Jessybrown

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 evaluation - Performance evaluation A company is developing a financial forecast for the next year. The company plans to implement a new factory that will increase production and resulting sales by 20%. S...

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 funding to increase the value of the firm. What are the main services offered by financial institutions? - Accepting a wide variety of deposits, offering investment products, providing loans, and bro...

=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 - Number of payment periods in an annuity pmt - Payment made each period pv - Present value, or the lump-sum amount that a series of future payments is worth right now rate - Interest rate per perio...

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 measure a firm's ability to meet short-term obligations. Market Ratios - A category of ratios that are used to evaluate the current share price of a public firm's stock.

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 agency problems be reduced through corporate control? - Executive compensation In which type of market would a company issue bonds or stocks for the first time? - Primary market Personal income is whi...

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? -Accounting involves investing and forecasting, while finance summarizes a company's financial information. -Finance provides financial data to decision makers, and accounting involves making decisions us...

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 interest on the mortgage. What action might the bank take to protect its interest? -Let the company manipulate accounting procedures. -Set a strict covenant that the company cannot easily achieve. ...

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 costs is by attempting to align managers' interests with shareholders' interests and compensate with shares in the company Agency Problem - When the agent (the management) does not act in the best ...

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 What is the name for the minimum rate of return that an investor or lender will accept for investments? - Required rate of return What is the rate at which the average price level of particular goo...

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 accomplish their own goals. What is a component of the required rate of return? - Opportunity cost Why would a long-term investment require a higher rate of return? - There is greater risk involved a...