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48 Cards in this Set

  • Front
  • Back

What is the primary goal of financial management for sole proprietor?

maximize the market value of the equity

Working capital management includes:

determining which customers will be granted credit



A currency trader in the yen market is what area of finance?

international finance



A corporation

is a legal separate entity from its owners

The primary purpose of the NYSE is to:

match buyers with sellers



Capital budgeting includes the evaluation of:

size, timing, and risk of future cash flows

A capital structure decision would be:

establishing the preferred debt-equity level

The goal of financial management is to increase the:

current market value per share

An employee has a claim on the cash flows of Martin's Machines. This claim is defined as a claim by one of the firm's:

stakeholders

The primary goal of financial management is to maximize:

the market value of existing stock



Margie is 100% owner and manager of a used bookstore, and is personally liable for all debts. She is in a:

sole proprietorship

Probably the least effective means of aligning management goals with shareholders' interests is:

automatically increasing management salaries on an annual basis

What should be assigned to the corporate treasurer rather than the controller?

cash management

Jenna is in charge of all external financing, aka:

capital structure management

The Sarbanes-Oxley Act:

Requires the corporate officers to personally attest that the financial statements are a fair representation of the company's financial results

A limited liability company (LLC):

prefers its profits to be tazxd as personal income to its owners

Type of business where Will and Bill both have full personal liability for debts:

general partnership

A sole proprietorship:

has its profits taxed as personal income

Business organization that offers liability protection to some of its owners but not all of its owners:

limited partnership

Domestic security analyst for a brokerage firm is what financial area?

investments

The Sarbanes-Oxley Act has:

essentially made officers of publicly traded firms personally responsible for the firm's financial statements

What applies to sole proprietorship?

obtaining additional equity is dependent on the owner's personal finances

LLC's are primarily designed to:

provide limited liability while avoiding double taxation

Corporate shareholders

have the ability to change the corps bylaws

The daily financial operations of a firm are primarily controlled by managing the:

working capital

Which is an intangible fixed asset?

copyright

Net working capital includes:

an invoice from a supplier

Cash flow to Creditors increases when:

long term debt is repaid

Cash flow to Creditors is defined as:

interest paid minus net new borrowing

Production equipment is classified as:

a tangible fixed asset

Which concerning the balance sheet is correct?

assets are listed in descending order of liquidity

Financial leverage:

increases the potential return to the stocholders

Given a profitable firm, depreciation:

lowers taxes

Over the past year, a firm decreased its current assets and increased its current liabilities. As a result, the firm's net working capital:

had to decrease

Shareholder's equity is equal to:

net fixed assets-long term debt + net working capital

Highly liquid assets:

can be sold quickly at close to full value

The financial statement that summarizes a firm's accounting value as of a particular date is called the:

balance sheet

A negative cash flow to stockholders indicates a firm:

received more from selling stock than it paid out shareholders

Which one of the following is included in the market value of a firm but not in the book value?

reputation

Cash flow from assets is defined as:

OCF-change in NWC-NCS

Which ration was primarily designed to monitor firms with negative earnings?

price sales ratio

If a firm has an inventory turnover of 15, the firm:

sells its entire inventory an average of 15 times each year

Which is a measure of long-term solvency?

cash coverage ratio

Which one of these statements is true concerning the PE ratio?

a high PE ratio may indicate that a firm is expected to grow significantly

Which is correct?

adjustments have to be made when comparing the income statements of firms that use different methods of accounting for inventory

If a firm has 100% dividend payout ratio, then the internal growth rate is

zero percent

The Dupont Identity can be used to help a financial manager determine the:

-degree of financial leverage used by a firm


-operating efficiency of a firm


-utilization rate of a firm's assets


-rate of return on a firm's assets

A firm has a current ratio of 1.4 and a quick ratio of .9. Given this, you know for certain that the firm:

has a positive net working capital