284371675 Test Bank for Fundamentals of Corporate Finance Canadian 8th Edition Ross Multiple Choice Questions 1 PDF

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Multiple choice practice questions for chapter 1
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FundamentalsofCorporateFinance Canadian8thEditionRossMultiple ChoiceQuestionsPage1 Assetsarelistedonthestatementoffinancialpositionin: A.Orderofimportancetothefirm. B.Orderofincreasingsize. C.Orderofdecreasingliquidity. D.Noparticularorder. E.Orderofpreferenceinbankruptcy. Currentassetsminuscurrentliabilitiesarereferredtoas: A.Tangibleassets. B.Networkingcapital. C.Netincome. D.Netassets. E.Netbookvalue. Acurrentassetis: A.Anitemcurrentlyownedbythefirm. B.Anitemthatthefirmexpectstoownwithinthenextyear. C.Anitemcurrentlyownedbythefirmthatwillconverttocashwithinthenext12 months. D.Theamountofcashonhandthefirmcurrentlyshowsonitsstatementof financialposition. E.Themarketvalueofalltheitemscurrentlyownedbythefirm. ________________referstothecashflowthatresultsfromthefirm'songoing,normal businessactivities. A.Operatingcashflow. B.Capitalspending. C.Networkingcapital. D.Cashflowfromassets. E.Cashflowtocreditors. Aliquidassetisdefinedasanassetwhich: A.Hasaphysicalpresenceandcanbetouched. B.Canbequicklyconvertedintocashwithoutsignificantlossinvalue. C.Afirmexpectstoownforaperiodoftenyearsormore. D.Hasnophysicalpresence,suchasapatent.

E.Afirmpurchasedwithcashwithinthelastyear. Earningspershareareequalto: A.Netincomedividedbythetotalnumberofsharesoutstanding. B.Netincomedividedbytheparvalueofcommonstock. C.Grossincomemultipliedbytheparvalueofcommonstock. D.Operatingincomedividedbytheparvalueofcommonstock. E.Netincomedividedbytotalstockholders'equity. Whichoneofthefollowingisanoncashitem? A.Downpaymentonabuilding. B.Rentexpense. C.Depreciationofequipment. D.Payrolltaxexpense. E.Companyprovidedhealthinsurance. Statementoffinancialpositionassets__________________:I.Arealwaysequaltototal liabilitiesminusshareholders'equity;II.Representitemsacquiredwiththeuseofthe firm'sassumedliabilitiesandequity;III.Arelistedinorderofincreasingliquidity. A.Ionly B.IIonly C.IIIonly D.IandIIIonly E.IIandIIIonly Whichoneofthefollowingisacurrentasset? A.Officedesk. B.Accountpayable. C.Staplesheldforresale. D.Companyownedtruck. E.Weldingmachine. Thecommonsetofstandardsandproceduresbywhichauditedfinancialstatementsare preparedisknownas: A.Thematchingprinciple. B.Thecashflowidentity. C.GenerallyAcceptedAccountingPrinciples(GAAP). D.TheFreedomofInformationAct(FOIA). E.The1993OmnibusBudgetReconciliationAct. Whichoneofthefollowingisatangibleassetofarestaurant? A.Bakingoven. B.Goodwill. C.Copyrightedcookbook.

D.Patentonamixingmachine. E.Oldfamilyrecipe. Liquidassets: A.Aredefinedascurrentassetsminuscurrentliabilities. B.Aredefinedasinventoryandequipment. C.Tendtoearnalowrateofreturn. D.Includeanyassetwhichcanbesoldwithinoneyear. E.Isanothertermforcurrentassets. ____________referstothedifferencebetweenafirm'scurrentassetsanditscurrent liabilities. A.Operatingcashflow B.Capitalspending. C.Networkingcapital. D.Cashflowfromassets. E.Cashflowtocreditors. Themarginaltaxratecanbeexplainedastheamountoftaxdue: A.Perdollaroftaxableincomeearned. B.Onanadditionaldollaroftaxableincome. C.Pershareofstockoutstanding. D.Inexcessofthetaxliabilityforthepriortaxyear. E.Asapercentageofthefirm'ssalesforanygiventaxyear. Whichofthefollowingstatementsistrue? A.Liabilitiesequalassetsplusshareholders'equity. B.Shareholders'equityequalsassetsplusliabilities. C.Shareholders'equityequalsliabilitiesminusassets. D.Assetsequalliabilitiesplusshareholders'equity. E.Assetsequalliabilitiesminusshareholders'equity. Cashflowfromassets: A.Isdefinedasthecashavailablefordistributiontocreditorsandstockholders. B.Isdefinedasthechangeinnetfixedassetsplusdepreciation. C.Referstothechangeinafirm'scashaccountoverastatedperiodoftime. D.Isdefinedasthenetchangeinthetotalassetsofafirmoverastatedperiodof time. E.Isanothertermforthenetcashflowfromafirm'songoing,normalbusiness activities. Thefinancialstatementsummarizingafirm'sperformanceoveraperiodoftimeisthe: A.Statementofcomprehensiveincome. B.Statementoffinancialposition.

