2
FINA 5320 TAMUCC Quiz 1 Chapters 1-5 Exam with || || || || || || || || ||
accurate detailed solutions || ||
What does capital structure refer to?
|| || || || ||
Capital structure refers to the specific mix of debt and equity used to finance a company's assets
|| || || || || || || || || || || || || || || || ||
and operations.
||
What cash budgeting means or refers to?
|| || || || || ||
A cash budget is an estimation of the cash flows of a business over a specific period of time. This
|| || || || || || || || || || || || || || || || || || || ||
could be for a weekly, monthly, quarterly, or annual budget. This budget is used to assess whether
|| || || || || || || || || || || || || || || || ||
the entity has sufficient cash to continue operating over the given time frame
|| || || || || || || || || || || ||
What the primary advantage of being a limited partner means compared to general
|| || || || || || || || || || || ||
The main advantage for limited partners is that their personal liability for business debts is
|| || || || || || || || || || || || || || ||
limited. A limited partner can only be held personally responsible up to the amount he or she
|| || || || || || || || || || || || || || || || ||
invested. Limited partners enjoy a protected investment, knowing they cannot lose more money
|| || || || || || || || || || || || ||
than they've contributed
|| ||
What is a corporation? || || ||
A corporation is a distinct legal entity composed of one or more owners. Stockholders are the true
|| || || || || || || || || || || || || || || || ||
owners through equity of common and preferred stocks, they are paid with cash dividends or
|| || || || || || || || || || || || || || ||
realizing capital gains through increases in price of their common stock shares.
|| || || || || || || || || || ||
,2
What are the advantages of a corporation?
|| || || || || ||
limited liability, unlimited life, separation of ownership and management, ability to own shares in
|| || || || || || || || || || || || || ||
several companies without having to work for them, liquidity, and ease of raising capital.
|| || || || || || || || || || || || ||
What are the disadvantages of a corporation?
|| || || || || ||
Separation of ownership and management (agency problem)|| || || || || ||
Double taxation (income taxed at the corporate rate and then dividends taxed at personal rate,
|| || || || || || || || || || || || || || ||
while dividends paid are not tax deductible)
|| || || || || ||
What is the goal of the firm?
|| || || || || ||
"Maximize shareholder wealth" by maximizing the price of the existing common stock.
|| || || || || || || || || || ||
What is the Sarbanes-Oxley Act?
|| || || ||
An act passed into law by Congress in 2002 to establish strict accounting and reporting rules in
|| || || || || || || || || || || || || || || || ||
order to make senior managers more accountable and to improve and maintain investor
|| || || || || || || || || || || || ||
confidence.
What did the Sarbanes-Oxley Act do?
|| || || || ||
Established an oversight board to monitor the accounting industry, tightened audit regulations,
|| || || || || || || || || || || ||
and controls, toughened penalties against executives who commit corporate fraud, strengthened
|| || || || || || || || || || ||
accounting disclosure requirements, established corporate board structure and membership
|| || || || || || || || ||
guidelines, established guidelines with regard to analyst conflicts of interest, mandated instant
|| || || || || || || || || || || ||
disclosure of stock sales by corporate executives, increased securities regulation authority and
|| || || || || || || || || || || ||
budgets for auditors and investigators.|| || || ||
,2
Who is a stakeholder?
|| || ||
A stakeholder is a party with an interest in an enterprise; stakeholders in a corporation include
|| || || || || || || || || || || || || || || ||
investors, employees, customers, and suppliers. || || || ||
What is agency cost? || || ||
An agency cost is a type of internal company expense, which comes from the actions of an agent
|| || || || || || || || || || || || || || || || || ||
acting on behalf of a principal.
|| || || || ||
What are the fours categories of agency costs?
|| || || || || || ||
Monitoring expenditures - for audit and control procedures || || || || || || ||
Bonding expenditures - protect against the potential consequences of dishonest acts by managers
|| || || || || || || || || || || ||
Structuring expenditures - Use of managerial compensation plans to provide financial incentives
|| || || || || || || || || || || ||
for managerial actions consistent with the share price maximization.
|| || || || || || || ||
Opportunity costs -these result from the difficulties typically encountered by large organizations
|| || || || || || || || || || || ||
in responding to ew opportunities
|| || || ||
What are stockholders and what do they do?
|| || || || || || ||
The owners of a corporation.
|| || || ||
Stockholders elect the board of directors, which has the ultimate authority to guide corporate || || || || || || || || || || || || || ||
affairs and set general policy. The board is usually composed of key corporate personnel and
|| || || || || || || || || || || || || || ||
outside directors. The CEO reports to the board directly. The owners do not have a direct
|| || || || || || || || || || || || || || || ||
relationship with management but give their input through board elections and voting on major
|| || || || || || || || || || || || || ||
charter issues. ||
, 2
How do you calculate working capital?
|| || || || ||
Working Capital = Current Assets - Current Liabilities
|| || || || || || ||
How do you calculate operating cash flow (OCF)?
|| || || || || || ||
OCF = EBIT + depreciation - taxes
|| || || || || ||
How do you calculate average tax rate?
|| || || || || ||
Average tax rate = tax bill / taxable income
|| || || || || || || ||
How do you calculate marginal tax rate?
|| || || || || ||
Marginal tax rate is the rate paid on the next dollar of income.
|| || || || || || || || || || || ||
What are the four accounting statements?
