Debt Reduction- Advice On Credit Card Debt Reduction, Debt Reduction Services, And Debt Reduction Plans

1. Maximization of shareholders wealth is a concept in which
a. Profits are maximizes on a quaterly basis
b. Optimally increasing the long-term value of the firm is emphasized
c. Virtually all earnings are paid as dividens to common stockhplders
d. Increased earnins is of primary importance

2. What is the primary goal of financial management?
a. Maximazing cash flow
b. Minimazing the risk of the firm
c. Maximazing shareholder wealth
d. Increased earnings

3. Corporate governance is the
a. Relationship between the chief financial officer and institutional investors
b. governance of the company by the board of directors with the focus on social responsibility
c. Operation of a company by the chief executive officer (CEO) and the senior executives on the management team
d. Relationship and the exercise of the oversight by the board of directors of the company

Which account represents the cumulative earnings of the firm since its formation, minus dividends paid?
A. Retained earnings
B. Accumulated depreciation
C. Paid-in capital
D. Common stock

5) An increase in investments in long-term securities will:
A. increase cash flow from financing activities.
B. decrease cash flow from financing activities.
C. increase cash flow from investing activities.
D. decrease cash flow from investing activities.

6) Which of the following would represent a use of funds and, indirectly, a reduction in cash balances?
A. an increase in accounts payable
B. the sale of new bonds by the firm
C. an increase in inventories
D. a decrease in marketable securities
7) If a firm has both interest expense and lease payments,
A. times interest earned will be the same as fixed charge coverage.
B. fixed charge coverage cannot be computed.
C. times interest earned will be smaller than fixed charge coverage.
D. times interest earned will be greater than fixed charge coverage.
A quick ratio that is much smaller than the current ratio reflects
A. that the firm will have a high inventory turnover.
B. that the firm will have a high return on assets.
C. a small portion of current assets is in inventory.
D. a large portion of current assets is in inventory.

9) Which of the following is not considered to be a profitability ratio?
A. return on equity
B. return on assets (investment)
C. profit margin
D. times interest earned

10. Refer to the figure above. The firm’s debt to asset ratio is:
a. 25%
b. 33%
c. 48%
d.58%

11) A firm’s long term assets = $75,000, total assets = $200,000, inventory = $25,000 and current liabilities = $50,000.
A. current ratio = 1.5; quick ratio = 2.0
B. current ratio = 1.0; quick ratio = 2.0
C. current ratio = 2.5; quick ratio = 2.0
D. current ratio = 0.5; quick ratio = 1.5

12) A firm has current assets of $75,000 and total assets of $375,000. The firm’s sales are $900,000. The firm’s fixed asset turnover is
A. 2.4x
B. 12.0x
C. 5.0x
D. 3.0x

13) In general, the larger the portion of a firm’s sales that are on credit, the
A. more rapidly credit sales will be paid off.
B. higher will be the firm’s need to borrow.
C. more the firm can buy raw materials on credit.
D. lower will be the firm’s need to borrow.

14) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced
A. is the same.
B. is lower.
C. can be either higher or lower.
D. is higher.

15) In the percent-of-sales method, an increase in dividends
A. has no effect on required new funds.
B. will decrease required new funds.
C. more information is needed.
D. will increase required new funds.

6) The difference between total receipts and total payments is referred to as
A. net cash flow.
B. beginning cash flow.
C. cash balance.
D. cumulative cash flow.

17) In developing the pro forma income statement we follow four important steps:
1) compute other expenses,
2) determine a production schedule,
3) establish a sales projection,
4) determine profit by completing the actual pro forma statement.

What is the correct order for these four steps?
A. 2,1,3,4
B. 3,2,4,1

Herb Nowitzke

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