C.Statementofcashflows. D.Taxreconciliationstatement. E.Shareholders'equitysheet. Thecashgeneratedfromafirm'snormalbusinessactivitiesiscalled: A.Financingcashflow. B.Netincome. C.Grossprofit. D.Operatingcashflow. E.Freecashflow. A(n)_________assetisonewhichcanbequicklyconvertedintocashwithoutsignificant lossinvalue. A.Current. B.Fixed. C.Intangible. D.Liquid. E.Longterm. Thestatementoffinancialposition: A.Reflectstheincomeandexpensesincurredyeartodate. B.Reflectstheincomeandexpensesforthecurrentmonthonly. C.Reflectsthefinancialstatusofthefirmasofaparticulardate. D.Reflectsthecashflowsofafirmoveraperiodoftime. E.Reflectsthecurrentmarketvalueofthefirm. ____________referstothenettotalcashflowofthefirmaccruingtoitscreditorsand stockholders. A.Operatingcashflow. B.Capitalspending. C.Networkingcapital. D.Cashflowfromassets. E.Cashflowtocreditors. Thelongtermdebtsofafirmare: A.Liabilitiesthatcomeduewithinthenext12months. B.Liabilitiesthatdonotcomedueforatleast12months. C.Liabilitiesowedtothefirm'ssuppliers. D.Liabilitiesowedtothefirm'sshareholders. E.Liabilitiesthefirmexpectstoincurwithinthenext12months. Whichofthefollowingassetswouldmostlikelybeconsideredtheleastliquid? A.AshareofcommonstockinNortel. B.AbondissuedbyCorel.

C.AshareofpreferredstockinGMofCanada. D.ALethbridge,Albertamunicipalbond. E.ACanadianTreasurybill. Financialleveragerefersto: A.Theproportionofdebtusedinafirm'scapitalstructure. B.Theratioofretainedearningstoshareholders'equity. C.Theratioofpaidinsurplustoshareholders'equity. D.Theratioofcostofgoodssoldtototalsales. E.Theamountofreceivablespresentinthefirm'sassetstructure. ___________referstothefirm'sdividendpaymentslessanynetnewequityraised. A.Operatingcashflow. B.Capitalspending. C.Networkingcapital. D.Cashflowfromassets. E.Cashflowtostockholders. ____________normallymustbepaidbyafirmwithin12months. A.Longtermbankloans B.Currentliabilities C.Bonds D.Marketablesecurities E.Accountsreceivable Thefinancialstatementshowingafirm'saccountingvalueonaparticulardateisthe: A.Statementofcomprehensiveincome. B.Statementoffinancialposition. C.Statementofcashflows. D.Taxreconciliationstatement. E.Shareholders'equitysheet. Theuseofdebtinafirm'scapitalstructureiscalled: A.Liquidity. B.Equityfinancing. C.Freecashflow. D.Networkingcapital. E.Financialleverage. Valuederivedbysubtractingcurrentliabilitiesfromcurrentassetsiscalled: A.Operatingcashflow. B.Netcapitalspending. C.Networkingcapital. D.Theliquidassetvalue.

