Exam 1 FINA-3311 Questions With Complete Solutions
A corporation: Correct Answer is a legal entity separate from
its owners.
A limited liability company (LLC): Correct Answer prefers its
profits be taxed as personal income to its owners.
Alameda Markets would like to increase its internal rate of
growth. Decreasing which one of the following will help the
firm achieve its goal? Correct Answer Dividend payout ratio
All else held constant, which one of the following will decrease
if a firm increases its net income? Correct Answer Price-
earnings ratio
An agency issue is most apt to develop when:
the control of a firm is separated from the firm's ownership.
a firm encounters a period of stagnant growth.
the firm's owner is also its key manager.
a firm downsizes.
a firm is structured as a general partnership. Correct Answer
the control of a firm is separated from the firm's ownership.
An employee has a claim on the cash flows of Westlake
Machines. This claim is defined as a claim by one of the firm's:
Correct Answer Stakeholders
An increase in which one of the following will increase
operating cash flow for a profitable, tax-paying firm? Correct
Answer Depreciation
, Builder's Outlet just hired a new chief financial officer. To get a
feel for the company, she wants to compare the firm's sales and
costs over the past three years to determine if any trends are
present and also determine where the firm might need to make
changes. Which one of the following statements will best suit
her purposes? Correct Answer Common size income
statement
Cash flow from assets is defined as: Correct Answer
operating cash flow minus the change in net working capital
minus net capital spending.
Cash flow to creditors is defined as: Correct Answer interest
paid minus net new borrowing.
Cash flow to stockholders is defined as: Correct Answer
dividends paid minus net new equity raised
Deandre and Mason both enjoy sunshine, water, and surfboards.
Thus, the two friends decided to create a business together
renting surfboards, paddle boats, and inflatable devices in
California. Deandre and Mason will equally share in the
decision making and in the business profits or losses. Which
type of business did they create if they both have full personal
liability for the firm's debts? Correct Answer General
partnership
If a firm has a 100 percent dividend payout ratio, then the
internal growth rate of the firm is: Correct Answer zero
percent.
A corporation: Correct Answer is a legal entity separate from
its owners.
A limited liability company (LLC): Correct Answer prefers its
profits be taxed as personal income to its owners.
Alameda Markets would like to increase its internal rate of
growth. Decreasing which one of the following will help the
firm achieve its goal? Correct Answer Dividend payout ratio
All else held constant, which one of the following will decrease
if a firm increases its net income? Correct Answer Price-
earnings ratio
An agency issue is most apt to develop when:
the control of a firm is separated from the firm's ownership.
a firm encounters a period of stagnant growth.
the firm's owner is also its key manager.
a firm downsizes.
a firm is structured as a general partnership. Correct Answer
the control of a firm is separated from the firm's ownership.
An employee has a claim on the cash flows of Westlake
Machines. This claim is defined as a claim by one of the firm's:
Correct Answer Stakeholders
An increase in which one of the following will increase
operating cash flow for a profitable, tax-paying firm? Correct
Answer Depreciation
, Builder's Outlet just hired a new chief financial officer. To get a
feel for the company, she wants to compare the firm's sales and
costs over the past three years to determine if any trends are
present and also determine where the firm might need to make
changes. Which one of the following statements will best suit
her purposes? Correct Answer Common size income
statement
Cash flow from assets is defined as: Correct Answer
operating cash flow minus the change in net working capital
minus net capital spending.
Cash flow to creditors is defined as: Correct Answer interest
paid minus net new borrowing.
Cash flow to stockholders is defined as: Correct Answer
dividends paid minus net new equity raised
Deandre and Mason both enjoy sunshine, water, and surfboards.
Thus, the two friends decided to create a business together
renting surfboards, paddle boats, and inflatable devices in
California. Deandre and Mason will equally share in the
decision making and in the business profits or losses. Which
type of business did they create if they both have full personal
liability for the firm's debts? Correct Answer General
partnership
If a firm has a 100 percent dividend payout ratio, then the
internal growth rate of the firm is: Correct Answer zero
percent.
