Exam1F07R - Exam1F07 Chapter 1 _ 1. Which of the following...

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Exam1F07 Chapter 1 ____ 1. Which of the following statements is most correct? a. One of the advantages of the corporate form of organization is that there is no double taxation. b. The partnership form of organization has easy transferability of ownership. c. One of the disadvantages of the sole proprietorship form of organization is that there is unlimited liability. d. All of these statements are correct. Chapter 1 ____ 2. Which of the following is likely to encourage a firm's managers to make decisions that are in the best interest of shareholders? a. Executive compensation comes primarily in the form of stock options or grants. b. The state legislature recently passed a law that makes it easier to successfully complete a hostile takeover. c. Institutional investors such as mutual funds and pension funds hold large amounts of the firm's stock. d. All of these statements are correct. Chapter 1 ____ 3. Which of the following statements is most correct? a. A primary goal for a corporate manager must be maximization of expected EPS. b. Most business in the U.S. is conducted by corporations; corporations' popularity results primarily from their favorable tax treatment. c. A good example of an agency relationship is the one between stockholders and managers. d. Corporations and partnerships have an advantage over proprietorships because a sole proprietor is subject to unlimited liability, but investors in the other types of businesses are not. Chapter 2 ____ 4. Which of the following items is included as part of a company's current assets? a. Short term money market investments. b. Inventory. c. Accounts receivable. d. All of these statementsare correct. Chapter 2 ____ 5. Analysts who follow Cascade Technology recently noted that, relative to the previous year, the company's operating income (EBIT) and net income had declined but its operating cash flow had increased. What could explain these changes? a. The company's depreciation and amortization expenses increased. b. The company's interest expense decreased. c. The company's tax rate increased. d. All of these statements are correct. Chapter 2 ____ 6. An analyst has collected the following information regarding Gilligan Grocers: Earnings before interest and taxes (EBIT) = $700 million. Earnings before interest, taxes, depreciation and amortization (EBITDA) = $850 million. Interest expense = $200 million. The corporate tax rate is 40 percent.
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Depreciation is the company's only non-cash expense or revenue. What is the company's net cash flow? a. $850 million b. $650 million c. $570 million d. $450 million e. $500 million Chapter 12 ____ 7. Which of the following statements is most correct? a.
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This note was uploaded on 11/21/2011 for the course BMGT 340 taught by Professor White during the Fall '08 term at Maryland.

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Exam1F07R - Exam1F07 Chapter 1 _ 1. Which of the following...

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