Flagler College

BUS 301

Chapter 1

1)The process of managing a firm's long-term investments is called:              

 

2. A firm's current assets minus its current liabilities are referred to as the firm's:              

 

3. Which one of the following statements about a limited partnership is correct?

 

 

4. The most widely used form of business entity in the U.S. is the:              

 

5. Which one of the following jobs best fits into the area of finance classified as financial institutions?   
6. Which of the following individuals generally make financial decisions?

 

I. chief financial officers II. Accountants   III. security analysts     IV. student borrowers        I, II, III, IV

 

7. The potential conflict of interest between a firm's owners and its managers is referred to as a(n):       
8. A firm created as a separate and distinct legal entity that may be owned by one or more individuals or entities is called a:       
9. Which one of the following is correct regarding a general partnership?

 

 

10. Paul is the owner of Paul's Cabinets, which is a sole proprietorship. The firm cannot pay its bills because a large customer defaulted on payment. Which one of the following statements is correct given this situation?

 

 

11. Which one of these transactions will increase the liquidity of a firm?   

 

12. A firm has a current ratio of 1.4 and a quick (acid-test) ratio of .9. Given this, you know for certain that the firm:

 

 

13. Outdoor Gear reduced its general and administrative costs this year. This cost containment will increase which of the following ratios?

 

I. Profit margin II. Return on assets   III. Total asset turnover      IV. Return on equity

 

I, II and IV only

 

14. A firm has inventory of $46,500, accounts payable of $17,400, cash of $1,250, net fixed assets of $318,650, long-term debt of $109,500, and accounts receivable of $16,600. What is the common-size percentage of the equity?

 

 

15. Gently Used Goods has cash of $2,950, inventory of $28,470, fixed assets of $9,860, accounts payable of $11,900, and accounts receivable of $4,660. What is the cash ratio?            

 

16. Which one of the following will increase the profit margin of a firm, all else held constant?