Which of the following is true about Asset Diversification?
a. It is necessary to invest in at least 500 assets to achieve significant risk reduction
b. It is a way of selecting the highest growth stocks in a portfolio
c. It involves allocating 100% of in
It is used to reduce exposure to firm-specific risk
Which of the following is not a tool of finance?
a. Present Value- future value analysis
b. financial statements and ratios
c. cost- benefit analysis
d. risk and return models
e. spreadsheet modelling
C. Cost-Benefit Analysis
Which of these statements concerning the Principles of Finance is true?
a. There is an inverse relationship between risk and return
b. Investors prefer less risk to more risk
c. a dollar tomorrow is worth more than a dollar today
d. markets are inefficien
B. Investors prefer less risk to more risk
Which of the following is common element of a financial crises?
a. A democrat is usually in the White HOuse
b. Financial crises occur only about once every 25 years
C. The federal Government is seldom involved in a financial crisis
D. Financial crises usu
D. Financial crises usually result from excessive investment in an area of the economy or markets
Which of the following statements regarding the cash flow statement is true?
A. Primary Source of Cash is Operating Activities; Primary Use of Cash is Investing Activities
B. Financing Activities do not have an impact on the Cash Flow Statement
C. A typic
A. Primary Source of Cash is Operating Activities; Primary Use of Cash is Investing Activities
Which of the following statements about stockholders and stakeholders is true?
A. Stockholders' interests are protected by contracts
B. The federal government is a corporate stakeholder
C. Stockholders have a claim on the firm's cash flows prior to debt h
B. The federal government is a corporate stakeholder
Which of the following is true about the different organizational forms?
A. Partnership and Sole Proprietorships profit are double taxed
B. It is easy to raise large amounts of money in a partnership
C. Corporations are the most complex form of business o
C. Corporations are the most complex form of business organization to start up
WHich of the following is true regarding corporate governance?
a. Management had a high level of stock ownership in the 1980s
b. in the 1980s CEOs were more likely to be fired than before
C. CEO's accountability for their performance declined in the 1990s
D. Japanese companies have fewer takeovers compared to the United States
Which of the following is true regarding financial statements?
A. Operating profit equals sales minus cost of goods sold
B. the Balance Sheet measures the growth in assets over a period of time
C. Shareholders equity is found on the income statement
D. As
E. The Cash Flow Statement shows how the cash balance changed from one period to the next
Disney Stock Price increased from $40 to $48 last yer, and the 10 company paid a $2 dividend. What was the stock return on Disney?
A. 10%
B. 15%
C. 20%
D. 25%
E.30%
(48 - 40) + 2 / 40 = 25%
Which statement is the most accurate reflection of the agency problem?
A. Management pursues that maximize shareholder value
B. The objectives of shareholders and management are aligned
C. Management allocates corporate resources in a way that benefits st
D. Management does not have an ownership stake in the company
Management's overall performance is the best gauged by
A. Profitability ratios
B. Liquidity Ratios
C. Leverage ratios
D. Activity ratios
E. Efficiency ratios
A. Profitability Ratios
Use the Strategic Profit Model to calculate the ROE for Badger Inc in 2007
Profit Margin= 10%
Asset Turnover = 1.5
Financial Leverage= .6
B. 9%
PM
AT = ROA
LEV = ROE
On a common sized balance sheet, what is Intel's "Short Term Investments' in 2008?
S-T INV/ Assets
10.51%
What is intel's return on assets for 2008?
Net Income/Assets
=11.33%
What is Intel's Current Ratio in 2007?
Curr. Assets/Curr. Liabs
= 2.80
Which of the following is true?
A. Top line growth 9sales0 in more important than bottom line growth (earnings) for companies
B. The U.S. ranks first in the world in terms of economic freedom
C. In an efficient market, stock prices reflect stock values
D.
C. In an efficient market, stock prices reflect stock values
Calculate Hawkeye Corp's Market Capitalization using the below information
Share Outstanding = 1million
Price Per Share = $2
Book Value Per Share = $5
Earnings Per Share= .25
#shares * price per share
=2million
Dow Jones is currently trading ____ at ; The Nasdaq is currently trading at ________?
