FIN 301 TOPHAT Exam Questions with Correct Answers
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Course
FIN 301
Institution
FIN 301
It is generally accepted that the primary goal or objective of the managers of a firm should be maximize profit - Answer-false; maximize wealth of owners
the common equity portion of a firm's balance sheet may include each of the following: common stock, retained earnings, and long term debt - A...
FIN 301 TOPHAT Exam Questions with
Correct Answers
It is generally accepted that the primary goal or objective of the managers of a firm
should be maximize profit - Answer-false; maximize wealth of owners
the common equity portion of a firm's balance sheet may include each of the following:
common stock, retained earnings, and long term debt - Answer-false;
capital surplus, capital in excess, paid in capital
the retained earnings account on the balance sheet as the end of a certain year reflects
the portion of the net income that the company has not paid in dividends for the year in
question - Answer-false
retained for a company's future use
return on equity (ROE) is an asset management ratio - Answer-false; leverage
a firm's working capital is comprised of the investment in short-term or current assets,
financing with current liabilities, and can provide insight into a firm's expectations about
the level of future operations - Answer-true
Ratio analysis is useful for analyzing a firm's internal performance over time but it is not
useful for comparison to the performance of other firms. - Answer-false; can compare
your ratio to others
a firm's statement of cash flow provides a plan for managing both cash inflows and
outflows over a specific period of time - Answer-true
according to the concept of the time value of money, a dollar today is worth more than a
dollar tomorrow simply because inflation will reduce the purchasing power of future
dollars - Answer-false; you can earn more interest because it's a longer period of time
the present value of an annuity due is smaller than the present value of an ordinary
annuity - Answer-false; the only difference between annuity due and an ordinary due is
time frame
the present value of a perpetuity can be determined as the cash flow divided by the
required rate of return - Answer-true
the effective annual rate of interest (EAR) is less than the annual percentage rate of
interest (APR) - Answer-false; greater; future values increase whenever compounding
occurs more often than once per year
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