1. A firm ended the year with an average collection period of 50 days. The firm’s credit sales were $11 million. What is the firm’s year-end balance in accounts receivable?   $1.51 million
2. According to the list provided in the textbook, which of the following is NOT one of the cautions in using ratios to evaluate firm performance?   The firm has a different capital structure.
3. All of the following are advantages to organizing as a corporation EXCEPT   double taxation.
4. As individual legal entities, corporations assume liability for their own debts, so the shareholders hold   only limited liability.
5. For corporations, maximizing the value of owner’s equity can also be stated as   maximizing the stock price.
6. From the perspective of access to capital, the best form of business organization is the   corporation.
7. If Epic, Inc. has an ROE = 25 percent, equity multiplier = 4, a profit margin of 12 percent, what is the total asset turnover ratio?   0.5208
8. Individuals who provide small amounts of capital and expert business advice to small firms in exchange for an ownership stake in the firm are referred to as   angel investors.
9. Individuals who provide small amounts of capital and expert business advice to small firms in exchange for an ownership stake in the firm are referred to as    angel investors.
10. Last year Rain Repel Corporation had an ROA of 5 percent and a dividend payout ratio of 90 percent. What is the internal growth rate?  0.50 percent
11. Last year Umbrellas Unlimited Corporation had an ROA of 10 percent and a dividend payout ratio of 50 percent. What is the internal growth rate?  5.26 percent
12. Loan amortization schedules show   both the principal balance and interest paid per period.
13. Restricted stock is   a special type of stock that is not transferable from the current holder to others until specific conditions are satisfied.
14. The agency relationship in corporate finance occurs   when the shareholders hire a manager to run their company.
15. The practice generally known as double taxation is due to  corporate incomes being taxed at the corporate level, then again at the shareholder level when corporate profits are paid out as dividends.
16. The Sarbanes-Oxley Act requires public companies to ensure which of the following individuals have considerable experience applying generally accepted accounting principles (GAAP) for financial statements?   corporate boards’ audit committees
17. The term “capital structure” refers to   the amount of long-term debt versus equity on the balance sheet.
18. This is the amount of additional taxes a firm must pay out for every additional dollar of taxable income it earns.    marginal tax rate
19. This is the set of laws, policies, incentives, and monitors designed to handle the issues arising from the separation of ownership and control    corporate governance
20. This should be the primary objective of a firm as it may actually be the most beneficial for the society in the long run.    maximizing shareholder value
21. This type of business organization is entirely legally independent from its owners.   public corporations
22. This type of business organization is relatively easy to start, and it is subject to much lighter regulatory and paperwork burden than other business forms.   sole proprietorship
23.   When determining a form of business organization, all of the following are considered EXCEPT  the physical location of the business.
24. When interest rates are lower, borrowers can     borrow more money.
25. When you get your credit card bill, if you make a payment larger than the minimum payment   you will reduce the payoff time.
26. Which financial statement reports a firm’s assets, liabilities, and equity at a particular point in time?    balance sheet
27. Which financial statement reports the amounts of cash that the firm generated and distributed during a particular time period?   statement of cash flows
28. Which financial statement shows the total revenues that a firm earns and the total expenses the firm incurs to generate those revenues over a specific period of time-generally one year?   income statement
29. Which financial statement shows the total revenues that a firm earns and the total expenses the firm incurs to generate those revenues over a specific period of time-generally one year?   income statement
30. Which of the following is a legal duty between two parties where one party must act in the interest of the other party?     Fiduciary
31. Which of the following is NOT a function of the board of directors?  provide reports to the auditors
32. Which of the following is not an impact of the slowdown occurring in China’s economy?  money going out of Manhattan, New York
33. Which of the following is the firm’s highest-level financial manager?   chief financial officer
34. Which of the following managers would NOT use finance?    all of these choices are correct.
35. Which of the following measures the number of dollars of sales produced per dollar of fixed assets?  fixed asset turnover ratio
36. Which of the following measures the operating return on the firm’s assets, irrespective of financial leverage and taxes?   basic earnings power ratio
37. Which of the following ratios measure how efficiently a firm uses its assets, as well as how efficiently the firm manages its accounts payable?  asset management
38. Which of the following ratios measure how efficiently a firm uses its assets, as well as how efficiently the firm manages its accounts payable?   asset management
39. Which of the following refers to the amount of debt versus equity a firm has on its balance sheet?   capital structure
40. Which of the following refers to the amount of debt versus equity a firm has on its balance sheet?   capital structure
41. Which of the following statements is correct?   Sole proprietorships are easy to start.
42. Which of the following will help you make better personal financial decisions?   knowing finance theory and applying financial tools.
43. Which of these does NOT act as a monitor of how the firm is being run outside the firm?   members of the board of directors
44. Which of these ratios show the combined effects of liquidity, asset management, and debt management on the overall operation results of the firm?   Profitability
45. Which type of ratio measures a firm’s ability to pay off short-term obligations without relying on inventory sales?  quick or acid-test
46. Which type of ratio measures the dollars of current assets available to pay each dollar of current liabilities?    Current

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