A. 11,500; 2,500
B. 8,750; 4, 350
C. 25,000; 3500
D. 15,500; 4200
E. 7,000, 1200
15,000; 4,200
Which of the following is true regarding the roles of the Controller and Treasurer
A. Controller oversees the Treasury of the company; treasurer is the head of Accounting
B. Controller is responsible for auditing company financials; Treasurer puts togethe
Treasurer manages Capital Budgets
Which of the following is true about Bernie Madoff?
A. Madoff's investment scam lasted only several months
B. Unlike Charles Ponzi, Madoff promised very high investment returns
C. Madoff's fraud pre-dated the scheme run by Charles Ponzi
D. The Securities
E. Schemes like Madoff's require new investment dollars on an ongoing basis to continue
The Dual challenges to management are to _______ and ____________.
A. Treat employees well; be responsible citizen in the community
B. Produce high quality products/services at competitive prices; provide competitive returns to stock holders
C. Provide jo
Produce high quality products/services at competition prices; provide competitive returns to stock holders
Given the following information, calculate the Cash Flow for the Wolverine
Net Income= 500,000
Depreciation= 50,000
Sales of Property=100k
Common Stock 200,000
Net Income + Depreciation + Property Sale - Stock Repurchase
$450,000
Which of the following is the true regarding Berkshire Hatheway?
A. Government after the financial crisis
B.Berkshire's stock has underperformed the overall stock market over the long term
C. Berkshire's shares trade for over $100k per share
D. Berkshire
C. Berkshire's shares trade for over $100,000 per share
Which of the following is a capital structure decision?
A. Paying for new equipment with debt or equity
B. Building a new manufacturing plant
C. Increasing employee wages
D. Managing short-term assets and liabilities
E. Changing lending policies for custo
A. Paying for new equipment with debt or equity
Which of the following is true?
A. The average annual return on the stock market is about 20%
B. The average growth rate in the U.S. is 12%
C. On average, companies earn a return on equity of 25% in the U.S.
D. The price of an ounce of gold is about $50,0
E. The price of a barrel of oil is about $100
Which of the following is true about behavioral finance?
A. Individuals are expected utility maximizers
B. Markets are always price efficient
C. Market prices may reflect emotions and biases
D. Arbitrageurs eliminate any price distortions in the markets
E
C. Market prices may reflect emotions and biases
Which of the following is true about financial statements?
A. Companies keep two sets of books- one for taxes and one for investors
B. Accounts receivable are on the income statement
C. There are no footnotes relating to income statement accounts
D. To re
Companies keep two sets of books- one for taxes and one for investors
Which of the following is a working capital decision?
A. A company refinances long-term debt at a lower interest rate
B. A company pays a dividend to stock holders
C. A company increases its R&D investment
D. A company changes its credit policy
E. A compa
D. A company changes its credit policy
Which of these statements concerning the Principles of Finance is true?
A. Buying a greater number of stocks increases the risk of your portfolio
B. Investors prefer more risk to less risk
C. According to the Capital Asset Pricing Model, Beta is the appro
C. According to the Capital Asset Pricing Model, Beta is the appropriate measure of risk
Which of the following is not true about corporate defense mechanisms?
A. They are used by activist investors to get the attention of management
B. They initially became popular in the 1980s in response to hostile takeovers
C. Poison pills result in a sal
A. They are used by activist investors to get the attention of management
Activist investors:
A. have a negative impact on a company and its stock price
B. usually invest in company that has been outperforming the market
C. are not required to report their investment holdings to the SEC
D. seek changes in management and/or stra
D. seek changes in management and/or strategy to improve stockholder returns
What would you add back to Net Income to determine Operating Profit?
A. Dividends
B. Interest and Taxes
C. COGS
D. SG&A and Depreciation
E. Long-term debt
B. Interest and Taxes
Which of the following corporate governance model would partnering companies own each other's stock?
