Ch14 - Ch14 Student 1 Retained earnings are A B C D 2...

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Ch14 Student: ___________________________________________________________________________ 1. Retained earnings are: A. The amount of cash that the firm has saved up B. The difference between the market price of the stock and the book value C. The difference between the net income earned and the dividends paid during a year D. The amount of directly contributed equity capital in excess of par value 2. Internal funds make up more than two-thirds of corporate financing in the following countries: I) The United States II) U.K. III) Germany IV) Japan A. I only B. I and II only C. I, II and III only D. I, II, III and IV 3. Internally generated cash is calculated as: I) Retained earnings II) Interest payments II) Depreciation A. (I - II) B. (I + II) C. (I + III) D. (I - III) 4. What percentage of corporate financing (non-financial) is made up of internal funds for firms in the U.S.A.? A. 75% (approximately) B. 50% (approximately) C. 25% (approximately) D. none of the above 5. Generally (during the years 1989-2006), non-financial US corporations have financed their capital expenditures mostly through: A. By issuing new equity B. Debt C. Working capital D. Internally generated cash
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6. Generally, managers of corporations prefer internally generated cash to finance their capital expenditures because: I) They can avoid the discipline of the financial markets II) The costs of issuing new securities are high III) The announcement of new equity issue is usually bad news for investors A. I only B. II only C. II and III only D. I, II, and III 7. A firm has $100 million in current liabilities, $200 million in total long-term liabilities and $300 million in stockholders' equity, total assets of $600 million. Calculate the long-term debt ratio for the firm. A. 40% B. 20% C. 50% D. None of the above 8. On the average, firms of the following countries have higher levels of debt ratios (after adjusting for accounting differences) except: A. France B. Netherlands C. Germany D. Italy 9. A firm has $100 million in current liabilities, $200 million in total long-term liabilities and $300 million in stockholders' equity, total assets of $600 million. Calculate the debt ratio for the firm. A. 40% B. 20% C. 50% D. None of the above 10. On the average, firms (manufacturing industry) of the following countries have lower levels of debt ratio (after adjusting for accounting differences) except: A. Japan B. Netherlands C. Finland D. Italy 11. Total capitalization is defined as: A. Total long-term liabilities plus stockholders' equity B. Total debt plus stockholders' equity C. Total debt minus stockholders' equity D. Current liabilities and stockholders' equity
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12. On the average, firms (manufacturing sector) of the following countries have about average levels of debt ratio (after adjusting for accounting differences) except: A. USA B. Austria C. Spain D. Germany 13. Maximum number of shares that can be issued by a firm is called A. Treasury stock B. Outstanding shares C. Authorized shares
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Ch14 - Ch14 Student 1 Retained earnings are A B C D 2...

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