D076 Q&A VERIFIED 100%

What is a reasonable alternative to keeping an emergency stash of cash? Investing in a savings account Investing in a readily withdrawable account that still earns some interest is a value-preserving alternative. Which area of finance deals with sources of funding and the capital structure of co...

Balance Sheet Forecasting - Using sales growth and the profit forecast to construct a pro forma balance sheet to understand the future implications of the sources and uses of finances Discretionary accounts - Accounts that do not vary proportionally with sales but are decided upon by management ...

Finance vs. Accounting - finance is forward looking accounting is backward looking Accounting - recording, reporting, and summarizing past financial information and transactions finance - management and allocation of capital (money) 3 primary areas of finance - business finance investments fin...

Beta A variable that describes how the price of a security varies with the market. Business Finance An area of finance that deals with sources of funding, the capital structure of corporations, the actions that managers take to increase the value of the firm to its owners, and the tools and anal...

A bond becomes "premium" or "discount" once it - begins trading on the secondary market. A company called Bobby's Books is considering purchasing a new bookbinding machine. The company calculates the hurdle rate of the project to be 9% and the IRR to be 11%. Should the company purchase the b...

Net Present Value (NPV) - the sum (or net) of the present values of all of the project's expected cash inflows and outflows. Advantages of NPV - Considers time value of money Calculates value added to the firm Considers risk and required return Disadvantages of NPV - Requires calculation of ap...

What is the name for a forecast of short-term events that helps a company understand if it has sufficient cash? - Cash budget What is the purpose of a monthly cash budget? - To control cash inflows and outflows so you can balance income with expenditures and savings In which situation would a fi...

Cash Budgets - Profit Forecasting - Balance Sheet Forecasting - Discretionary Financing Needed - The additional financing needed given a firm's expectations for future growth. Spontaneous Accounts - Accounts that vary naturally with sales. Discretionary Accounts - Accounts that do not vary...

Company ABC would like to continue to grow, but in order to maintain control of all decisions and ownership, it wants to avoid issuing new stock. Which calculation will show the company's leadership the fastest that ABC can grow? - Sustainable growth rate How can you use the envelope method of b...

A company calculated variances of a budget and actual cash flows that indicate the firm's strengths and weaknesses in cash flows and its budgeting process. Which major use of cash budgeting is this an example of? -Corrective action -Standardization -Assessment of future needs -Performance eva...

Firm A has an average collection period of 67 days, and the industry norm is 40 days. What can the firm do in order to be competitive with accounts receivable management in the industry? - Tighten the credit standards for its customers. MiniCo recently spun off of BigCo. Both companies have the s...

Ratios are useful for analyzing and comparing company performance for at least four different reasons: - Standardization Flexibility Focus Evaluation You can standardize the companies' net incomes by - dividing both by the total sales of those companies. This will help you to see how much inc...

liquidity ratio - is a measure of not only how much cash you have but also how easily you can convert short-term assets into cash. activity ratio - the firm's operational efficiency and profitability. activity ratio - efficiency ratio leverage ratio - financing ratios or solvency ratios levera...

A company that produces soap, shampoo, lotion, and other personal care products has recently taken a hit due to a competitor's new product line. The company decides to reduce wages for its labor force to save money while the company focuses on building up its reputation again, but the company's ...

What is the term for the percentage of the principal that a lender charges a borrower for the use of assets? - Interest rate How is the interest rate expressed? - as a percentage What is the main purpose of charging interest? - It allows borrowers to pay to use the assets of another entity to ac...

How is risk defined in finance? - The possibility that the realized or actual return will differ from what we expect The nominal interest rate of an investment is 8%, and the inflation rate is 3%. What is the real interest rate? - 5% What is another name for the cost of capital? - Discount rate ...

Accounting - The system of recording, reporting, and summarizing past financial information and transactions. Agency Costs - Costs that are incurred when management does not act in the best interest of shareholders; related to the maximization of shareholder value; firms mitigate some of these co...

A company is trying to finance a project with a mortgage loan from a bank. The company's assessment of the project indicates that the company may experience several years of loss until the project becomes profitable. This means that the company might lose its ability to pay back the loan and the ...