A. Anglo- American corporate governance model
B. Japan-Germany corporate governance model
C. Rest of World corporate governance model
D. Democratic corpor
B. Japan-Germany corporate governance model
1. Which of the following is a characteristic of a sole proprietorship?
A. It is easier to raise money than it is for corporations
B. There is no legal distinction between the business and owner
C. It is the most complex form of business organization to s
B. There is no legal distinction between the business and owner
Which of the following is a characteristic of a partnership?
A. It is more difficult for a partnership to raise capital compared to a corporation
B. Business partnerships are listed on the NYSE
C. Partnerships are easier to set up than sole proprietorship
A. It is more difficult for a partnership to raise capital compared to a corporation
. Calculate the stock return from the following information:
Beginning Price: $120.00
Price 1 Year Later: $180.00
Annual dividend: $15.00
A. 12.5%
B. 41.7%
C. 50.0%
D. 62.5%
E. 8.3%
D. 62.5%
Calculate the stock return from the following information:
Beginning Price: $90.00
Ending Price: $50.00
Annual dividend: $25.00
A. -50.0%
B. -27.8%
C. -30.0%
D. -44.4%
E. -16.7%
E. -16.7%
3. What is the return on a stock with the following information?
Beginning Price: $25
Ending Price: $30
Annual Dividend: $2
A. 20.0%
B. 23.3%
C. 28.0%
D. 16.7%
E. 12.0%
C. 28%
1. Which of the following investments are the most risky?
A. International stocks
B. Corporate bonds
C. Treasury bonds
D. Large-cap stocks
E. Savings account
A. International stocks
2. Which of the following investments are the least risky?
A. Small-cap stocks
B. Corporate bonds
C. International stocks
D. Large growth stocks
E. Mid-cap stocks
B. Corporate bonds
1. Which of the following is part of the treasurer's function?
A. Auditing the company's financials
B. Publishing financial statements
C. Making capital expenditures
D. Monitoring accounting systems
E. Filing the company's taxes
C. Making capital expenditures
2. Which of the following is part of the controller's function?
A. Determining the feasibility of various projects
B. Financial planning
C. Managing short and long term capital requirements
D. Working capital management
E. Preparing financial statements a
E. Preparing financial statements and reports
According to the Theory of Efficient Capital Markets:
A. Stock prices are not affected by new information
B. Current stock prices reflect all publicly available information
C. Stock prices adjust to new information slowly over time
D. Stock prices only re
B. Current stock prices reflect all publicly available information
According to the Theory of Efficient Capital Markets:
A. Stock prices do not reflect all publicly available information
B. Stock prices take a long time to capture new information
C. Stock prices react instantaneously to new information
D. Stock prices re
C. Stock prices react instantaneously to new information
Given the following information, a rational investor would most likely invest in which stock?
Stock A: Mean Return - 12%; Standard Deviation - 11%
Stock B: Mean Return - 12%; Standard Deviation - 9%
A. Stock A because it is riskier than Stock B
B. Stock A
D. Stock B because it is not as risky as Stock A
1. The last 10 year returns of Stock A and Stock B have a mean of 20% each and standard deviation of 80% and 30% respectively. Assuming all other criteria for choosing a stock are similar for A and B, a risk averse investor would prefer investing in
A. St
Stock B
Which of the following statements about Business Organizational Forms is true?
A. Corporations are easier to start than sole proprietorships
B. Owners of corporations have limited liability
C. Partnerships are easier to transfer than corporations
D. It is
B. owners of coproations have limited liability
The time value of money implies that:
A. A dollar today is worth MORE than a dollar tomorrow
B. A dollar today is worth LESS than a dollar tomorrow
C. The value of money does not change over time
D. Investors are indifferent to receiving a dollar today vs
A. dollar today is worth MORE than a dollar tomorrow
The time value of money implies that:
A. Investors are indifferent to receiving a dollar today vs. a dollar in the future
B. A dollar today is worth the SAME as a dollar tomorrow
C. A dollar today is worth LESS than a dollar tomorrow
D. The value of money
E. A dollar tomorrow is worth LESS than a dollar today
3. Jennifer is selling her iPhone which is worth $500 to Dave. Dave suggests the following options. The most financially valuable option for Jennifer is
A. Immediate cash payment of $500
B. Cash payment of $500, a year after the Sale
C. Cash payments of $
A. Immediate cash payment $500
Which of the following is an "enemy" of your investment plan?
