Practice_prelim__2 - 1. Financial leverage refers to the:...

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a. amount of debt used in a firm’s capital structure. b. ratio of retained earnings to shareholders’ equity. c. ratio of paid-in surplus to shareholders’ equity. d. ratio of cost-of-goods-sold to total sales. e. amount of receivables present in the firm’s asset structure. 2. The common set of standards and procedures by which audited financial statements are prepared is known as the: a. matching principle. b. Financial Accounting Standards Board (FASB). c. Generally Accepted Accounting Principles (GAAP). d. Certified Public Account (CPA). e. Congressional Omnibus Budget Reconciliation Act (COBRA) 3. Your _____ tax rate is the amount of tax payable on the next taxable dollar you earn. a. deductible b. residual c. total d. average e. marginal 4. A _____ standardizes items on the income statement and balance sheet as a percentage of total sales and total assets, respectively. a. tax reconciliation statement b. statement of standardization c. statement of cash flows d. common-base year statement e. common-size statement 5. A firm has an interval measure of 83. This means that the firm must: a. pay its creditors within the next 83 days or go bankrupt. b. get additional financing within the next 83 days or possibly face closing the firm. c. sell all of its common stock in the next 83 days or become privately owned. d. pay a dividend to its shareholders every 83 days. e. pay interest on its debt every 83 days. 6. Which one of the following statements is correct if a firm has a receivables turnover measure of 10? a. It takes a firm 10 days to collect payment from its customers. b. It takes a firm 36.5 days to sell its inventory and collect the payment from the sale. c. It takes a firm 36.5 days to pay its creditors. d. The firm has an average collection period of 36.5 days. e.
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Practice_prelim__2 - 1. Financial leverage refers to the:...

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