1.Which ofthe following action/s is/are considered as source/s of cash?

A.Decrease in asset account

B.Increase in liability account

C.Decrease in equity account

D.Only A and B

2.Which of the following action/s is/are considered as use/s of cash?

A.Decrease in asset account

B.Increase in notes payable balance

C.Decrease in liability account

DDecrease in equity account

3.Change in cash flows comes from three major categories. EXCEPT:

A.Operating Activity

B.Investment Activity

C.Capital Activity

D.Financing Activity

4.Common-Size ________ compute all accounts as a percent of total assets.

A.Balance Sheets

B.Income Statements

C.Standardized Statements

D.Both A and B

5.Ratios allow for better comparison ________ and ________.

A.Internally, externally

B.through time, between company

C.same industry, different industry

D.Both A and B

6.Which of the following is NOT a typical category of Financial Ratios?

A.Non-liquidity ratios

B.Financial leverage ratios

C.Profitability ratios

D.Market value ratios

7.Which of the following is/are external users of a company's financialstatements?

A.Company staff

B.Creditors

C.Shareholders

D.Only B and C

8.If we expect EBIT to be ________ the break-even point, then leverage maybe ________ to our stockholders.

A.Greater than, Beneficial

B.Less than, Beneficial

C.Less than, Detrimental

D.Both A and C

9.Which of the following statement is NOT conclusive?

A.The effect of financiallevaragedepends on the company's EBIT. WhenEBIT is relatively high, leverage is beneficial.

B.Under the expected scenario, leverage increase the returns toshareholders, as measured by both ROE and EPS.

C.Shareholders are exposed to more risk under the proposed capitalstructure because the EPS and ROE are much more sensitive to changesin EBIT.

D.Because of the impact that financial leverage has on both the expectedreturn to stockholders and the riskiness of the stock, capital structure is animportant consideration.

10.There are three case for Capital Structure Theory, The Assumptions forCase I are:

A.No corporate or personal taxes, No bankruptcy costs

B.With corporate taxes but no personal taxes, No bankruptcy costs

C.No corporate or personal taxes, With bankruptcy costs

D.With corporate taxes but no personal taxes, No bankruptcy costs

11.The Propositions for Case I ofthe Capital Structure Theory are:

A.The value of the firm is NOT affected by changes in the capital structure

B.The WACC of the firm is NOT affected by capital structure

C.Both value of the firm and the WACC of the firm is affected by capitalstructure

D.Both A and B

12.The Propositions for Case II of the Capital Structure Theory are:

A.The value of the firmincreaseby the present value of the annual interesttax shield.

B.The WACC decrease as D/E increase because of the government subsidyon interest payments.

C.The value of the firm decreased by the present value of the annual interesttax shield.

D.Both A and B

13.Which of the following statement is NOT related to Case III of the CapitalStructure Theory?

A.Case III consider bankruptcy costs

B.As the E/E ratio increases, the probability of bankruptcy decreases

C.The additional value of the interest tax shield will be offset by the increasein expected bankruptcy cost.

D.The value of the firm will start to decrease, and the WACC will start toincrease as more debt is added.

14.Which of the following is/are directs costs aroused from bankruptcy costs?

A.Legal and administrative costs

B.Ultimately cause bondholders to incur additional losses

C.Disincentive to debt financing

D.All ofthe above

15.________ occurs when we ________ something.

A.Cash inflow, sell

B.Cash outflow, buy

C.Cash inflow, buy

D.Both A and B

16.Which of the following transaction/s will cause cash inflow?

A.Increase in asset account

B.Decrease in liability account

C.Increase in equity account

D.Only A and B

17.The ________ summarizes the sources and uses of cash.

A.Balance sheet

B.Statement of cash flows

C.Income statement

D.Trial balance

18.Operating activity includes:

A.Net income

B.Change in current accounts

C.Change in fixed assets

D.Both A and B

19.Investment activity includes:

A.Net income

B.Change in current accounts

C.Change in long-term debt

D.Change in fixed assets

20.Which of the following is NOT a liquidity ratio?

A.Equity multiplier

B.Current ratio

C.NWC to total assets

DInterval measure