Chapter 03 - Working with Financial Statements Multiple Choice Questions 1. Common-size financial statements present all balance sheet account values as a percentage of: A. the forecasted budget. B. sales. C. total equity. D. total assets. E. last year's account value. 2. The ratios that are based ...
,Chapter 01 - Introduction to Financial Management
Chapter 01
Introduction to Financial Management
Multiple Choice Questions
1. Tim has been promoted and is now in charge of all fixed asset purchases. In other words,
Tim is in charge of:
A. capital structure management.
B. asset allocation.
C. risk management.
D. capital budgeting.
E. working capital management.
2. Stadford, Inc. is financed with 40 percent debt and 60 percent equity. This mixture of debt
and equity is referred to as the firm's:
A. capital structure.
B. capital budget.
C. asset allocation.
D. working capital.
E. risk structure.
3. Lester's BBQ has $121,000 in current assets and $109,000 in current liabilities. These
values as referred to as the firm's:
A. capital structure.
B. cash equivalents.
C. working capital.
D. net assets.
E. fixed accounts.
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,Chapter 01 - Introduction to Financial Management
4. Margie opened a used book store and is both the 100 percent owner and the store's
manager. Which type of business entity does Margie own if she is personally liable for all the
store's debts?
A. Sole proprietorship
B. Limited partnership
C. Corporation
D. Joint stock company
E. General partnership
5. Will and Bill both enjoy sunshine, water, and surfboards. Thus, the two friends decided to
create a business together renting surfboards, paddle boats, and inflatable devices in
California. Will and Bill will equally share in the decision making and in the profits or losses.
Which type of business did they create if they both have full personal liability for the firm's
debts?
A. Sole proprietorship
B. Limited partnership
C. Corporation
D. Joint stock company
E. General partnership
6. Todd and Cathy created a firm that is a separate legal entity and will share ownership of
that firm on a 50/50 basis. Which type of entity did they create if they have no personal
liability for the firm's debts?
A. Limited partnership
B. Corporation
C. Sole proprietorship
D. General partnership
E. Public company
7. The potential conflict of interest between a firm's owners and its managers is referred to as
which type of conflict?
A. Organizational
B. Structure
C. Formation
D. Agency
E. Territorial
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, Chapter 01 - Introduction to Financial Management
8. The federal government has a tax claim on the cash flows of The Window Store. This claim
is defined as a claim by one of the firm's:
A. residual owners.
B. shareholders.
C. financiers.
D. provisional partners.
E. stakeholders.
9. The "Say on Pay" bill requires corporations to do which one of the following?
A. Give the chairman of the board the final say on executive pay
B. Give the firm's creditors a nonbinding say on executive pay
C. Give the firm's creditors a binding say on executive pay
D. Give shareholders a nonbinding vote on executive pay
E. Give shareholders a binding vote on executive pay
10. In 2009, the Obama administration established a maximum limit on executive salaries for
firms that received bailout funds. What was the amount of that salary limit?
A. $250,000
B. $500,000
C. $750,000
D. $1,000,000
E. $1,500,000
11. Jamie is employed as a commercial loan officer for a regional bank centered in the
Midwestern section of the U.S. Her job falls into which one of the following areas of
finance?
A. International finance
B. Financial institutions
C. Corporate finance
D. Capital management
E. Investments
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