Financial Management Exam 1 – Study Guide, Key Concepts and Practice
Questions Review
Which one of the following questions involves a capital budgeting decision?
a. How many shares of stock should the firm issue?
b. Should the firm purchase a new machine for the production line?
c. Should the firm borrow money to acquire new equipment?
d. How much inventory should the firm keep on hand?
e. How much money should be kept in the checking account? - ✔✔b. Should the firm purchase
a new machine for the production line
Which one of the following questions involves a capital structure decision?
a.Which one of two project proposals should the firm implement?
b.How should the firm allocate its limited available funds among acceptable projects?
c.How much funding should be allocated to financing customer purchases of a new product?
d.How much debt should the firm incur to fund a project?
e.How much inventory will be needed to support a project? - ✔✔d.How much debt should the
firm incur to fund a project?
Determining the number of shares of stock to issue is an example of a ______ decision.
a. capital rationing
b. net working capital
c. capital budgeting
d. capital allocation
e. capital structure - ✔✔e. capital structure
Which one of the following questions is a working capital management decision?
, a. Should the company issue new shares of stock or borrow money?
b. Should the company refurbish its equipment or replace it?
c. How much inventory should the company keep on hand?
d. Should the company close one of its current stores?
e. How much money should the company borrow to buy a new building? - ✔✔c. How much
inventory should the company keep on hand?
Which one of the following is a working capital management decision?
a. What equipment will be required to complete a project?
b. Should the firm require immediate payment from customers or offer credit terms?
c. What amount of long-term debt is required to complete a project?d. What percentage of the
firm's equity should the firm issue to fund an acquisition?
e.Which one of several acceptable projects should be implemented? - ✔✔b. Should the firm
require immediate payment from customers or offer credit terms?
Which one of the following involves a working capital management decision?
a. What is the maximum level of cash to be kept in the firm's bank account?
b. What is the most efficient process for producing a product?
c. How many hours of overtime should manufacturing employees be allowed to work?
d. When is the appropriate time to replace the delivery fleet?
e. Should a newly available parcel of land be acquired? - ✔✔a. What is the maximum level of
cash to be kept in the firm's bank account?
Deciding which long-term investment a firm should make is a ______ decision.
Questions Review
Which one of the following questions involves a capital budgeting decision?
a. How many shares of stock should the firm issue?
b. Should the firm purchase a new machine for the production line?
c. Should the firm borrow money to acquire new equipment?
d. How much inventory should the firm keep on hand?
e. How much money should be kept in the checking account? - ✔✔b. Should the firm purchase
a new machine for the production line
Which one of the following questions involves a capital structure decision?
a.Which one of two project proposals should the firm implement?
b.How should the firm allocate its limited available funds among acceptable projects?
c.How much funding should be allocated to financing customer purchases of a new product?
d.How much debt should the firm incur to fund a project?
e.How much inventory will be needed to support a project? - ✔✔d.How much debt should the
firm incur to fund a project?
Determining the number of shares of stock to issue is an example of a ______ decision.
a. capital rationing
b. net working capital
c. capital budgeting
d. capital allocation
e. capital structure - ✔✔e. capital structure
Which one of the following questions is a working capital management decision?
, a. Should the company issue new shares of stock or borrow money?
b. Should the company refurbish its equipment or replace it?
c. How much inventory should the company keep on hand?
d. Should the company close one of its current stores?
e. How much money should the company borrow to buy a new building? - ✔✔c. How much
inventory should the company keep on hand?
Which one of the following is a working capital management decision?
a. What equipment will be required to complete a project?
b. Should the firm require immediate payment from customers or offer credit terms?
c. What amount of long-term debt is required to complete a project?d. What percentage of the
firm's equity should the firm issue to fund an acquisition?
e.Which one of several acceptable projects should be implemented? - ✔✔b. Should the firm
require immediate payment from customers or offer credit terms?
Which one of the following involves a working capital management decision?
a. What is the maximum level of cash to be kept in the firm's bank account?
b. What is the most efficient process for producing a product?
c. How many hours of overtime should manufacturing employees be allowed to work?
d. When is the appropriate time to replace the delivery fleet?
e. Should a newly available parcel of land be acquired? - ✔✔a. What is the maximum level of
cash to be kept in the firm's bank account?
Deciding which long-term investment a firm should make is a ______ decision.
