PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Textbook Question
Chapter 30, Problem 2PS
Components of working capital* True or false?
- a. Companies with negative net working capital are usually in financial trouble.
- b. Principal payments on long-term debt are shown as current liabilities if due within the next 12 months.
- c. Accounts payable are usually a small fraction of the firm’s total liabilities.
- d. Accounts receivable are usually the largest category of current assets.
- e. Less profitable companies typically hold larger cash balances as a precautionary measure.
- f. Well-managed companies invest the majority of their excess cash in short-term securities. They avoid the risks of investing in long-term bonds.
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1. How is it possible for a firm to be profitable and still go bankrupt?
Select one:
a. The firm has positive net income but has failed to generate cash from operations.
b. Earnings have increased more rapidly than sales.
c. Sales have not improved even though credit policies have been eased.
d. Net income has been adjusted for inflation.
2. Which ratio or ratios measure the overall efficiency of the firm in managing its investment in assets and in generating return to shareholders?
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b. Return on investment and return on equity.
c. Total asset turnover and operating profit margin.
d. Return on investment.
3. What is the first step in an analysis of financial statements?
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b. Do a common size analysis.
c. Check references containing financial information.
d. Check the auditor’s report.
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Chapter 30 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 30 - Prob. 1PSCh. 30 - Components of working capital True or false? a....Ch. 30 - Inventory True or false? a. Just-in-time inventory...Ch. 30 - Inventory What are the trade-offs involved in the...Ch. 30 - Prob. 5PSCh. 30 - Prob. 6PSCh. 30 - Prob. 7PSCh. 30 - Prob. 8PSCh. 30 - Prob. 9PSCh. 30 - Credit terms Phoenix Lambert currently sells its...
Ch. 30 - Prob. 11PSCh. 30 - Prob. 12PSCh. 30 - Prob. 13PSCh. 30 - Prob. 14PSCh. 30 - Prob. 15PSCh. 30 - Credit policy How should your willingness to grant...Ch. 30 - Prob. 17PSCh. 30 - Prob. 18PSCh. 30 - Prob. 19PSCh. 30 - Prob. 20PSCh. 30 - Cash management Complete the passage that follows...Ch. 30 - Prob. 22PSCh. 30 - Prob. 23PSCh. 30 - Prob. 24PSCh. 30 - Prob. 25PSCh. 30 - Prob. 26PSCh. 30 - Prob. 27PSCh. 30 - Prob. 28PSCh. 30 - Prob. 29PSCh. 30 - Prob. 30PSCh. 30 - Prob. 31PSCh. 30 - Prob. 32PSCh. 30 - Prob. 34PSCh. 30 - Prob. 35PSCh. 30 - Prob. 36PSCh. 30 - After-tax yields Suppose you are a wealthy...Ch. 30 - Prob. 38PSCh. 30 - Prob. 39PS
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