Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
11 Cards in this Set
- Front
- Back
|
Which of the following actions are most likely to directly increase cash as shown on a firm’s balance sheet? a. It reports a large loss for the year. (Assume the loss is not due to a large depreciation expense.)b. It increases the dividends paid on its common stock.c. It buys new plant and equipment at a cost of $6 million.d. It issues $3 million of new common stock |
d. It issues $3 million of new common stock |
|
|
Which of the following is/are tax-deductible expense(s) for a corporation? a. Dividends paid on the corporation’s stockb. Interest paid on the corporation’s bondsc. Both interest and dividends paidd. Neither interest nor dividends paid |
b. Interest paid on the corporation’s bonds |
|
|
Which of the following financial statements is best described as a “snapshot” of a firm’s financial position at a particular point in time? a. Balance Sheetb. Income Statementc. Statement of Cash Flowsd. Statement of Financial Assetse. Statement of Retained Earnings |
a. Balance Sheet |
|
|
Which of the following is NOT one of the four financial statements contained in most annual reports? a. Statement of Financial Assetsb. Balance Sheetc. Statement of Stockholders' Equityd. Income Statementse. Statement of Cash Flows |
a. Statement of Financial Assets |
|
|
Suppose Congress changes the tax laws so that a firm’s depreciation expense is cut in half. (The firm’s percentage tax rate does not change, however.) Assuming there are no changes in sales, other operating costs, or interest charges, the firm’s net income will ________, and its cash flow will ________. a. decrease ... decreaseb. increase ... increasec. increase ... decreased. decrease ... increase |
c. increase ... decrease |
|
|
Could a firm with negative free cash flow still be |
Yes, if it has made significant capital expenditures |
|
|
Which of the following actions are most lilely to directly increase cash as showm on a firms balance sheet? A. It repurchases 3 million of its own common stockB. It reports a large financial loss for the yearC. It buys new plant and equipment. D. It reduces the dividends paid on its common stock |
D. It reduces the dividends paid on its common stock |
|
|
The inventory turnover ratio would be most important when analyzing a(n) a. commercial bank.b. medical clinic.c. insurance company company d. grocery store.e. consulting firm |
d. grocery store. |
|
|
If a firm’s ROE is low and management wants to improve it, the increased use of debt could help, most directly through its effect on the... a. times interest earned ratio.b. total asset turnover.c. equity multiplier.d. profit margin.e. inventory turnover |
c. equity multiplier |
|
|
Which of the following statements is correct? a.The higher its debt ratio, the lower a firm’s BEP ratio will be, other things held constant.b. The higher its tax rate, the lower a firm’s BEP ratio will be, other things held constant.c. The higher the interest rate on its debt, the lower a firm’s BEP ratio will be, other things held constant.d. If a firm’s expected basic earning power (BEP) is constant for all of its assets and exceeds the interest rate on its debt, then adding assets and financing them with debt will raise the firm’s expected return on common equity (ROE). |
d. If a firm’s expected basic earning power (BEP) is constant for all of its assets and exceeds the interest rate on its debt, then adding assets and financing them with debt will raise the firm’s expected return on common equity (ROE). |
|
|
All other things being equal, which of the following would decrease the current ratio? a. The estimated taxes payable are increased.b. A fixed asset is sold for less than book value.c. Accounts receivable are collected.d. Ten-year notes are issued to pay off accounts payable.e. Cash is acquired through issuance of additional common stock. |
a. The estimated taxes payable are increased. |
