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BMAL 590 Business Finance Exam Marking Scheme New Update (Verified A+ Pass)
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BMAL 590 Business Finance Exam Marking Scheme New Update (Verified A+ Pass) A company's balance sheet shows the value of assets, liabilities, and stockholders' equity - Answers - At a specific point in time On a balance sheet, retained earnings are not "unspent cash" because - Answers - They ...

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  • November 1, 2024
  • 7
  • 2024/2025
  • Exam (elaborations)
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BMAL 590 Business Finance Exam
Marking Scheme New Update
(Verified A+ Pass)
A company's balance sheet shows the value of assets, liabilities, and stockholders'
equity - Answers -✔✔ At a specific point in time

On a balance sheet, retained earnings are not "unspent cash" because - Answers -✔✔
They have been used to finance the firm's assets

For both managers and external financial analysts, ________ is the single most
important accounting number found on the income statement - Answers -✔✔ Net
income (net profit after tax)

Earnings per share (EPS) is calculated by - Answers -✔✔ Dividing earnings available
for common stockholders by the number of shares of common stock outstanding

Net working capital - Answers -✔✔ Is a measure of a firm's overall liquidity

Why is the quick ratio a more appropriate measure of liquidity than the current ratio for a
large-airplane manufacturer? - Answers -✔✔ It excludes inventory from the numerator
of the ratio because it is difficult to convert inventory to cash and most sales are made
on a credit basis

The one fixed asset that is not depreciated is _________ - Answers -✔✔ Land

Return on total assets (ROA) is equal to _________ - Answers -✔✔ All of the above

When a firm has no "other income," its operating profit and _________ are equal -
Answers -✔✔ EBIT

The firm's ________ are primarily interested in ratios that measure the short-term
liquidity of the company and its ability to make principal and interest payments -
Answers -✔✔ Creditors

When evaluating financial ratios, analysts typically examine a firm's ratio values -
Answers -✔✔ Compared to the firm's previous years' ratio

_________ ratios would provide the best information regarding total return to common
stockholders - Answers -✔✔ Profitability

, The firm's managers use ratios to _________ - Answers -✔✔ All of the above

The ________ flows result from debt and equity financing transactions - Answers -✔✔
Financing

Which of the following is an inflow of corporate cash? - Answers -✔✔ Depreciation
charges

The bottom-up method for forecasting sales - Answers -✔✔ Relies on the ability of
sales personnel to assess future demand, usually without the aid of statistical models

Following ________ financing strategy takes advantage of short-term interest rates but
also increases refinancing risk. Following ________ financing strategy minimizes the
risk of a liquidity crisis, but generally increases borrowing costs. Following ________
financing strategy results in the use of long-term funding for permanent assets and
short-term financing for temporary or seasonal requirements - Answers -✔✔ None of
the above

The sustainable growth model gives managers a kind of shorthand projection that ties
together ________ and ________ - Answers -✔✔ Growth objectives and financial
needs

The key input required to build a cash budget is - Answers -✔✔ The firm's sales
forecast

Which of the following are common cash disbursements? - Answers -✔✔ All of the
above

Most pro forma statements begin with a sales forecast. One approach to deriving a
sales forecast is the top-down approach. Top-down sales forecasts rely heavily on -
Answers -✔✔ Macroeconomic and industry forecasts

A firm that employs an aggressive strategy to finance assets - Answers -✔✔ Will
finance a portion of long-term (permanent) growth in assets with short-term financing

A strategic plan is a - Answers -✔✔ Long-term guide driven by competitive forces

A cash budget is - Answers -✔✔ A statement of a firm's planned inflows and outflows
of cash used to ensure that a firm has available cash to meet short-term financial
obligations

A speedup in ________ should ________ a firm's financing needs; whereas, a slow
down in ________ should ________ financing needs for a firm - Answers -✔✔
Payments; increase; collections; increase

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