BUSI 530 Quiz Financial Analysis

BUSI 530 Quiz: Financial Analysis and Planning

1. According to the MM dividend irrelevance proposition, since investors do not need dividends to convert their shares to cash, they will not pay higher prices for firms with higher
2. Which one of these parties is most likely to prefer a stock with a high-dividend payout policy?
3. The primary purpose of laws prohibiting a firm from paying dividends that include its legal
4. The most common way that companies buy back their stock is to buy it in the market just like any other investor TRUE
5. Zeta Corp has 1,000 shares outstanding. Its stock is priced at $100 a share and shareholders expect Zeta to pay dividends of $10 a year in perpetuity. Now the president suddenly announces that it will keep the total payout the same but will pay only a quarter of the total amount as dividends and use the remaining cash to buy back stock. What will happen to the share price now and how much will the share price grow each year?
6. If sales growth for XYZ Corporation exceeds 6%, XYZ will need to seek external financing. This means that 6% is the:
7. Pro formas refer to
8. Adaptability is not a desirable feature in financial plans.
9. If a firm does not want to use either dividends or debt as the plug, then the obvious plug is:
10. Increased needs for net working capital are:
11. An increase in accounts payable is a source of cash.
12. When the length of the financing is directly related to the life of the asset being financed, the firm is said to follow a:
13. For a recent period, a firm collected $38,200 on accounts receivable, paid $19,700 to suppliers on trade credit, paid $12,000 in cash expenses, purchased for cash a $42,000 piece of equipment that will be depreciated straight-line to zero over 4 years, and had $59,000 of sales of which 15% were cash sales. The firm also paid $13,500 in taxes and interest. The beginning cash balance was $11,300. How much did the firm need to borrow in order to maintain a minimum cash balance of $10,000?
14. Which of these assets is likely to be the least liquid?
15. Issuing additional long-term debt of $5 million and buying new long-term assets worth $4 million and short-term assets of $1 million will result in a net cash flow of:
16. The economic order quantity:
17. The Automated Clearing House (ACH)
18. Money market securities usually have a maturity of:
19. Which one of the following is not a carrying cost to holding inventory? (PG 588)
20. Which of the following is not a current asset?