BUS #2 chapter 9

49問 • 1年前

問題一覧

Certificate of deposit is an interest-earning deposit that requires the funds to remain deposited for a fixed term.

True

Projects with potential for high returns generally have a low degree of uncertainty and risk.

False

A budgeted income statement is a projected financial statement that forecasts the types and amounts of assets a firm will need to implement its future plans and how the firm will finance those assets.

False

In the context of accounting for the time value of money, discount rate remains constant in a specified number of time periods.

False

Benny-Duke Inc. reported a net income of $7 million but paid no dividends to its shareholders. The shareholders should sue the company for failure to provide a return on their equity investment.

False

Accounts receivable represents what customers who buy on credit owe the firm.

True

Lean inventory policies can be ineffective in a firm, although they do not leave the firm vulnerable to supply disruptions.

False

The extent to which retained earnings are used as a source of long-term capital for a firm, depends on the state of the economy.

True

Cash budgets normally cover a one-year period and show projected cash inflows and outflows for each month.

True

When conflicts arise between the long-term interests of owners and those of other stakeholders, the fiduciary duty required of financial managers generally leads them to make decisions that are most consistent with the interests of ownership.

True

Financial managers should focus solely on meeting the financial needs of their firms in the short run, leaving the long-term financial issues to the top management.

False

The current ratio is calculated by dividing a firm's current liabilities by its total assets.

False

Term loans issued by commercial banks are popularly used by financial institutions and large corporations because they typically carry lower interest rates than commercial paper.

False

A manufacturing firm does not necessarily need an inventory of parts and materials to assemble its products.

False

A factor is a restriction lenders impose on borrowers as a condition of providing long-term debt financing.

False

A disadvantage of debt financing is that creditors often impose covenants on the borrower.

True

The following questions must be answered when setting credit terms: How long should the firm extend credit? What type of cash discount should the firm offer to encourage early payments?

True

Because it is normally unsecured, commercial paper is only offered by firms with no credit ratings.

False

If an invoice lists the terms of trade credit as 2/10 net 30, it means that the supplier is offering a 10 percent cash discount off the invoice price if the buyer pays within 2 days.

False

A budgeted income statement is a detailed forecast of future cash flows that helps financial managers identify when their firm is likely to experience temporary shortages or surpluses of cash.

False

Money market mutual funds raise money by selling shares to large numbers of investors.

True

David needs to acquire financial capital to purchase a printing press for his business. David can either acquire the financial capital for the press by borrowing money from a bank or by purchasing the press on credit from his supplier.

True

Return-on-equity indicates how much net income a firm earned per share of common stock outstanding.

False

Commercial paper, which is sometimes issued for as little as two days, can be issued for up to 270 days.

True

A commitment to meeting social responsibilities can contribute to a more profitable company and an increase in shareholder value.

True

Which of the following statements is true of angel investors?

They typically provide funds to start-ups in exchange for a share of ownership.

Which of the following statements is true of commercial paper?

It is not backed by a pledge of collateral.

Trumen House, a confectionary manufacturing company, orders its raw materials in bulk from Nesinbon. Nesinbon allows Trumen House to make the payment at a later date, as opposed to immediate payment. Which of the following short-term financing options is being offered by Nesinbon?

Trade credit

Yennex Inc., a textile company, planned to sell its stock products in two months' time. The company was able to sell those products within a month's time. Therefore, it was able to sell double the estimated amount in a year. Given the scenario, which of the following ratio analyses is most likely to have been analyzed by Yennex Inc. to achieve this success?

Profitability ratios

Alpha Inc. saw an increase in profits in the previous year following which the management decided to reinvest its earnings. These retained earnings will be used to:

meet the company's long-term financial needs.

MVJ Corp., a market research firm, borrowed $2 million from Trimitium Bank. While negotiating with the bank, the firm signs a promissory note, which specifies that the firm must pay the borrowed amount in 90 days with interest. However, the bank also requires the firm's inventories and receivables to be pledged as collateral to back the loan. Which of the following short-term financing options is being offered by Trimitium Bank in the given scenario?

Short-term bank loans

The _____ is an asset management ratio that measures how quickly a firm sells its stock to generate revenue.

inventory turnover ratio

Newot Texin, a pharmaceutical company, introduces a new pain relieving drug in the market. It borrows $1 million from Esterotia, a private bank, to market the drug. In return, Esterotia allows Newot Texin to return the full amount with interest in fixed amounts of $200,000 every six months. Which of the following sources of long-term funds is being used by Newot Texin in the given scenario?

A term loan

Vironi Mave, a designer clothing company, wants to hire fashion designers to start a new clothing line for men. To obtain funds for the project, Vironi Mave issues several formal IOUs to sell them to its investors, with a maturation period of ten years. Which of the following sources of long-term funds is being used by Vironi Mave in the given scenario?

Corporate bonds

Connink, a software development firm, invested on developing new products from the company's earnings from the previous year. Which of the following sources of long-term funds is being used by Connink in the given scenario?

Direct investments from owners

An advantage of factoring is that:

firms using factors get their money almost immediately.

Yellow Dustur, a textile company, converts its overseas assets into cash in order to pay its debts to different companies the following year. In the given scenario, which of the following financial ratios is most likely being analyzed by Yellow Dustur?

Liquidity ratios

In the context of short-term financing, which of the following statements is true of a factor?

It buys the accounts receivables of other firms.

