Dividend and Other Payouts

Short-Term Finance

1.Payments made out of a firm's earnings to its owners in the form of cash or stock are called:

a.dividends.

b.distributions.

c.share repurchases.

d.payments-in-kind.

e.stock splits.

2.The date before which a new purchaser of stock is entitled to receive a declared dividend, but on or after which she does not receive the dividend, is called the _____ date.

a.ex-rights

b.ex-dividend

c.record

d.payment

e.declaration

3.A payment made by a firm to its owners in the form of new shares of stock is called a _____ dividend.

a.stock

b.normal

c.special

d.extra

e.liquidating

4.An increase in a firm's number of shares outstanding without any change in owners' equity is called a:

a.special dividend.

b.stock split.

c.share repurchase.

d.tender offer.

e.liquidating dividend.

5.The difference between the highest and lowest prices at which a stock has traded is called its:

a.average price.

b.bid-ask spread.

c.trading range.

d.opening price.

e.closing price.

6.Which one of the following is an argument in favor of a low dividend policy?

a.the tax on capital gains is deferred until the gain is realized

b.few, if any, positive net present value projects are available to the firm

c.a preponderance of stockholders have minimal taxable income

d.a majority of stockholders have other investment opportunities that offer higher

rewards with similar risk characteristics

e.corporate tax rates exceed personal tax rates

7.A stock split:

a.increases the total value of the common stock account.

b.decreases the value of the retained earnings account.

c.does not affect the total value of any of the equity accounts.

d.increases the value of the capital in excess of par account.

e.decreases the total owners' equity on the balance sheet.

8.The Rent It Company declared a dividend of $.60 a share on October 20^th to holders of

record on Monday, November 1^st. The dividend is payable on December 1^st. You

purchased 100 shares of Rent It Company stock on Wednesday, October 27^th. How

much dividend income will you receive on December 1^st from the Rent It Company?

a.$0

b.$1.50

c.$6.00

d.$15.00

e.$60.00

9.A prearranged, short-term bank loan made on a formal or informal basis, and typically reviewed for renewal annually, is called a:

a.letter of credit.

b.cleanup loan.

c.compensating balance.

d.line of credit.

e.roll-over.

10.A type of short-term loan where the borrower sells its receivables to the lender up-front, but at a discount to face value, is called:

a.a compensating balance.

b.assigned receivables financing.

c.a letter of credit.

d.factored receivables financing.

e.a bond.

11.Net working capital is defined as

a.the current assets in a business.

b.the difference between current assets and current liabilities.

c.the present value of short-term cash flows.

d.the difference between all assets and liabilities.

e.None of the above.

12.Which one of the following is a source of cash?

a.an increase in accounts receivable

b.an increase in fixed assets

c.a decrease in long-term debt

d.the payment of a cash dividend

e.an increase in accounts payable

13.Which of the following are uses of cash?

I.marketable securities are sold

II.the amount of inventory on hand is increased

III.the firm takes out a long-term bank loan

IV.payments are paid on accounts payable

a.I and III only

b.II and IV only

c.I and IV only

d.II and III only

e.II, III and IV only

14.Which of the following actions will tend to decrease the inventory period?

I.discontinuing all slow-selling merchandise

II.selling obsolete inventory below cost just to get rid of it

III.buying raw materials only as they are needed in the manufacturing process

IV.producing goods on demand versus for inventory

a.I and III only

b.II and IV only

c.II, III and IV only

d.I, II and III only

e.I, II, III and IV

15.Your firm collects 30 % of sales in the month of sale, 55 % of sales in the

month following the month of sale and 13 % of sales in the second month

following the month of sale. Given this, you will collect _____ sales during the month

of June.

a.30 % of May

b.55 % of June

c.13 % of May

d.55 % of May

e.13 % of March

16.Which of the following is not included in current assets?

a.Accounts receivable

b.Accrued wages

c.Cash

d.Inventories

e.All of the above are included in current assets.