A FIRM’S CASH BORROWING NEEDS CAN BE REDUCED IF ITS INVENTORY TURNOVER RATE CAN BE INCREASED, OTHER THINGS REMAINING CONSTANT.

A FIRM’S CASH BORROWING NEEDS CAN BE REDUCED IF ITS INVENTORY TURNOVER RATE CAN BE INCREASED, OTHER THINGS REMAINING CONSTANT.

Select Ture and False From below Questions:

1. It is important to evaluate all financial decisions by measuring how they affect a firm’s stock price, hence ensuring maximization of shareholder wealth.

2. One advantage of organized stock exchanges is increased stock price volatility resulting from the efficient exchange of pricing information.

3. Real assets are tangible, whereas financial assets merely reflect claims for future payment on other economic units.

4. If two companies have the same revenues and operating expenses, their net incomes will still be different if one company finances its assets with more debt and the other company with more equity.

5. If a company’s cash balance increases during the year, and the company also reports positive net income, then the company’s retained earnings balance must increase.

6. A car manufacturer offers either $2,000 cash back or zero percent financing for 5 years. A rational consumer will always take the cash back because money received today is worth more than money received in the future.

7. If an asset is sold for a price above its book value, the difference is considered taxable income to the firm.

8. Equity is a measure of the monetary contributions that have been made either directly or indirectly on behalf of the owners of the company.

9. The total assets of a firm are financed with liabilities and stockholder’s equity.

10. A firm’s cash borrowing needs can be reduced if its inventory turnover rate can be increased, other things remaining constant.

11. Profitability ratios are distorted by inflation because profits are stated in current dollars and assets and equity are stated in historical dollars.

12. Operating profit is essentially a measure of how efficient management is in generating revenues and controlling expenses.

13. When the inflation rate is zero, the present value of $1.00 is identical to the future value of $1.00.

MULTIPLE CHOICE

1. If an investor is said to be “risk averse” then that investor ________.

a. will not be induced to take on any risk

b. will only take on the least risk possible

c. will only take on additional risk if they expect to be compensated in the form of additional return

d. is not behaving in a typical manner

2. A corporation’s capital losses can be carried back three years and, if any loss still remains, it may be carried forward ________.

a. 1 year

b. 3 years

c. 5 years

d. 7 years

3. Which of the following are tax-deductible for a corporation?

a. common stock dividends

b. interest expense

c. preferred stock dividends

d. all of the above e. both A and B

4. Which of the following will likely result in a greater use of external funding?

a. higher corporate profits and higher interest rates

b. lower corporate profits and lower interest rates

c. higher corporate profits and lower interest rates

d. lower corporate profits and higher interest rates

5. The real rate of return is the return earned above the ________.

a. default risk premium

b. risk-adjusted return

c. inflation risk premium

d. variability of returns measured by standard deviation

6. Company A and Company B both report the same level of sales and net income. Therefore, ________.

a. both A and B will report the same Earnings Per Share

b. both A and B will report the same Gross Profit Margin

c. both A and B will report the same Net Profit Margin


 

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The post A FIRM’S CASH BORROWING NEEDS CAN BE REDUCED IF ITS INVENTORY TURNOVER RATE CAN BE INCREASED, OTHER THINGS REMAINING CONSTANT. appeared first on Cheap Nursing Tutors.

 
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