Which area of finance deals with sources of funding and the capital structure of corporations and seeks to increase the value of a firm to its owners? -Business finance -Real estate -Investments -Financial institutions - A What is the primary difference between finance and accounting? -Accoun...

A company's officers and board of directors are selling their stocks in the firm at higher prices due to false accounting reports that made the stock seem more valuable than it truly was. Which ethical issue is occurring in this situation? - Agency problem due to conflicting interests How can ag...

Activity Ratios - A category of ratios that measure how well a company uses its assets to generate sales or cash, showing the firm's operational efficiency and profitability. Leverage Ratios - A category of ratios that consider how a firm is financed. Liquidity Ratios - A category of ratios that...

=NPV(rate,value1,[value2],...) - Returns the net present value of a series of future payments with a given rate fv - Future value, or the cash balance you want to attain after the last payment is made IRR(values,[guess]) - Returns the internal rate of return of a series of future payments nper -...

Which area of finance deals with sources of funding and the capital structure of corporations and seeks to increase the value of a firm to its owners? Financial institutions Business finance Investments Real estate - Business finance is the area of finance that deals with uses and sources of fu...

A company calculated variances of a budget and actual cash flows that indicate the firm's strengths and weaknesses in cash flows and its budgeting process. Which major use of cash budgeting is this an example of? Standardization Assessment of future needs Corrective action Performance evaluat...

A company calculated variances of a budget and actual cash flows that indicate the firm's strengths and weaknesses in cash flows and its budgeting process. Which major use of cash budgeting is this an example of? Standardization Assessment of future needs Performance evaluation Corrective act...

A company called Bobby's Books is considering purchasing a new bookbinding machine. The company calculates the hurdle rate of the project to be 9% and the IRR to be 11%. Should the company purchase the bookbinding machine? No, because the old bookbinding machine still works. Yes, because the IR...

*Part 1* W&H Company wants to create a cash budget to better manage its cash flows. The financial manager knows that the firm's labor costs and materials casts are too high for the level of sales each month. The firm also needs to keep better track of its cash flows to assess its need for additio...

A firm had sales of $100,000 this month. However, the firm received only $90,000 in cash from sales. Why would the firm receive $10,000 less cash than its monthly sales? - Because the firm did not make all sales on cash (Some sales are made on credit rather than cash, and a portion of credit sale...

Which area of finance deals with sources of funding and the capital structure of corporations and seeks to increase the value of a firm to its owners? Financial institutions Business finance Investments Real estateBusiness finance is the area of finance that deals with uses and sources of fundi...

0 / 1 Maria and Mateo are setting financial goals. They decide that they need to save $200 each month to reach their goal of taking their children to visit their grandparents in Spain next summer. What is the objective of setting such a goal? - To maximize individual utility - While everyone has...

A company calculated variances of a budget and actual cash flows that indicate the firm's strengths and weaknesses in cash flows and its budgeting process. Which major use of cash budgeting is this an example of? - Performance evaluation A company calculated variances of a budget and actual cash...

Which principle of ratio analysis means that ratios are open for analyst interpretation, are not governed by rules, and allow creativity to work according to a particular company or asset? - Flexibility Comparing a firm's ratios across time. - Trend Analysis Comparing a firm's financial ratios ...

A company calculated variances of a budget and actual cash flows that indicate the firm's strengths and weaknesses in cash flows and its budgeting process. Which major use of cash budgeting is this an example of? -Assessment of future needs -Performance evaluation -Standardization -Corrective...

In which way is accounting different from finance? - Accounting is backward looking, while finance is focused on the future What is the main question that both individuals and companies must consider when making financial decisions to reach a goal? - Will the benefits of the action outweigh the c...

A company calculated variances of a budget and actual cash flows that indicate the firm's strengths and weaknesses in cash flows and its budgeting process. Which major use of cash budgeting is this an example of? Assessment of future needs Performance evaluation Standardization Corrective act...

0 / 1 Why is it appropriate to calculate the value of a bond in the same way that the present value of an annuity is calculated? Bonds pay a coupon every six months, pay a constant coupon amount, and have a maturity date. The cash flows that come from owning a bond grow at a constant rate every ...