A. Strong market fundamentals
B. Corporate governance
C. Strong company earnings
D. Dividend payouts
E. Taxes
E. Taxes
2. Which of the following would increase an investor's real rate of return?
A. Brokerage firms increasing the commissions on executing a trade for an investor
B. The government raising the capital gains tax on investments
C. Higher asset management fees p
D. A significant drop in the inflation rate
What is working capital management?
A. Determining the optimal use of debt and equity for a firm
B. Managing a firm's short-term financial position
C. Choosing the best option for financing an acquisition
D. Managing investments in property, plant, and eq
A. Determining the optimal use of debt and equity for a firm
As you increase a portfolio's diversification in an asset class, the riskiness of the portfolio:
A. Increases
B. Decreases
C. Stays the same
D. Increases, then decreases
E. Fluctuates with the beta
B. Decreases
2. As you decrease a portfolio's diversification in an asset class, the riskiness of the portfolio:
A. Increases
B. Decreases
C. Stays the same
D. Decreases, then increases
E. Fluctuates with the beta
A. Increases
Which of the following is an element of good management according to Gordon Gekko?
A. Managerial efficiency is not important
B. Management is not accountable to shareholders
C. Management should have a stake in the company
D. Shareholder value should be i
C. Management should have a stake in the company
Which of the following is a principle held by Gordon Gekko:
A. Management must be accountable to the shareholders
B. Management should not have a stake in the company
C. The maximization of shareholder value doesn't matter
D. Managerial efficiency is not
A. Management must be accountable to the shareholders
1. Given the following information for Conwood Inc., compute its market capitalization:
Stock price: $50.00
Earnings per share: $7.50
Price/Earnings ratio: 19
Shares outstanding: 2.5 billion
A. $0.99 billion
B. $356.25 billion
C. $6.58 billion
D. $18.75 b
E. 125 billion
2. Given the following information for UST, compute its market capitalization:
Stock price: $12.50
Earnings per share: $6.25
Price/Earnings ratio: 15
Shares outstanding: 6 billion
A. $37.5 billion
B. $5.0 billion
C. $562.5 billion
D. $75.0 billion
E. $2.5
D. 75 billion
Which activity is most likely to increase shareholder value?
A. Minimizing the company's cost of capital
B. Minimizing the amount of projects the company spends money on
C. Financing the company's business with expensive debt
D. Maximizing the amount of c
A. Minimizing the company's cost of capital
Which activity is most likely to increase shareholder value?
A. Minimizing the amount of projects the company spends money on
B. Using only equity to finance the company's acquisitions
C. Maximizing the cost of capital
D. Allocating capital to investments
D. Allocating capital to investments with the highest risk adjusted return
3. Which of the following is true about creating shareholder value?
A. The pricing efficiency of the markets is not an issue if managers are to pursue shareholder value creation
B. Activist investors such as Carl Icahn attempt to force companies to create
B. Excessive investment in an asset class
Which of the following is a common element of financial crises?
A. Strong growth in the US economy
B. Excessive investment in an asset class
C. Trade deficit
D. Democratic President
E. Occurs only once every 30 years
B. Excessive investment in an asset class
Which of the following is a common element of financial crises?
A. Easy financing
B. Strong growth in the US economy
C. Increase in value of dollar
D. Trade deficit
E. Excessive exports
A. Easy financing
Which of the following is an example of the agency problem?
A. Management pursues strategies that maximize shareholder value
B. Management invests in a project that serves the interests of management more than shareholders
C. The objectives of shareholder
B. management invests in a project that serves the interests of management more than shareholders
Which of the following is an example of the agency problem?
A. Management acts in the best interest of shareholders
B. The objectives of shareholders and management are aligned
C. Management invests in a project that serves the interests of shareholders
D
D. Corporate Management invests in a negative ROI project because it will mean large bonuses and kickbacks for all senior executives
. Which of the following is an example of an internal control mechanism used to ensure that management acts in shareholder interests?
