FIN 301 Managerial Finance Exam 1 Questions with Latest Update
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Course
FIN 301
Institution
FIN 301
Capital Budgeting - Answer-the process of planning and managing a firm's long-term investments
Capital Structure - Answer-the mixture of debt and equity maintained by a firm
Working Capital - Answer-a firm's short-term assets and liabilities.
Sole Proprietorship - Answer-a business owned b...
FIN 301 Managerial Finance Exam 1
Questions with Latest Update
Capital Budgeting - Answer-the process of planning and managing a firm's long-term
investments
Capital Structure - Answer-the mixture of debt and equity maintained by a firm
Working Capital - Answer-a firm's short-term assets and liabilities.
Sole Proprietorship - Answer-a business owned by a single individual
Partnership - Answer-a business formed by two or more individuals or entities
Corporation - Answer-a business created as a distinct legal entity composed of one or
more individuals or entities
Agency Relationships - Answer-The relationship between stockholders and
management
Agency Problems - Answer-the possibility of conflict of interest between the
stockholders and management of a firm
Agency Costs - Answer-the costs of the conflict of interest between stockholders and
management (direct or indirect)
Direct Agency Costs - Answer-corporate expenditure or expense that arises from the
need to monitor management actions
Restricted Stock Unit (RSU) - Answer-a restricted stock unit, or RSU, is issued to an
employee, but is distributed only when it vests. The vesting generally requires a
performance milestone or length of service
Proxy Fight - Answer-an important mechanism by which unhappy stockholders can act
to replace existing management
Stakeholders - Answer-someone other than a stockholder or creditor who potentially
has a claim on the cash flows of the firm
Primary Markets - Answer-The corporation is the seller, and the transaction raises
money for the corporation
Secondary Markets - Answer-Involves one owner or creditor selling to another
, Balance Sheet - Answer-financial statement showing a firm's accounting value on a
particular date
Stockholders' Equity - Answer-if the firm were to sell all of its assets and use the money
to pay off its debts, then whatever the residual value remained would belong to the
shareholders
Net Working Capital - Answer-current assets less than current liabilities
Financial Leverage - Answer-the use of debt in a firm's capital structure
Generally Accepted Accounting Principles (GAAP) - Answer-the common set of
standards and procedures by which audited financial statements are prepared
Book Value - Answer-what an asset is actually worth and the difference indicates a
GAIN or a LOSS when sold
Market Value - Answer-depends on things like its riskiness and cash flows
Liquidity - Answer-the speed and ease with which an asset can be converted to cash
Income Statement - Answer-financial statement summarizing a firm's performance over
a period of time
Non Cash Items - Answer-expenses charged against revenues that do not directly affect
cash flow, such as depreciation
Product Costs - Answer-things such as raw materials, direct labor expense, and
manufacturing overhead
Period Costs - Answer-incurred during a particular time period and might be reported as
selling, general, and administrative expenses
Average Tax Rate - Answer-total taxes paid dividend by total taxable income
Marginal Tax Rate - Answer-amount of tax payable on the next dollar earned
Cash Flow - Answer-the difference between the number of dollars that came in and the
number of dollars that went out
Cash Flow from Assets - Answer-the total of cash flow to creditors and cash flow to
stockholders, consisting of the following: operating cash flow, capital spending, and
change in net working capital
Operating Cash Flow - Answer-cash generated from a firm's normal business activities
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