Question 16

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Under GAAP, how would dividends paid to company stockholders be accounted for on the statement of cash flows?

• As an increase in cash flow from operations
• As a decrease in cash flow from investment
• As an increase in cash flow from financing
• As a decrease in cash flow from financing

Question 17

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Which market is intended to benefit from the recent trend of microfinance?

• Impoverished individuals
• Foreign governments
• Corporations
• Venture capitalists

Question 18

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How are assets typically organized on a balance sheet?

• In order of value, with least valuable assets first.
• In order of value, with most valuable assets first.
• In order of liquidity, with least liquid assets first.
• In order of liquidity, with more liquid assets first.

Question 19

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What must be forecasted first in order to prepare the pro forma income statement?

• Cost of goods sold
• Expenses
• Sales
• Net income

Question 20

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Which of the following is an example of an agency conflict?

• Board oversight
• Shareholder voting rights
• Manager's salary
• Managerial self-dealing

Question 21

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Which of the following would explain a company's day sales outstanding ratio rising from 32 to 41.25?

• The company's accounts receivable has decreased while the average inventory has remained constant.
• The company's accounts receivable has decreased while the average inventory has increased.
• The company's accounts receivable has remained constant while total sales has decreased.
• The company's accounts receivable has decreased while total sales has increased.

Question 22

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What is a question that should be asked about accounts receivable when forecasting?

• What percentage of sales will likely be made on credit?
• Are we taking on too much debt?
• What do we anticipate owing to our suppliers?
• What is the lead time needed to replenish goods?

Question 23

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Which statement best characterizes the impact of regulatory changes on corporate governance since the 1990s?

• New regulations require corporate managers to prioritize the interests of external stakeholders over those of shareholders.
• Oversight by boards of directors and independent auditors has decreased, allowing for greater corporate flexibility.
• Corporate transparency and accountability have increased through revised reporting and oversight requirements and stiffer penalties for fraud.
• Corporate governance has become untenable due to requirements that all conflicts of interest be catalogued.

Question 24

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Using the DuPont equation, how can a company determine if it has an acceptable ROE?

• If it is at least 15%.
• If it is over 30%.
• If it is over 50%.
• If it is between 2-3%.

Question 25

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Consider the following information:

Total current assets$78,632

Deferred income taxes$3,210

Inventories$9,823

Prepaid expenses$1,050

Other assets$3,890

Total current liabilities$32,043

What is the quick ratio?

• 2.15
• 2.32
• 2.24
• 2.45

Question 26

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For which company can trend analysis bemostuseful?

• A ride-sharing company whose business model has been rapidly adapting to market conditions
• A manufacturing company that has recently expanded into mining as well
• An established hotel company that has made very few changes to its business model
• An insurance company that has recently been subject to new accounting laws

Question 27

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A software company issues shares of stock to the public for the first time in order to raise funds for a planned product expansion.

What financial market is the company participating in?

• Primary money market
• Secondary money market
• Secondary capital market
• Primary capital market