 30-yr old mortgage loan is a long-term liability
T or F: agency costs are fees paid by the management of a corporation to compensate any investor that feels it has suffered a loss due to agency problems F
T or F: partnerships are the most common type of business in the world F
t or F: the balance sheet shows the assets, liabilities, and stockholders equity of a firm over a given length of time F
the corporate controller is generally responsible for which one of these functions? tax reporting
a firms capital structure refers to the firms proportions of financing from current and long term debt and equity
for a firm to create value it must create more cash flow than it uses
the ultimate control of a corportation lies in the hands of the corporate: stock holders
a proxy fight occurs when: a group solicits voting rights to replace the board of directions
the basic regulatory framework for the public trading of securities in the US was provided by the: securities act of 1933 and the securities exchange act of 1934
US corporate taxes switch to a constant flat rate once the average tax reaches 35 percent
operating cash flow is defined as EBIT+ Depreciation – Taxes
earnings per share will increase when depreciation decreases
assuming the numbers of shares outstanding remains constant, an increase in dividends per share will reduce the addition to retained earnings
book value is based on historical cost
if you sell an asset, you are most apt to receive which value for that asset market value
all else held constant, the earnings per share will decrease as the number of shares outstanding increase
according to the generally accepted accounting principles, costs are matched with revenues
when you are making a financial decision, the most relevant tax rate is the ___ rate marginal
assets are listed on the balance sheet in order of decreasing liquidity
according to generally accepted accounting principles (GAAP), revenue is recognized as income when: the transaction is complete and the goods or services are delivered
the cash flow of the firm must be equal to: cash flow to stockholders plus cash flow to creditors
is fixed asset a current asset? no
projected future financial statements are pro forma statements
ratios that measure a firms ability to pay its bills over the short run without undue stress are known as liquidity measures
the current ratio is measured as current assets divided by current liabilities
the quick ratio is measured as current assests minus inventory divided by current liabilities
ratios that measure a firms financial leverage are known as _____ ratios long-term solvency
the debt-equity ratio is measured as total debt divided by total equity
the equity multiplier is measured as total assets divided by total equity
ratios that measure how efficiently a firm uses its assets to generate sales are known as_____ ratios asset management
the financial ratio days’ sales in inventory is measured as 365 days divided by the inventory turnover
the amount that investors are willing to pay for each dollar of annual earnings is price-earnings ratio
an increase in which of the following accounts increases a firms current ratio without affecting its quick ratio inventory
a captial intensity ratio of 1.03 means a firm has a 1.03 in total assets for every $1 in sales
if a firm decreases its operating costs, all else contant, then the: price-earnings ratio will decrease
enterprise value is based on the market value of interest bearing debt plus the market value of equity minus cash
the return on equity can be calculated as ROA x Equity multiplier
which of the following depicts a correct relationship? Dividend payout ratio= 1- retention ratio
which statement expresses all accounts as a percentage of a total assets common-size balance sheet
which one of these equations expresses the balance sheet stock holders equity = assets- liabilities
which of these accounts is classified as a current asset on the balance sheet inventory
on the balance sheet, deferred taxes are classified as a long term liability
financial statement summarizing a firms accounting performances over a period of time is the income statement
non cash items refer to expenses charged against revenues that do not directly affect cash flow
for a firm with long-term debt, net income is equal to dividends + addition to retained earnings
which term defines the tax rate that applies to the next dollar of taxable income earned marginal
the cash flow resulting from a firm’s ongoing, normla business activities is referred to as the operating cash flow
which of these terms refers to the firms interest payments less any net new borrowing cash flow to creditors
a firms dividend payments less any net new equity raised is referred to as the firms cash flow to stock holders
which of the following is a non-cash item depreciaition
an increase in total assets: must be offset by an equal increase in liabilities and stock holders equity
which asset is generally the most liquid cash and then accts. rec.
the corporate treasurer oversees which of the following areas? financial planning
a business formed by two or more individiuals who each have unlimited personal libabitly for allt he firms debts is called general partnership
the understanding of the work and cash to be contributed to a partnership by each member of that partnership is formalized in the partnership agreement
a business created as a distinct legal entity is called a corporation
which corporate document sets forth the number of members on the original board of directors articles of incorportation
the rules by which the corp. govern themselves are called by laws
a business entity operated and taxed like a partnership, but with limitied liability for the owners is called a limitied liability company
the primary goald of a financial mamagement is to maxamize current dividens per share of existing stock
agency costs refer to the costs of any conflicts of interest between stockholders and management
a stake holder is a person or entitiy other than a stockholder or creditor who potentially has a financial interest in the firm
one intent of the sarbanes oxley act of 2002 is to protect investors from corporate abuses
the treasurer and controller of a corp report to the chief finacnial officer
insider trading is prohibited by the securities exchange act of 1934
Which statement expresses all accounts as a percentage of total assets common-size balance sheet
The equity multiplier is measured as total assets divided by total equity
The total asset turnover ratio measures the amount of: sales generated by every $1 in total assets.
The financial ratio measured as net income divided by sales is known as the firm’s: profit margin.
The measure of net income returned from every dollar invested in total assets is the: return on assets.
The financial ratio that measures the accounting profit per dollar of book equity isreferred to as the: return on equity.
The amount that investors are willing to pay for each dollar of annual earnings isreflected in the: price-earnings ratio.
The external funds needed (EFN) equation projects the addition to retained earnings as: PM × Projected sales × (1 – d).
Which one of the following is a liquidity ratio? quick ratio
Puffy’s Pastries generates five cents of net income for every $1 in equity. Thus, Puffy’shas _______ of 5 percent. a return on equity
If stockholders want to know how much profit the firm is making on their entireinvestment in that firm, the stockholders should refer to the: return on equity.
Which one of the following sets of ratios would generally be of the most interest tostockholders? return on equity and price-earnings ratio
The DuPont identity can be computed as Profit margin × (1 / Capital intensity) × (1 + Debt-equity ratio)
Enterprise value is based on the: market value of interest bearing debt plus the market value of equity minus cash.
The equity multiplier measures: financial leverage

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