page 3 14. A financial statemen t on which all items are expressed as a percent
ID: 2619428 • Letter: P
Question
page 3 14. A financial statemen t on which all items are expressed as a percent of total assets is a(n) a. statement of cash flows b. pro forma balance sheet c. common sized balance sheet d. common sized income statement 15. Which of the following statements is false? a. The goal of a business firm is to maximize a company's profits. b. Finance is the study of investing C. The three elements of financial decision making are money, time, and risk. d. An efficient market is a market in which securities' market prices equal their intrinsic values. 16. The annual amount of cash generated by a company that is available to pay to the company's investors is the a. Net Income b. Earnings Before Interest and Taxes C. Free Cash Flow d. Retained Earnings 17. A Preferred Stock's dividends are a perpetuity. GEL Corporation has a preferred stock which pays $3.90 annually. Given a discount rate of 8.5%, what is the present value of the dividends? a. $0.46 b. $3.59 c. $33.15 d. $45.88Explanation / Answer
Ans 14 option C, in common size balance sheet you show all.items as a percentage of assets
Ans 15 option A, firm's goal is to maximize wealth of investor and not profits.
Ans 16 option C, free cash flow is the available cash for all investors
Ans 17 present value of dividend = dividend/rate
= 3.9/0.085
= 45.88
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