E.Cashflowfromassets. Acurrentasset: A.Hasalifeoflessthanoneyear. B.Includesaccountspayable. C.Isanilliquidasset. D.Isincludedinthestatementofcomprehensiveincome. E.Ispartofshareholders'equity. Whichoneofthefollowingisanoncashitem? A.Interestexpense. B.Taxes. C.Dividends. D.Depreciation. E.Payrollexpense. Thestatementoffinancialpositionidentitystatesthat: A.Currentassets+Fixedassets=Totalassets B.Assets=Liabilities+Shareholders'equity C.Currentliabilities+Longtermdebt=Totalliabilities D.Commonstock+Retainedearnings=Shareholders'equity E.Cashflow=MarketvalueBookvalue WhichofthefollowingisNOTtypicallycharacterizedasacurrentasset? A.Inventory. B.Cashonhand. C.Patents. D.Accountsreceivable. E.Marketablesecurities. Freecashflowiscommonlyreferredtoasafirm's: A.Cashflowtostockholders. B.Cashflowfromassets. C.Cashflowtocreditors. D.Networkingcapital. E.Liquidcapital. Dividendspershareareequalto: A.Dividendspaiddividedbytheparvalueofcommonstock. B.Dividendspaiddividedbythetotalnumberofsharesoutstanding. C.Dividendspaiddividedbytotalstockholders'equity. D.Dividendspaidmultipliedbytheparvalueofcommonstock. E.Dividendspaidmultipliedbythetotalnumberofsharesoutstanding.

Cashflowfromassetsisalsoknownasthefirm's______________. A.Capitalstructure. B.Equitystructure. C.Hiddencashflow. D.Freecashflow. E.Historicalcashflow. Your________taxratemeasuresthetotaltaxesyoupaydividedbyyourtaxableincome. A.Deductible. B.Residual. C.Total. D.Average. E.Marginal. Thecostofanassetlessthedepreciationtodateisreferredtoasthenet_____value. A.Liquid. B.Book. C.Market. D.Cash. E.Financial. Noncashitemsare: A.Thecreditsalesofafirm. B.Theaccountspayableofafirm. C.Expensesincurredforthepurchaseofintangiblefixedassets. D.Expenseschargedagainstrevenuesthatdonotdirectlyaffectcashflow. E.Allaccountsonthestatementoffinancialpositionotherthancashonhand. Your__________taxrateistheamountoftaxpayableonthenextdollaryouearn. A.Deductible. B.Residual. C.Total. D.Average. E.Marginal. Accountspayableareacomponentof: A.Networkingcapital. B.Currentassets. C.Longtermdebt. D.Fixedassets. E.Shareholders'equity. ______________referstothefirm'sinterestpaymentslessanynetnewborrowing. A.Operatingcashflow.

B.Capitalspending. C.Networkingcapital. D.Cashflowfromassets. E.Cashflowtocreditors. Operatingcashflowisdefinedasthecashflow: A.Whichisdistributedtotheshareholdersintheformofdividends. B.Whichafirmusestoincreaseitscurrentaccounts. C.Fromdebtissuedbyafirmtofinanceitsongoingoperations. D.Usedbyafirmtoacquirenewfixedassets. E.Thatresultsfromafirm'songoing,dailybusinessactivities. Theeaseandspeedwithwhichanassetcanbeconvertedintocashiscalled: A.Liquidity. B.Marketability. C.Convertibility. D.Transferability. E.Liability. The___________taxrateistheratethatappliesifonemoredollarofincomeisearned andthe___________taxrateisthetotaltaxbilldividedbytaxableincome. A.Marginal;flat B.Marginal;average C.Flat;marginal D.Flat;average E.Average;marginal _____________referstothenetspendingofthefirmonfixedassetpurchases. A.Operatingcashflow. B.Capitalspending. C.Networkingcapital. D.Cashflowfromassets. E.Cashflowtocreditors. Afirmwithnegativenetworkingcapital____________________. A.Istechnicallybankrupt. B.Hasnocashonhand. C.Needstosellsomeofitsinventorytocorrecttheproblem. D.Hasmorecurrentliabilitiesthancurrentassets. E.Mostlikelywillnotrunshortofcashoverthenextsixmonths. Intangibleassets________. A.Aregenerallyconsideredveryliquid. B.Areclassifiedonthestatementoffinancialpositionjustbeforeaccounts

receivable. C.Includesuchthingsaspatents. D.Includeanyitemthatexistsphysically. E.Aregenerallyveryvaluable. Whichoneofthefollowingisanexampleofanintangibleasset? A.Accountsreceivable. B.Inventory. C.Accountspayable. D.Furniture. E.Patent. Networkingcapitalisdefinedas: A.Totalliabilitiesminusshareholders'equity. B.Currentliabilitiesminusshareholders'equity. C.Fixedassetsminusshareholders'equity. D.Totalassetsminustotalliabilities. E.Currentassetsminuscurrentliabilities.

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