FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Multiple Choice Questions
1. The following are the factors to be considered in Suitability, except
A. Environment
B. Capabilities
C. Expectations
D. Scenarios
2. The ____________ for a firm is the
A. cash flow return on investment (CFROI)
B. Economic Value Added (EVA)
C. Total Shareholders Return
D. Return on Investment
3. The elements that must be considered in using EVA are as follows, except ___________.
A. Reasonableness of earnings
B. Appropriate cost of Capital
C. Volatility of the market
D. None of the above
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- Which of the following is a working capital management issue? O A. The choice of which long-term assets to purchase to meet the firm's business goals. O B. The appropriate amount of cash to hold. C. None of the above is a working capital management issue. O D. The proper mix of stocks and bonds to issue for financing assets.arrow_forwardWhat can be added to this or what comment can made? The weighted average cost of capital (WACC) is a useful measure for businesses deciding whether or not to invest. WACC is a financial model that helps companies understand how investment decisions will effect their finances. Companies and investors will be able to determine whether or not to proceed with investment initiatives based on the information offered by applying WACC calculations, such as a company's share value. WACC will be used by financial analysts to determine critical investing parameters such as the net present value of a firm and the potential for future cash flows. WACC is used to complete these computations, and the result is divided by the number of shareholders' equity.arrow_forwardShould a firm’s managers help investors improve their estimates of the firm’s intrinsicvalue? Explain.arrow_forward
- What is WACC (select all that are true)? Group of answer choices Rd (1-Tc) * D/V + Re * E/V Weighted Average Cost of Capital For a firm overall, it is based on the riskiness of the firm's assets While it is generally estimated by looking at the right-hand-side of the balance sheet, it is largely driven by the left-hand-side (i.e., assets) It is the amount that equity holders demand for an investment in a firm It is the amount that debt holders demand for a loan made to the firmarrow_forwardWhich of the following is a drawback of payback period method of investment appraisal? Oit is cash flow based OIt consider the time value of money it does not measure potential impact on shareholder wealth OIt is profit basedarrow_forwardWhich of the followings is the LEAST considered when developing financial strategiesa.Risk of industry-comparable employee turnoverb. Relationships with business partnersc. Current and forecasted financial positiond. Need for long-term financing of potential projects and current operationsarrow_forward
- 3. Explain the relationship between the weighted average cost of capital (WACC), the maximization of firm value, and financial decision making.arrow_forward1.) What value due financial ratios offer investors in reviewing the financial performance of firms?arrow_forwardA firm's overall cost of financing is equal to: I. Its weighted-average cost of capitalII. The required rate of return of its capital providersIII. The returns being generated by investments Select one: A. I only B. I and II only C. I and III only D. I, II, and IIIarrow_forward
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