_____ measure how effectively an organization uses its resources to generate net income.

Asset management ratios

The term _____ refers to the use of debt to meet a firm's funding needs.

financial leverage

In finance, a _____ is one that can be quickly converted into cash with little risk of loss.

liquid asset

A _____ can help a firm evaluate how much internal financing (funds generated by earnings) will be available for a planning period.

budgeted income statement

_____ compares assets that will provide cash in the following year to debts that will come due in the following year.

The current ratio

An advantage of debt financing is that:

it does not require firms to sell stock to new investors to gain additional funds.

Financial managers evaluate a firm's current strengths and weaknesses by computing ratios that compare values of key accounts listed on their firm's:

balance sheet and income statement.

Hevron Hrist, a multinational company, finances itself each year by procuring 25 percent of its yearly budget through loans from banks. The remaining budget is covered by the company itself. The given scenario suggests that the firm most likely relies on measuring _____ to decide its capital structure.

leverage ratios

Which of the following statements best describes a money market mutual fund?

It pools funds from many investors and uses these funds to purchase very safe, highly liquid securities.

_____ helps financial managers determine the amount of additional financing a firm must arrange to acquire the assets needed to implement its future plans.

The budgeted balance sheet

Kitsure, a cosmetics company, was able to sell 20 percent more than its estimated sales in a year. The company was able to acquire its investment along with a higher turnover for its shareholders. Which of the following financial ratios provides the measure of Kitsure's earnings?

Profitability ratios

BUS 101

BUS 101

Part 2

Part 2

part 3

part 3

BUS TEST #2 Chapter 17

ユーザ名非公開 · 45問 · 1年前

BUS TEST #2 Chapter 17

BUS #2 Chapter 13

BUS #2 Chapter 13

BUS #2 Chapter 8

BUS #2 Chapter 8

問題一覧

Certificate of deposit is an interest-earning deposit that requires the funds to remain deposited for a fixed term.

True

Projects with potential for high returns generally have a low degree of uncertainty and risk.

False

In the context of accounting for the time value of money, discount rate remains constant in a specified number of time periods.

False

Benny-Duke Inc. reported a net income of $7 million but paid no dividends to its shareholders. The shareholders should sue the company for failure to provide a return on their equity investment.

False

Accounts receivable represents what customers who buy on credit owe the firm.

True

Lean inventory policies can be ineffective in a firm, although they do not leave the firm vulnerable to supply disruptions.

False

The extent to which retained earnings are used as a source of long-term capital for a firm, depends on the state of the economy.

True

Cash budgets normally cover a one-year period and show projected cash inflows and outflows for each month.

True

Financial managers should focus solely on meeting the financial needs of their firms in the short run, leaving the long-term financial issues to the top management.

False

The current ratio is calculated by dividing a firm's current liabilities by its total assets.

False

Term loans issued by commercial banks are popularly used by financial institutions and large corporations because they typically carry lower interest rates than commercial paper.

False

A manufacturing firm does not necessarily need an inventory of parts and materials to assemble its products.

False

A factor is a restriction lenders impose on borrowers as a condition of providing long-term debt financing.

False

A disadvantage of debt financing is that creditors often impose covenants on the borrower.

True

The following questions must be answered when setting credit terms: How long should the firm extend credit? What type of cash discount should the firm offer to encourage early payments?

True

Because it is normally unsecured, commercial paper is only offered by firms with no credit ratings.

False

If an invoice lists the terms of trade credit as 2/10 net 30, it means that the supplier is offering a 10 percent cash discount off the invoice price if the buyer pays within 2 days.

False

A budgeted income statement is a detailed forecast of future cash flows that helps financial managers identify when their firm is likely to experience temporary shortages or surpluses of cash.

False

Money market mutual funds raise money by selling shares to large numbers of investors.

True

Return-on-equity indicates how much net income a firm earned per share of common stock outstanding.

False

Commercial paper, which is sometimes issued for as little as two days, can be issued for up to 270 days.

True

A commitment to meeting social responsibilities can contribute to a more profitable company and an increase in shareholder value.

True

Which of the following statements is true of angel investors?

They typically provide funds to start-ups in exchange for a share of ownership.

Which of the following statements is true of commercial paper?

It is not backed by a pledge of collateral.

Trade credit

Profitability ratios

Alpha Inc. saw an increase in profits in the previous year following which the management decided to reinvest its earnings. These retained earnings will be used to:

meet the company's long-term financial needs.

Short-term bank loans

The _____ is an asset management ratio that measures how quickly a firm sells its stock to generate revenue.

inventory turnover ratio

A term loan

Corporate bonds

Direct investments from owners

An advantage of factoring is that:

firms using factors get their money almost immediately.

Liquidity ratios

In the context of short-term financing, which of the following statements is true of a factor?

It buys the accounts receivables of other firms.

_____ measure how effectively an organization uses its resources to generate net income.

Asset management ratios

The term _____ refers to the use of debt to meet a firm's funding needs.

financial leverage

In finance, a _____ is one that can be quickly converted into cash with little risk of loss.

liquid asset

A _____ can help a firm evaluate how much internal financing (funds generated by earnings) will be available for a planning period.

budgeted income statement

_____ compares assets that will provide cash in the following year to debts that will come due in the following year.

The current ratio

An advantage of debt financing is that:

it does not require firms to sell stock to new investors to gain additional funds.

Financial managers evaluate a firm's current strengths and weaknesses by computing ratios that compare values of key accounts listed on their firm's:

balance sheet and income statement.

leverage ratios

Which of the following statements best describes a money market mutual fund?

It pools funds from many investors and uses these funds to purchase very safe, highly liquid securities.

_____ helps financial managers determine the amount of additional financing a firm must arrange to acquire the assets needed to implement its future plans.

The budgeted balance sheet

Profitability ratios