A. Shareholder Activism
B. Market for Corporate Control
C. Managerial Labor Market
D. Threat of Takeover by Private Equit
E. Audited Financial Statements
According to Behavioral Finance, which of the following statements are true?
A. Markets are always efficient
B. Decisions are based on rational expectations
C. Prices reflect values
D. Prices reflect emotions and biases
E. Low risk equals high returns
D. Prices reflect emotions and biases
According to Traditional Finance, which of the following statements are true?
A. Markets are never efficient
B. Prices reflect expected outcomes
C. Arbitrageurs will not correct the market
D. Decisions are based on emotions and biases
E. There are flaws i
Prices reflect expected outcomes
3. The financial crisis of the late 2000s is proof of irrational investors supports which of the following theories?
A. Behavioral Finance
B. Risk Aversion
C. Traditional Finance
D. Efficient Markets
E. Diversification reduces risk
A. Behavioral Finance
. Which of the following is true about the Chief Financial Officer (CFO)?
A. The CFO reports to the head Controller
B. CFO is the head accountant for an organization
C. The CFO is prohibited from signing the Annual Report
D. The CFO oversees the financial
D. The CFO oversees the financial activites of an organization
Which of the following is true about the Chief Financial Officer (CFO)?
A. The Controller and Treasurer report to the CFO
B. The CFO is not responsible for risk management
C. The CFO is solely responsible for Treasury operations
D. The CFO is not expected
A. The controller and treasurer report to the CFO
1. Which of the following companies Warren Buffet would least prefer to invest in
A. Twitter, Inc.
B. Nestle
C. Exxon Mobil
D. PNC Financial services
E. None of the above
A. Twitter
2. Which of the following does Warren Buffet believe is necessary for investment in a company:
A. Low barriers to entry
B. Management that acts without owner interests
C. Prefers to buy and sell shares quickly
D. Enjoys investing in high-tech companies
E.
E. Generators of cash flow
What is Berkshire Hathaway's primary business?
A. Insurance
B. Automobile
C. Investment Banks
D. Textiles
E. Semi-Conductors
E. Semi- Conductors
In the short term, stock prices are driven by:
A. Supply and demand
B. Corporate earnings (fundamentals)
C. Leadership structure
D. Long-term value of the company
E. Company cash flow
A. Supply and Demand
Which of the following concerning the relationship between risk and return is correct?
A. Investors do not need to be compensated for taking on risk
B. Investors generally demand higher return for lower risk investments
C. Riskier investments tend to have
C. Riskier investments tend to have higher returns
Which of the following concerning the relationship between risk and return is correct?
A. Risk and return are directly related
B. Investors generally require a lower return as they take on more risk
C. Safer investments tend to have higher returns
D. High
A. Risk and return are directly related
1. Historically, which of the following investment decisions is most significant in portfolio performance?
A. Industry selection
B. Sector selection
C. Security selection
D. Country selection
E. Asset allocation
E. asset allocation
2. Which of the following is not a part of the corporate financial toolbox:
A. Accounting Statements and Ratios
B. Risk and Return Models
C. GAAP performance and Comparables
D. Present Value
E. Spreadsheet Modeling
C. GAAP
1. What is true about risk-averse investors?
A. Most rational investors are not risk averse
B. A risk-averse investor never takes on any risk, small or large
C. Risk averse investors prefer stocks with lower standard deviations compared to higher standard
C. Risk averse investors prefer stocks with lower standard deviations compared to higher standard deviations
2. Stocks in which of the following industries would require the highest expected return for an investor?
A. Water companies
B. Electric companies
C. Telecom companies
D. Biotech companies
E. Property Insurance companies
D. Biotech Companies
1. Which of the following is true about financial markets?
A. Markets only bring together buyers and sellers in common stocks
B. The U.S. is viewed as having the most free markets in the world
C. The pricing efficiency of the markets is not an issue if ma
E. The alternative to allocating capitl through markets is for the government to allocate capital
What distinguishes Debt and Equity Markets from other capital markets?
