FIN 370T Wk 1 – Practice: Ch. 1 and 3 Knowledge Check

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FIN 370T Wk 1 – Practice: Ch. 1 and 3 Knowledge Check
FIN 370T Wk 1 – Practice: Ch. 1 and 3 Knowledge Check
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FIN 370T Wk 1 – Practice: Ch. 1 and 3 Knowledge Check

A potential future negative impact to value and/or cash flows is often discussed in terms of probability of loss and the expected magnitude of the loss. This is called

Multiple Choice

  • options.

  • standard deviation.

  • coefficient of variation.

  • risk.

 

 

This subarea of finance looks at firm decisions in acquiring and utilizing cash received from investors or from retained earnings.

Multiple Choice

  • investments

  • financial management

  • treasury management

 

 

Which of these must effectively distribute capital between investors and companies?

Multiple Choice

  • individuals

  • international investors

  • companies

  • financial institutions

 

 

Which of the following can use financial concepts to improve their decisions?

Multiple Choice

  • financial professionals only

  • financial and nonfinance professionals

  • day-to-day operations managers only

  • long-term operations managers only

 

 

Which of the following do not ensure firm viability over the long run?

Multiple Choice

  • maximizing employment

  • market share

  • profits

  • all of these choices are .

 

 

The most common type of business in the United States is the

Multiple Choice

  • corporation.

  • partnership.

  • sole proprietorship.

  • hybrid organization such as a limited liability company.

 

 

Which of these does NOT act as a monitor of how the firm is being run outside the firm?

Multiple Choice

  • auditors

  • analysts

  • credit rating agencies

  • members of the board of directors

 

 

For corporations, maximizing the value of owner’s equity can also be stated as

Multiple Choice

  • maximizing retained earnings.

  • maximizing earnings per share.

  • maximizing net income.

  • maximizing the stock price.

 

 

Corporate stakeholders include all of the following EXCEPT

Multiple Choice

  • employees.

  • shareholders.

  • suppliers.

  • auditors.

 

 

Which of the following statements is ?

Multiple Choice

  • Sole proprietorships are easy to start.

  • If the sole proprietorship gets sued, the owner is not liable.

  • It is relatively easy for sole proprietorships to raise money.

  • Profits from the sole proprietorship are subject to double taxation.

 

 

The biggest disadvantage of the sole proprietorship is

Multiple Choice

  • unlimited liability.

  • double taxation.

  • limited access to capital.

  • total control.

 

 

Which of the following is not an impact of the slowdown occurring in China’s economy?

Multiple Choice

  • lower demand in materials such as steel, iron ore, and copper

  • real estate market declining in Sydney, Australia

  • money going out of Manhattan, New York

  • falling community prices

 

 

You are considering a stock investment in one of two firms (A and B), both of which operate in the same industry. A finances its $20 million in assets with $18 million in debt and $2 million in equity. B finances its $20 million in assets with $2 million in debt and $18 million in equity. Calculate the debt-to-equity ratio for the two firms.

Multiple Choice

  • Firm A: 9 times; Firm B: 1.11 times

  • Firm A: 19 times; Firm B: 0.11 times

  • Firm A: 9 times; Firm B: 0.11 times

  • Firm A: 19 times; Firm B: 1.11 times

 

 

Which of these is NOT considered a coverage ratio?

Multiple Choice

  • cash coverage ratio

  • current ratio

  • fixed-charge coverage ratio

  • times interest earned

 

 

Tops N Bottoms Corp. reported sales for 2018 of $50 million. Tops N Bottoms listed $4 million of inventory on its balance sheet. Using a 365-day year, how many days did Tops N Bottoms’ inventory stay on the premises? How many times per year did Tops N Bottoms’ inventory turn over?

Multiple Choice

  • 29.2 days, 12.5 times, respectively

  • 12.5 days, 29.2 times, respectively

  • 0.08 days, 12.5 times, respectively

  • 29.2 days, 0.0345 times, respectively

 

 

Bree’s Tennis Supply’s market-to-book ratio is currently 9.4 times and PE ratio is 20 times. If Bree’s Tennis Supply’s common stock is currently selling at $20.50 per share, what is the book value per share and earnings per share?

Multiple Choice

  • $1.025, $2.1809, respectively

  • $2.1809, $1.025, respectively

  • $410.00, $192.70, respectively

  • $192.70, $410.00, respectively

 

 

Which ratio measures the overall return on the firm’s assets including financial leverage and taxes?

Multiple Choice

  • ROA

  • ROE

  • basic earning power

  • profit margin

 

 

To interpret financial ratios, managers, analysts, and investors use which of the following type of benchmarks?

Multiple Choice

  • competitive analysis

  • cross-industry analysis

  • time-industry analysis

  • time series analysis

 

 

If Apex, Inc. has an ROE = 10 percent, equity multiplier = 3, and profit margin of 5 percent, what is the total asset turnover ratio?

Multiple Choice

  • 0.0600

  • 0.0667

  • 0.1667

  • 0.6667

 

 

The maximum growth rate that can be achieved by financing asset growth with new debt and retained earnings is called the

Multiple Choice

  • internal growth rate.

  • retention rate.

  • sustainable growth rate.

  • operating expansion rate.