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Exam 9: Finance: Acquiring Using Funds to Maximize Value

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Question 91

Multiple Choice

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A high inventory turnover ratio is good because it indicates that:

A) a firm can continue its daily operations with a small amount of inventory on hand.
B) it is easier for a firm to pay its short-term debts.
C) a firm's customers are paying for their purchases more quickly.
D) a firm produces a larger return to shareholders than investment by the stockholders.

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Question 92

Multiple Choice

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Yellow Dustur, a textile company, converts its overseas assets into cash in order to pay its debts to different companies the following year. In the given scenario, which of the following financial ratios is most likely being analyzed by Yellow Dustur?

A) Leverage ratios
B) Liquidity ratios
C) Asset management ratios
D) Profitability ratios

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Question 93

Multiple Choice

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In financial management, risk is referred to as the:

Explain how the accounting process can be used for a long-term project's cash flows that are spread out over a number of years.

As a current asset, firms use cash for _____.

Term loans issued by commercial banks are popularly used by financial institutions and large corporations because they typically carry lower interest rates than commercial paper.

Commercial paper, which is sometimes issued for as little as two days, can be issued for up to 270 days.

Kitsure, a cosmetics company, was able to sell 20 percent more than its estimated sales in a year. The company was able to acquire its investment along with a higher turnover for its shareholders. Which of the following financial ratios provides the measure of Kitsure's earnings?

The time value of money reflects the fact that:

_____ forecasts the types and amounts of assets a firm will need to implement its future plans and help financial managers determine the amount of additional financing the firm must arrange in order to acquire those assets.

When customers of Trankent Corp., an equipment manufacturing unit, buy equipment on credit and then delay making payments, they receive a bill from a collection agency. Which of the following sources for short-term financing is being used by Trankent Corp. in this scenario?

Bon Suede, a shoe manufacturing company, produces ten thousand units of shoes of a distinct design. In 2015, the company was able to sell all the units within six months of manufacture, prompting the company to produce an additional ten thousand units. Which of the following financial ratios has most likely been analyzed in the given scenario?

Juxipi Inc. is well known for having a stronger credit score than its competitors. That is why, buyers are more willing to buy promissory notes from Juxipi than its competitors. Which of the following short-term financing options is being offered by Juxipi Inc. in the given scenario?

Pro Corp. and Darths Inc. are two companies that are identical in every aspect except for the fact that Pro only uses equity financing, while Darths relies heavily on debt financing. Over the past year, the firms had identical earnings before interest and taxes. If net income for both firms is high, _____.