A. They are where currencies are traded
B. They are where companies raise funds to finance growth
C. They are where essential commodities such are corn and wheat
D. They are where fold
B. They are where companies raise funds to finance growth
The annual report publicly traded companies must file with the SEC is the _______
A. 10Q
B. 8K
C. 4C
D. 10K
E. 401K
D. 10K
. The quarterly report publicly traded companies must file with the SEC is the _______
A. 10Q
B. 8K
C. 4C
D. 10K
E. 401K
A. 10Q
Why did Bernard Madoff's Ponzi scheme fall apart?
A. Too many new investors wanted him to manage their portfolios
B. His auditor turned him in
C. There was a financial crisis and too many investors withdrew their money
D. He lacked the name recognition to
C. There was a financial crisis and too many investors withdrew their money
Bernard Madoff told his investors he had $50B in his fund but he really only had $15B. Why?
A. He paid out higher returns than he earned
B. He lost money investing in International Reply Coupons (IRCs)
C. He was fined by the SEC for audit infractions
D. H
A. He paid out higher returns than he earned
Calculate the company's Current Assets:
Fixed Assets = $300,000
Long-term debt = $225,000
Current Liabilities = $175,000
Shareholder's Equity = $150,000
A. $400,000
B. $375,000
C. $800,000
D. $1,100,000
E. $250,000
E. 250 million
Calculate the company's Current Liabilities:
Fixed Assets = $450,000
Current Assets = $400,000
Long-term debt = $250,000
Shareholder's equity = $275,000
A. $1,275,000
B. $625,000
C. $450,000
D. $325,000
E. $260,000
D. 325 million
The managerial defense mechanism that occurs when a company is targeted for hostile takeover and responds by selling off its prized assets is______.
A. The Pac-Man defense
B. Greenmail
C. Crown Jewels
D. Poison Pill
E. Golden Parachutes
C. Crown Jewels
The managerial defense mechanism that occurs when a target company purchases the acquirer's shares at a premium over the market price is______.
A. The Pac-Man defense
B. Greenmail
C. Crown Jewels
D. Poison Pill
E. Golden Parachutes
B. Greenmail
Which of the following is true of stakeholders?
A. Danny Devito (in 'Other People's Money') represents the stakeholder view of the firm
B. Stakeholders' interests are protected by contractual agreements
C. Stakeholders are entitled to a residual claim of
B. Stakeholder's interests are protected by contractual agreements
Which of the following statements about shareholders is true?
A. Shareholders are protected by contracts
B. Shareholders are paid before stakeholders
C. Shareholders do not agree with Danny Devito's view (in 'Other People's Money')
D. Shareholders are con
D. Shareholders are considered owners of the firm
Which of the following statements about stockholders and stakeholders is true?
A. The federal government is never a corporate stakeholder
B. Danny Devito (in 'Other People's Money') represents the stakeholder view of the firm
C. Stockholders have a residu
C. Stockholders have a residual claim on a firm's cash flows
Which of the following is true regarding depreciation methods?
A. Companies report the same financial results to investors that they report to the Internal Revenue Service
B. Using accelerated depreciation methods for fixed assets provides for higher repo
E. Companies report higher depreciation and lower net income using accelerated depreciation for fixed assets to the Internal Revenue Service
Which of the following is true regarding depreciation methods?
A. Companies do not report the same depreciation methods to investors that they report to the Internal Revenue Service
B. Using accelerated depreciation methods for fixed assets provides for h
A. Companies do not report the same depreciation methods to investors that they report to the Internal Revenue Service
On a common size income statement, each item is expressed as a percentage of what value?
A. Cost of Goods Sold (COGS)
B. Revenue
C. Net Income
D. Total Assets
E. Selling, General and Administrative (SG&A) Expenses
B. Revenue
On a common size balance sheet, each item is expressed as a percentage of what value?
A. Liabilities + Stockholders Equity
B. Cash
C. Net Sales
D. Power, Plant and Equipment (PP&E)
E. Inventory
A. Liabilites + Stockholders Equity
Which of the following is a measure of profitability?
A. Operating Margin
B. Days Sales Outstanding
C. Days Payables Outstanding
D. Fixed Asset Turnover
E. Current Ratio
A. Operating Margin
Which of the following is a measure of company's liquidity?
