BFIN 300 Corporate Finance (SP22 Monaco)
– MIDTERM Questions With Solutions
Current Ratio Formula (Liquidity) Current Ratio = Current Assets / Current Liabilities
Quick Ratio Formula (Liquidity) (Current Assets - Inventory) / Current Liabilities
Debt Ratio Formula (Leverage) Total Liabilitie...
Current Ratio Formula (Liquidity) Current Ratio = Current Assets / Current Liabilities
Quick Ratio Formula (Liquidity) (Current Assets - Inventory) / Current Liabilities
Debt Ratio Formula (Leverage) Total Liabilities/Total Assets
Double Taxation Corporation pays taxes on its earnings & then shareholders have to pay
taxes on dividends
Real Interest the amount of interest that you pay after taking inflation rates into account,
eg if the interest rate is 5%, but prices have risen 10%, then the real interest rate is -5% (5% -
10%). (2001 vs 2022 example)
Nominal Interest A nominal interest rate refers to the interest rate before taking inflation
into account. (2001 vs 2022 example)
, BFIN 300 Corporate Finance (SP22 Monaco)
– MIDTERM Questions With Solutions
Sole Proprietorship A business owned by one person who receives all the profits from the
business and incurs unlimited liability
LLC (Limited Liability Company) A business structure in the U.S. that protects its owners
from personal responsibility for its debts or liabilities
LLP (Limited Liability Partnership) All partners are limited partners, managed by partners
(not a board), not responsible for other partners
Public Limited Corporation A company that has limited liability and offers shares to the
general public (common in UK)
Junk Bonds Junk bonds represent bonds issued by companies that are financially
struggling and have a high risk of defaulting or not paying their interest payments or repaying the
principal to investors
Bonds A certificate issued by a government or private company which promises to pay
back with interest the money borrowed from the buyer of the certificate
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