Reference no: EM133379942

Question 1

The liquidity of a firm is

a. a measurement of spontaneous financing.

b. the ability of the firm to sell its products quickly.

c. not important to a company's financial health.

d. often measured by a ratio of current assets to current liabilities.

Question 2

The cash conversion cycle measures the time:

a. between payment for inventory and collection of cash for its subsequent sale as product.

b. between the creation of receivables and their collection.

c. for a check to clear the banking system.

d. it takes for inventory to be turned into product and sold.

Question 3

Sunk costs:

a. cannot be estimated accurately.

b. represent an initial period of cash flow of a capital budgeting project.

c. have been incurred in prior periods.

d. None of the above

Question 4

____ is a growing practice in which people concern themselves with the activities of the issuing business.

a. Socially responsible investing

b. Morality analysis

c. Agency control

d. Wealth maximization

Question 5

Capital projects are said to be mutually exclusive when:

a. the financial viability of a single project is being evaluated.

b. two or more projects are being evaluated and doing one precludes doing another.

c. one project is much easier to do than another.

d. b and c

Question 6

Bernard has just learned that on the balance sheet, the assets must equal the ___________ plus the _______________.

a. accounts receivable, accounts payable

b. net profit, retained earnings

c. accumulated depreciation, asset value

d. money borrowed from others, money invested by the owners

Question 7

The variability in a firm's EPS is affected by:

a. variability in its sales.

b. operating leverage.

c. financial leverage.

d. a and c

e. All of the above

Question 8

A source of cash would be generated by which of the following?

a. An increase in inventory

b. An increase in accounts receivable

c. An increase in accounts payable

d. A decrease in accrued expenses

Question 9

To determine his company's net profits, Edward should

a. subtract cost of goods sold from sales.

b. subtract taxes from profits before taxes.

c. add interest paid and depreciation.

d. add taxes paid and income before taxes.

Question 10

A positive NPV implies an:

a. unacceptable project base on its future inflow.

b. the best project available.

c. acceptable project on a stand-alone basis.

d. unacceptable project on a stand-alone basis.

Question 11

Accounting and finance each have significant responsibilities related to the firm's financial performance; however, the accountant's role is informational, while the financial analyst's role is critical and investigative. Therefore, we can say that:

a. the analyst must rely on the accountant to assist in analyzing the financial statements because the accountant is more familiar with their content.

b. the accountant's job stops at the presentation of information.

c. financial analysts qualified to practice as CPAs may undertake both responsibilities and eliminate any overlap of similar tasks.

d. the financial analyst assesses the information presented in the accountant's financial statements to seek out problems and their ramifications for the firm.

Question 12

?Three years ago a piece of equipment was purchased for $10,000. Assuming an eight-year life and straight-line depreciation, financial statements for the third year will show:

a. ?depreciation expense of $3,000 on the income statement, and accumulated depreciation of $3,000 on the balance sheet.

b. ?depreciation expense of $1,250 on the income statement, and accumulated depreciation of $3,000 on the balance sheet.

c. ?depreciation expense of $1,250 on the income statement, and accumulated depreciation of $1,250 on the balance sheet.

d. ?depreciation expense of $1,250 on the income statement, and accumulated depreciation of $3,750 on the balance sheet.

Question 13

XYC Corporation pays its taxes quarterly but withholds payroll taxes from its employees' paychecks each week. Until the taxes are actually paid to the IRS, they appear on the balance sheet as:

a. a long-term debt.

b. a liability.

c. an account receivable.

d. an asset..

Question 14

Initial outlay:

a. includes expenses and excludes assets that have to be purchased.

b. includes expenses and assets that have been purchased.

c. includes expenses and assets that have to be purchased.

d. excludes expenses and assets that have to be purchased.

Question 15

EBIT is also called:

a. gross profit.

b. operating profit.

c. net profit.

d. pretax profit.