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BFIN 320 Finance Midterm Exam Questions with 100% Correct Answers

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BFIN 320 Finance Midterm Exam Questions with 100% Correct Answers The cash flow that a firm generates for its investors in a given periods, excluding cash inflows from the sale of securities to investors. - Answer-Cash Flow to Investors Does not include cash flows associated with working cap...

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  • February 20, 2025
  • 11
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • BFIN 320 Finance
  • BFIN 320 Finance

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BFIN 320 Finance Midterm Exam
Questions with 100% Correct
Answers
The cash flow that a firm generates for its investors in a given periods, excluding cash
inflows from the sale of securities to investors. - Answer-Cash Flow to Investors

Does not include cash flows associated with working capital amounts. - Answer-Cash
Flows to Investors from Operating Activity (CFOA)

EBIT - Current taxes + Noncash expenses (Dep. & Amt.) - Answer-CFOA = ?

LIFO
FIFO - Answer-Inventory Accounting

- Highest COGS
- Lowest Net Income
- Lowest Inventory Value - Answer-LIFO (during inflation)

- Lower COGS
- Highest Net Income
- Highest Inventory Value - Answer-FIFO (during inflation)

Higher taxable income = Higher the tax liability - Answer-Corporate Income Tax

Total taxes paid divided by taxable income - Answer-Average Tax Rate

The tax rate paid on the last dollar earned or the next dollar they can expect - Answer-
Marginal Tax Rate

Primarily concerned with the value of their stock and how much cash they can expect to
receive from dividends and capital appreciation over time.
- Profitability of firm
- Return on investment
- Cash available for stockholders (in total and per share)
- Dividend distribution

, - Net cash flow
- Rate of return and risk - Answer-Stockholder's Perspective

Responsible for running the business on a daily basis and must make decisions that will
maximize stockholder wealth in the long run
- Need feedback on the ST impact that day-to-day decisions have on the firm's financial
statements and its current stock price
- Profitability
- Cash available for stockholders
- Capital appreciation
- Return on investment
- Efficient use of assets
- Control costs
- Job security
- Inside information - Answer-Manager's Perspective

Primary concern is whether and when they will receive the interest payments they are
entitled to and when they will be repaid the money they loaned to the firm.
- Closely monitor debt
- Whether the firm is generating enough cash to pay day-to-day bills
- Whether the firm will have sufficient casino the future to make interest and principal
payments on LT debt after satisfying obligations with higher legal priority
- Cash flows
- Profitability
- Changes in risks - Answer-Creditor's Perspective

Uses history as its standard by evaluation a single firm's performance (analysis of
trends in financial data) over time - Answer-Trend Analysis

Each number is expressed as a % of net sales
- efficiency
- profitability - Answer-Common Size Income Statement

Each number is expressed as a % of total assets - Answer-Common-Size Balance
Sheet

The inability to pay debts when they are due - Answer-Insolvency

Indicate a firm's ability to pay ST obligations with ST assets without endangering the
firm. In general, HIGHER ratios are a favorable indicators (more currents assets than
liabilities) - Answer-Liquidity Ratios

Current Assets/Current Liabilities - Answer-Current Ratio = ?

Current Assets - Inventory/Current Liabilities - Answer-Quick Ratio = ?

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