Docsity
Docsity

Prepare for your exams
Prepare for your exams

Study with the several resources on Docsity


Earn points to download
Earn points to download

Earn points by helping other students or get them with a premium plan


Guidelines and tips
Guidelines and tips

Financial Management Exam Q&A: Pro Forma, Growth & Capital, Exams of Financial Statement Analysis

A series of questions and answers related to financial management, focusing on topics such as pro forma statements, sustainable growth rate, capital structure, agency costs, and cash flow analysis. It covers key concepts like the roles of stakeholders, articles of incorporation, capital budgeting, and the primary goal of financial management. Additionally, it addresses various aspects of cash flow statements, including sources of cash and the impact of changes in accounts receivable. The document also explores time value of money concepts, such as annuities, perpetuities, and interest rate calculations, providing practical examples and solutions. It is useful for students studying finance, accounting, and business administration, offering a concise review of essential financial principles and calculations. Designed to help students prepare for exams and quizzes by providing clear and concise answers to common questions.

Typology: Exams

2024/2025

Available from 05/14/2025

tizian-kylan
tizian-kylan šŸ‡ŗšŸ‡ø

2.7

(21)

3.8K documents

1 / 4

Toggle sidebar

This page cannot be seen from the preview

Don't miss anything!

bg1
BUSI 7110 EXAM 1 QUESTIONS AND CORRECT
ANSWERS 100% VERIFIED
Projected
future
financial
statements
are
called
-
ANSWER
Pro
Forma
statements
The
maximum
rate
at
which
a
firm
can
grow
while
maintaining
a
constant
debt-equity
ratio
is
best
defined
by
its
-
ANSWER
Sustainable
rate
of
growth
The
sustainable
growth
rate
will
be
equivalent
to
the
internal
growth
rate
when
and
only
when:
-
ANSWER
the
firm
has
no
debt
The
sustainable
growth
rate
is:
-
ANSWER
usually
higher
than
the
internal
growth
rate
Marice's
mercantile
wants
to
maintain
its
current
dividend
policy
of
a
payout
ratio
of
35
percent.
The
firm
does
not
want
to
increase
its
equity
financing
but
is
willing
to
maintain
its
current
debt-equity
ratio.
Given
these
requirements,
the
maximum
rate
at
which
Marcie's
can
grow
is
equal
to
-
ANSWER
The
sustainable
growth
rate
Capital
structure
refers
to
the
firm's
-
ANSWER
Proportions
of
financing
from
current
and
long-term
debt
and
equity
Which
one
of
these
best
fits
the
description
of
an
agency
cost?
-
ANSWER
The
payment
required
for
an
outside
audit
of
the
firm
The
ultimate
control
of
a
corporation
lies
in
the
hands
of
the
corporate
-
ANSWER
Stakeholders
Which
of
the
following
corporate
document
provides
the
number
of
members
on
the
original
board
of
directors
-
ANSWER
Articles
of
incorporation
pf3
pf4

Partial preview of the text

Download Financial Management Exam Q&A: Pro Forma, Growth & Capital and more Exams Financial Statement Analysis in PDF only on Docsity!

BUSI 7110 EXAM 1 QUESTIONS AND CORRECT

ANSWERS 100% VERIFIED

Projected future financial statements are called - ANSWER Pro Forma statements The maximum rate at which a firm can grow while maintaining a constant debt-equity ratio is best defined by its - ANSWER Sustainable rate of growth The sustainable growth rate will be equivalent to the internal growth rate when and only when: - ANSWER the firm has no debt The sustainable growth rate is: - ANSWER usually higher than the internal growth rate Marice's mercantile wants to maintain its current dividend policy of a payout ratio of 35 percent. The firm does not want to increase its equity financing but is willing to maintain its current debt-equity ratio. Given these requirements, the maximum rate at which Marcie's can grow is equal to - ANSWER The sustainable growth rate Capital structure refers to the firm's - ANSWER Proportions of financing from current and long-term debt and equity Which one of these best fits the description of an agency cost? - ANSWER The payment required for an outside audit of the firm The ultimate control of a corporation lies in the hands of the corporate - ANSWER Stakeholders Which of the following corporate document provides the number of members on the original board of directors - ANSWER Articles of incorporation

The process of planning and managing a firm's long term assets is called - ANSWER Capital budgeting The primary goal of financial management is to - ANSWER maximize the current value per share of the existing stock Which of the following is the best description of the major benefit of being a limited partner versus being a general partner - ANSWER Liability for firm debts is limited to the capital invested A proxy fight is when - ANSWER A group solicits voting rights in order to vote in their own board of directors. Accounting profits and cash flows are generally - ANSWER Different because of the various GAAP rules regarding the recognition of income The cheapest business entity to form is typically the - ANSWER sole proprietorship What does the statement of cash flows shows - ANSWER How much the firm's cash - the total of currancy, bank deposits, and short-term liquid securities (or cash equivalents) -- increased or decreased during the year Which of the following items cannot be found on a firm's balance sheet under current liabilities - ANSWER Costs of goods sold What does a typical industrial company's balance sheet list - ANSWER the firm's assets that will be converted to cash first, and then goes down to list the firm's longest lived assets last What is considered a source of cash? - ANSWER Common stock increase on the balance sheet

You are the beneficiary of a life insurance policy. The insurance company offers to pay the proceeds to you either as a lump sum of $50,000 today or in monthly installments of $550 for ten years. If you can earn 6 percent, compounded monthly, which should you take and why? - ANSWER You should take the lump sum because the payments are only worth $49,540.40 today. Denise will receive annual payments of $10,000 for the next 25 years. The discount rate is 6.8 percent. What is the difference in the present value of these payments if they are paid at the beginning of each year rather than at the end of each year? - ANSWER 8, You borrow $12,600 to buy a car. The terms of the loan call for monthly payments for five years at an interest rate of 4.65 percent, compounded monthly. How much does each payment amount to? - ANSWER 235. Theo is depositing $1,300 today in an account with an expected rate of return of 8. percent. If he deposits an additional $3,200 two years from today, and $4,000 three years from today, what will his account balance be ten years from today? - ANSWER 15,699. What is the annual percentage rate on a loan that charges interest of 1.65 percent per quarter? - ANSWER 6.60%