The CFO of a company is concerned about the company's accounts receivable turnover ratio. The
company currently offers customers terms of 3/10, net 30. Which of the following strategies would most
lik . . . Read more
Which of the following factors is inherent in a firm's operations if it utilizes only equity financing?
a. Financial risk.
b. Business risk.
c. Interest rate risk.
d. Marginal risk.
ANSWER:
C . . . Read more
Which of the following formulas should be used to calculate the economic rate of return on common
stock?
a. (Dividends + change in price) divided by beginning price.
b. (Net income - preferred dividen . . . Read more
Which of the following terms represents the residual income that remains after the cost of all capital,
including equity capital, has been deducted?
a. Free cash flow.
b. Market value-added.
c. Econom . . . Read more
The optimal capitalization for an organization usually can be determined by the
a. Maximum degree of financial leverage (DFL).
b. Maximum degree of total leverage (DTL).
c. Lowest total weighted-avera . . . Read more
Why would a firm generally choose to finance temporary assets with short-term debt?
a. Matching the maturities of assets and liabilities reduces risk.
b. Short-term interest rates have traditionally b . . . Read more
Pinecrest Co. had variable costs of 25% of sales, and fixed costs of $30,000. Pinecrest's break-even
point in sales dollars was
a. $24,000
b. $30,000
c. $40,000
d. $120,000
Choice "c" is correc . . . Read more
In an interest rate swap the first company
Answers
A: Sells its right to low interest rate financing at a financial institution to the second company that is seeking to borrow funds.
B: Agrees to se . . . Read more
In statistical analysis, a weighted-average using probabilities as weights is the
Answers
A: Standard deviation.
B: Expected value.
C: Coefficient of variation.
D: Objective function.
Answer . . . Read more
Which of the following characteristics represent an advantage of the internal rate of return technique over the accounting rate of return technique in evaluating a project?
I. Recognition of the proj . . . Read more
How are the following used in the calculation of the net present value of a proposed project(excluded, included)?
Ignore income tax considerations.
Depreciation expense
Salvage value
. . . Read more
To estimate the Economic Value Added (EVA), one must deduct __________ from the after-tax EBIT.
Interest expense
The required return on capital sources
The expected return on common
The earnings per . . . Read more
C earned $1,000,000 in net income this past year, paid a preferred dividend of $200,000 and had 200,000 shares of common outstanding. The price of their stock is now selling for $20 per share. What is . . . Read more
A Corporation has a total debt to total assets ratio of 20%. What is their debt/equity ratio and equity multiplier ratio, respectively?
If total debt is 20% of assets,
that leaves equity fina . . . Read more
The quick ratio is a measure of the level of circulating current assets relative to current liabilities after deducting what most usually illiquid account from current assets?
Cash
Marketable securit . . . Read more