1. Which of the following will increase cumulative borrowing in the cash budget?

Question

1. Which of the following will increase cumulative borrowing in the cash budget? Answer a. Slower collections from customers b. Slower payments to suppliers c. Higher interest rates d. Faster collection of receivables 2. The preparation of pro forma financial statements accomplishes which of the following objectives? Answer a. It allows management to pinpoint a firm's optimal stock price. b. It is essential if the firm is to accurately estimate its weighted average cost of capital. c. It assists management in making decisions with respect to raising the capital that is needed for growth. d. pinpoints periods when the firm will have short-term cash surpluses 3. Which of the following is a reason that a company would repurchase its own shares of stock in the market? Answer a. To reduce cash and the number of shares outstanding b. To increase outstanding equity shares c. To have shares available to offer a merger target d. Both A and B

Explanation / Answer

c. Higher interest rates b. It is essential if the firm is to accurately estimate its weighted average cost of capital c. To have shares available to offer a merger target

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