CONCEPTUAL: RETURN ON EQUITY Which of the following statements is most correct? 7. If you don't see any interesting for you, use our search form on bottom ↓ . The cost of floating a debt is greater than the cost of floating an equity issue. In working capital management we find that profitability varies inversely with liquidity. (Hint: Work Problem 4-16 before answering 4-17, and consider the solution setup for 4-16 as you think about 4-17.)a. C) The statement of cash flows shows where cash came from and how cash was spent. In 2008 their ratio was 2.2 and in 2009 it was 1.5. 24. 23. a) By relying on short-term debt the firm exposes itself to funding risk, which is the risk of incurring financial distress costs should the firm not be able to refinance its debt in a timely manner or at a reasonable rate. If a firm’s expected basic earning power (BEP) is constant for all of its assets and exceeds the interest rate on its debt, adding assets and financing them with debt will … amount of debt in their capital structure. c) Capitalstructure theory allows managers to precisely determine the optimal … (Hint: Work Problem 4-16 before answering 4-17, and consider the solution setup for 4-16 as you think about 4-17.) a. Financing permanent inventory buildup with long-term debt. A) For capital budgeting purposes, the project’s financing is the incremental financing that results if the firm takes on the project. Geoff want to buy a home with a conventional mortgage. A) The data show a clear preference for equity as a source of external financing for the total population of U.S. firms. One primary difference between warrants and convertibles is that warrants bring in additional funds when exercised, while convertibles do not. Multiple Choice . C.€As another financing source in the government-wide Statement of Activities. B. The issuance of deep discount debt requires approval by referendum b. in comparison to serial bond issues, deep discount debt is usually issued in relatively small amounts c. deep discount debt require little or no interest payments during its outstanding term 6. Which of the following statements is CORRECT? Since debt financing is cheaper and is adjusted downward for taxes, it should, when averaged with equity, cause the WACC to be less than the cost of equity financing. Geoff doesn’t qualify for a conventional loan because his TOR is above 36% True b. Each of the above statements is false. A debt-equity ratio of 2:1 indicates that for every 1 unit of equity, the company can raise 2 units of debt. Debt Financing . Which of the following would be consistent with a conservative approach to financing working capital? The hedging approach to financing involves matching maturities of debt with specific financing needs. False. All other things equal, reducing a firm's current assets will decrease profitability as measured by ROI. Which of the following statements is FALSE? True or False: Financing activities for corporations include borrowing money and selling shares of their own stock. A) Even after adjusting for personal taxes, the value of an unlevered firm exceeds the value of a levered firm, and there is a tax advantage to using debt financing. Answer: _____ 48. Financing some long-term needs with short-term funds. B) Projects with safer cash flows can support more debt before they increase the risk of financial distress for the firm. Which of the following statements is most correct? A)When bond yields have increased, by exercising the call on the callable bond and then immediately refinancing, the issuer can lower its borrowing costs. a) Inmost situations, the use of debt financing increases the return to owners (say,as measured by ROE). B) Government can create money to finance its debt. Tax … d. Statements a and c are correct. d.Financing some long-term needs with short-term funds. A) The statement of cash flows covers a span of time and is dated "Year Ended Month Day, Year". Under MM with corporate taxes, the value of the levered firm … Generally, a … Which of the following statements about the use of debt financing (financial leverage) is incorrect? What do the asset turnover ratios measure? Which of the following statements is FALSE? b. D. € As another financing source in the debt service fund and as another financing use in the capital projects fund. Which of the following statements is true? Students can solve NCERT Class 12 Business Studies Financial Management MCQs Pdf with … they provide financing solutions to companies and individuals seeking … C) Most U.S. government debt is owned by foreigners. b.Financing short-term needs with long-term debt. True or False: Although the use of financial leverage (debt financing) can increase the return to the owners of a business, it also increases the riskiness of their equity investment. Financing seasonal needs with short-term funds. Which of the following statements is false? a. Quiz 15: Debt Financing; Which of the Following Statements Is False. (Points: 3) A firm that employs financial leverage will have a higher equity multiplier than an otherwise identical firm that has no debt in its capital structure. If the firm's income tax rate is 34%, what is the amount of the firm's income tax liability? 