1. Which one of the following terms is defined as the management of a firm\'s lo

Question

1. Which one of the following terms is defined as the management of a firm's long-term investments?
A. working capital management
B. financial allocation
C. agency cost analysis
D. capital budgeting
E. capital structure

2. Which one of the following terms is defined as the mixture of a firm's debt and equity financing?
A. working capital management
B. cash management
C. cost analysis
D. capital budgeting
E. capital structure

3. Which one of the following is defined as a firm's short-term assets and its short-term liabilities?
A. working capital
B. debt
C. investment capital
D. net capital
E. capital structure

4. Which one of the following terms is defined as a conflict of interest between the corporate shareholders and the corporate managers?
A. articles of incorporation
B. corporate breakdown
C. agency problem
D. bylaws
E. legal liability

5. Which of the following questions are addressed by financial managers?
I. How should a product be marketed?
II. Should customers be given 30 or 45 days to pay for their credit purchases?
III. Should the firm borrow more money?
IV. Should the firm acquire new equipment?
A. I and IV only
B. II and III only
C. I, II, and III only
D. II, III, and IV only
E. I, II, III, and IV

6. Which one of the following is a capital budgeting decision?
A. determining how many shares of stock to issue
B. deciding whether or not to purchase a new machine for the production line
C. deciding how to refinance a debt issue that is maturing
D. determining how much inventory to keep on hand
E. determining how much money should be kept in the checking account

7. Which of the following should a financial manager consider when analyzing a capital budgeting project?
I. project start up costs
II. timing of all projected cash flows
III. dependability of future cash flows
IV. dollar amount of each projected cash flow
A. I and IV only
B. I, II, and IV only
C. I, II, and III only
D. II, III, and IV only
E. I, II, III, and IV

8. Which one of the following is a capital structure decision?
A. determining which one of two projects to accept
B. determining how to allocate investment funds to multiple projects
C. determining the amount of funds needed to finance customer purchases of a new product
D. determining how much debt should be assumed to fund a project
E. determining how much inventory will be needed to support a project

9. The decision to issue additional shares of stock is an example of which one of the following?
A. working capital management
B. net working capital decision
C. capital budgeting
D. controller's duties
E. capital structure decision

10. Which of the following accounts are included in working capital management?
I. accounts payable
II. accounts receivable
III. fixed assets
IV. inventory

A. I and II only
B. I and III only
C. II and IV only
D. I, II, and IV only
E. II, III, and IV only

Explanation / Answer

1. D. capital budgeting

2. E. capital structure

3.A. working capital

4.C. agency problem

5. D. II, III, and IV only

6. B. deciding whether or not to purchase a new machine for the production line

max of 4 sub sections to be answered

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