A. Fixed Assets Turnover
B. Profit Margin
C. Return on Equity
D. Quick Ratio
E. Return on Assets
D. Quick Ratio
Calculate the Return on Equity (ROE) using the Strategic Profit Model for a company with the following data:
Profit margin = 15%
Total Asset Turnover = 2.1
Inventory Turnover = 1.2
Equity Multiplier = 0.8
Current Ratio = 1.7
A. 25%
B. 51%
C. 36%
D. 18%
E.
19%
Given the following information, what is the stock price of the firm?
Market capitalization: $205M
Market Value of Debt: $73M
No. of shares outstanding: 3.5M
Book value of equity: $115M
Net Sales: $340M
P/E Ratio: 8
A. $58.57
B. $25.63
C. $91.43
D. $49.82
A. 58.57
Given the following information, how many shares are outstanding for this firm?
Market capitalization: $250M
Market Value of Debt: $88M
Gross Profit: $140M
Book value of equity: $93M
Current Ratio: 1.3
Stock Price: $65
A. 2.69M shares
B. 3.85M shares
C. 4
B. 3. 85 million
What are some challenges to the Shareholder Value Standard?
A. Too little focus on markets and expectations
B. Management looks only at the long-term horizon
C. A decline in financial scandals, which makes the SEC irrelevant
D. CEO compensation too heavil
D. CEO compensation too heavily tied to stock price
What issues could arise from overemphasizing the Shareholder Value Standard?
A. Managers try to only hit short-term estimates rather than focus on long-term health of the company
B. CEOs pay is no longer tied to stock options
C. There have been fewer fina
A. Managers try to only hit short-term estimates rather than focus on long-term health of the company
. Which of the following is true regarding balance sheets?
A. They report the net assets generated and consumed, as well as the net income over a specific time period
B. They report the resources and the obligations of a company, as well as the equity of
D. They report the resources and the obligations of a company, as well as the equity of the owners at one point in time
Which of the following is true regarding income statements?
A. They report the company's assets, liabilities, and stockholders' equity over a specific time period
B. They report the net assets generated, the net assets consumed, and the net income over a
B. They report the resources and the obligations of a company, as well as the equity of the owners over a specific time period
. Shareholders' equity on the balance sheet is equal to which of the following?
A. The market value of company's shares in the market
B. The assets plus the liabilities of a company
C. Previous issued common stock plus retained earnings
D. The market valu
C. Previous issued common stock plus retained earnings
Which of the following is true regarding Zeno's given the following information?
Current Assets = $200
Fixed Assets = $310
Current Liabilities = $190
Long Term Debt = $140
Revenue = $450
Net Income = $90
A. Shareholder Equity = $100
B. Current Ratio = 1.6
D. Debt to Equity Ratio =.78
Which of the following is true regarding Caf� 210 given the following information?
Current Assets = $400
Fixed Assets = $150
Current Liabilities = $200
Long Term Debt = $75
Sales = $240
Net Income = $50
A. Shareholder Equity = $290
B. Current Ratio = 0.90
E. Return on Equity = 18%
The Matching Principle in GAAP:
A. Matches sales to inventory shipments
B. Matches the expenses related to a sale in the same period
C. Matches ROE to a firm's capital investment
D. Matches costs of goods sold with the inventory on the balance sheet
E. Ma
B. Matches the expenses related to a sale in the same period
According to the Revenue Recognition Principle in GAAP:
A. Dividends can be paid only after taxable income is positive
B. Expenses can be realized when cash payment is made
C. Companies can realize revenue only if the transaction is profitable
D. Revenue
D. Revenue is recognized when a good or service is provided, not when the money is received
Which of the following correctly describes the revenue recognition policy under US GAAP?
A. Revenue is recognized when a company has manufactured the product.
B. Revenue is recognized only when payment has been received for a good or service.
C. GAAP does
E. Revenue is recognized when a good or service has been provided
Which of the following is true regarding financial statements?
Gross profit equals sales minus cost of goods sold.
The Balance Sheet measures the growth in revenues over a period of time.
Shareholders' equity is found on the income statement
Assets divide
A. Gross Profit equals sales minus cost of goods sold