47. In general, long-term debt costs less than short-term debt. A) Government has the power to tax to finance its debt. If you decide that you do not want to take on investors and want total control of the business yourself, you may want to pursue debt financing in order to start up your business. A)A single municipal bond issue will often contain a number of different maturity dates.Such issues are often called multi-muni bonds because the bonds are scheduled to mature over a multiple number of years. C) Capital expenditures greatly exceed firms’ external financing, implying that most investment and growth is supported by … Which of the following statements about inventory turnover is false? Which of the following statements concerning capital structure theory is false? B) The statement of cash flows reports why cash increased or decreased during the period. A cash management system which minimizes … Which of the following is TRUE of the statement of cash flows? Consider the below mentioned statements: 1. a. If a firm’s expected basic earning power (BEP) is constant for all of its assets and exceeds the interest rate on its debt, adding assets and financing them with debt will … False True or False: The purchase of equipment is an example of a financing activity. D. Cash paid for interest on debt would be classified as a financing cash flow. Debt Financing is a cheaper source of finance because of: (a) Time Value of Money,(b) Rate of Interest,(c) Tax-deductibility of Interest,(d) Dividends not Payable to lenders. b) Inall situations, the use of debt financing increases the riskiness to owners. C. Boogle's quality of income ratios indicates poor performance because net income is less than cash flow. Their ratio in 2008 was better than their ratio in 2009. c.Financing seasonal needs with long-term funds. the loan company that grant me loan of 5,000,000.00 USD When other loan investors has neglect my offer but Le_Meridian Funding Service grant me success loan.they are into directly in loan financing and project in terms of investment. Which of thefollowing statements about the use of debt financing (financial leverage) isincorrect? B)To understand how call provisions affect the price of a bond, we first need … Statement c is false; WACC is calculated on an after-tax basis. Statement d is false; the WACC is based on marginal, not embedded, costs. 2) Which of the following statements is false? Which of the following ratios would not be used to measure the extent of a firm's debt financing? Both warrants and convertibles are types of option securities. Business Studies MCQs for Class 12 Chapter Wise with Answers PDF Download was Prepared Based on Latest Exam Pattern. Statement b is false; WACC is an average of debt and equity financing. Cash Flow From Financing Activities: Cash flow from financing (CFF) activities is a category in a company’s cash flow statement that accounts for external activities that allow a … 7) Browning Cookware, Inc. has the following income statement items: sales of $50,250,000; operating expenses of $10,115,000; cost of goods sold of $35,025,000; and interest expense of $750,000. 6. Allow me to introduce the LE-MERIDIAN FINANCING SERVICES. Try this amazing This Is A Quiz About Chapter 18 In Bus 438 quiz which has been attempted 649 times by avid quiz takers. Indicate whether the following statement is true or false: Debt financing means exchanging partial ownership in a firm in exchange for cash. The total PITI on the home he wants to buy will total $1500. Geoff’s gross monthly income is $4200. Which of the following statements about government debt is false? c. Increasing the amount of debt in a firm’s capital structure is likely to increase the costs of both debt and equity financing. False True or False: Assets are resources owned by a business and … Update: All of the following fiscal policies will … CONCEPTUAL: RETURN ON EQUITY Which of the following statements is most correct? € 12. He is already paying $1000 in other long-term debt obligations. Which of the following items would cause the cash conversion cycle to decrease? 23.Which of the following statements is most correct? Bond financing is better than stock financing for investors because income from bonds is taxed on a more favorable basis than income from stock. a. On this page you can read or download which of the following statements about equity financing is false everfi investing basics in PDF format. Which of the following is false about their quality of income ratios? Debt financing occurs when a firm sells … 5. D) Almost half of U.S. government debt is internal to the government. Financing short-term needs with short-term funds. Also explore over 13 similar quizzes in this category. Question 85. Although short‑term interest rates have historically averaged less than long‑term rates, the heavy use of short-term debt is considered to be an aggressive strategy because of the inherent risks of using short‑term financing. Debt financing is the opposite of equity financing, which includes issuing stock to raise money. B) Debt as a fraction of firm value has varied in a range from 30-45% for the average firm. 15) Which of the following statements is false? Why is the amount of debt in a company's capital structure important to the … 1. End of Question 2 Question 3. 8. b. c. The coupon rate on convertible debt is lower than the coupon rate on similar straight debt … B)Revenue bonds are where the local government pledges specific revenues generated by … a.Financing short-term needs with short-term funds. Open Hint for Question 3 in a new window. 2. Which of the following statements about "deep discount debt" is false? Which of the following statements about warrants and convertibles is false? True True or False: Investing activities involve collecting the necessary funds to support the business. a. b) An ultra-conservative policy would involve financing even some of the plant, property, and equipment with short … D. The ratio in … As another financing source in the capital projects fund and as another financing use in the debt service fund. a. A. A UCC-1 financing statement (an abbreviation for Uniform Commercial Code-1) is a legal form that a creditor files to give notice that it has or may have an interest in the personal property of a debtor (a person who owes a debt to the creditor as typically specified in the agreement creating the debt). e. Statements b and c are correct. Free PDF Download of CBSE Business Studies Multiple Choice Questions for Class 12 with Answers Chapter 9 Financial Management. Financing group Greensill Capital, which is backed by Japan’s SoftBank Group and General Atlantic of the U.S., last year provided a false statement to … a.For small companies, long-term debt is the principal source of external financing. In order to find out cost of equity capital under CAPM, which of the following is not required: (a) Beta Factor, (b) Market Rate of Return, (c) Market Price of Equity Share,(d) Risk-free Rate of Interest. 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