|| || || || ||
Balance sheet ||
Income Statement ||
Statement of Cash Flows || || ||
Statement of Stockholders Equity || || ||
FINA 5320 TAMUCC Quiz 1 Chapters 1-5 Exam with || || || || || || || || ||
accurate detailed solutions || ||
What does capital structure refer to?
|| || || || ||
Capital structure refers to the specific mix of debt and equity used to finance a company's assets
|| || || || || || || || || || || || || || || || ||
and operations.
||
What cash budgeting means or refers to?
|| || || || || ||
A cash budget is an estimation of the cash flows of a business over a specific period of time. This
|| || || || || || || || || || || || || || || || || || || ||
could be for a weekly, monthly, quarterly, or annual budget. This budget is used to assess whether
|| || || || || || || || || || || || || || || || ||
the entity has sufficient cash to continue operating over the given time frame
|| || || || || || || || || || || ||
What the primary advantage of being a limited partner means compared to general
|| || || || || || || || || || || ||
The main advantage for limited partners is that their personal liability for business debts is
|| || || || || || || || || || || || || || ||
limited. A limited partner can only be held personally responsible up to the amount he or she
|| || || || || || || || || || || || || || || || ||
invested. Limited partners enjoy a protected investment, knowing they cannot lose more money
|| || || || || || || || || || || || ||
than they've contributed
|| ||
What is a corporation? || || ||
A corporation is a distinct legal entity composed of one or more owners. Stockholders are the true
|| || || || || || || || || || || || || || || || ||
owners through equity of common and preferred stocks, they are paid with cash dividends or
|| || || || || || || || || || || || || || ||
realizing capital gains through increases in price of their common stock shares.
|| || || || || || || || || || ||
,2
What are the advantages of a corporation?
|| || || || || ||
limited liability, unlimited life, separation of ownership and management, ability to own shares in
|| || || || || || || || || || || || || ||
several companies without having to work for them, liquidity, and ease of raising capital.
|| || || || || || || || || || || || ||
What are the disadvantages of a corporation?
|| || || || || ||
Separation of ownership and management (agency problem)|| || || || || ||
Double taxation (income taxed at the corporate rate and then dividends taxed at personal rate,
|| || || || || || || || || || || || || || ||
while dividends paid are not tax deductible)
|| || || || || ||
What is the goal of the firm?
|| || || || || ||
"Maximize shareholder wealth" by maximizing the price of the existing common stock.
|| || || || || || || || || || ||
What is the Sarbanes-Oxley Act?
|| || || ||
An act passed into law by Congress in 2002 to establish strict accounting and reporting rules in
|| || || || || || || || || || || || || || || || ||
order to make senior managers more accountable and to improve and maintain investor
|| || || || || || || || || || || || ||
confidence.
What did the Sarbanes-Oxley Act do?
|| || || || ||
Established an oversight board to monitor the accounting industry, tightened audit regulations,
|| || || || || || || || || || || ||
and controls, toughened penalties against executives who commit corporate fraud, strengthened
|| || || || || || || || || || ||
accounting disclosure requirements, established corporate board structure and membership
|| || || || || || || || ||
guidelines, established guidelines with regard to analyst conflicts of interest, mandated instant
|| || || || || || || || || || || ||
disclosure of stock sales by corporate executives, increased securities regulation authority and
|| || || || || || || || || || || ||
budgets for auditors and investigators.|| || || ||
,2
Who is a stakeholder?
|| || ||
A stakeholder is a party with an interest in an enterprise; stakeholders in a corporation include
|| || || || || || || || || || || || || || || ||
investors, employees, customers, and suppliers. || || || ||
What is agency cost? || || ||
An agency cost is a type of internal company expense, which comes from the actions of an agent
|| || || || || || || || || || || || || || || || || ||
acting on behalf of a principal.
|| || || || ||
What are the fours categories of agency costs?
|| || || || || || ||
Monitoring expenditures - for audit and control procedures || || || || || || ||
Bonding expenditures - protect against the potential consequences of dishonest acts by managers
|| || || || || || || || || || || ||
Structuring expenditures - Use of managerial compensation plans to provide financial incentives
|| || || || || || || || || || || ||
for managerial actions consistent with the share price maximization.
|| || || || || || || ||
Opportunity costs -these result from the difficulties typically encountered by large organizations
|| || || || || || || || || || || ||
in responding to ew opportunities
|| || || ||
What are stockholders and what do they do?
|| || || || || || ||
The owners of a corporation.
|| || || ||
Stockholders elect the board of directors, which has the ultimate authority to guide corporate || || || || || || || || || || || || || ||
affairs and set general policy. The board is usually composed of key corporate personnel and
|| || || || || || || || || || || || || || ||
outside directors. The CEO reports to the board directly. The owners do not have a direct
|| || || || || || || || || || || || || || || ||
relationship with management but give their input through board elections and voting on major
|| || || || || || || || || || || || || ||
charter issues. ||
, 2
How do you calculate working capital?
|| || || || ||
Working Capital = Current Assets - Current Liabilities
|| || || || || || ||
How do you calculate operating cash flow (OCF)?
|| || || || || || ||
OCF = EBIT + depreciation - taxes
|| || || || || ||
How do you calculate average tax rate?
|| || || || || ||
Average tax rate = tax bill / taxable income
|| || || || || || || ||
How do you calculate marginal tax rate?
|| || || || || ||
Marginal tax rate is the rate paid on the next dollar of income.
|| || || || || || || || || || || ||
What are the four accounting statements?
|| || || || ||
Balance sheet ||
Income Statement ||
Statement of Cash Flows || || ||
Statement of Stockholders Equity || || ||
