FIN 571 NERD Education Specialist /fin571nerd.com FIN 571 NERD Education Specialist /fin571nerd.com | Page 25

flows are known with certainty. its reported sales exceed its costs.
2.Which one of these is a cash outflow from a corporation? sale of an
asset dividend payment profit retained by the firm sale of common
stock issuance of debt 2.(Set 2) Short-term finance deals with:
acquiring and selling fixed assets. financing long-term projects.
capital budgeting. 3.For a firm to create value it must: avoid the
issuance of debt securities. have a greater cash inflow from its
stockholders than its outflow to them. avoid payments to the
government so dividends can be increased. 3.(Set 2) A stakeholder is
any person or entity: owning shares of stock of a corporation. to
whom the firm currently owes money. that initially started a firm and
currently has management control over that firm. owning bonds or
other long-term debt issued by a corporation. other than a stockholder
or creditor who potentially has a financial interest in the firm. 4.If a
firm is currently profitable, then: its cash flows are known with
certainty. its reported sales exceed its costs. the timing of the cash
flows on proposed projects is irrelevant. it will always have sufficient
cash to pay its bills in a timely manner. its current cash inflows must
exceed its current cash outflows. 4.(Set 2)Which one of these best fits
the description of an agency cost? increasing the dividend payments
per share the benefits received from reducing production costs per
unit the payment of interest on a firm’s debts the payment of
corporate income taxes the payment required for an outside audit of
the firm 5.The primary goal of financial management is to: maximize
current dividends per share of the existing stock. avoid financial
distress. minimize operational costs and maximize firm efficiency.
maximize the current value per share of the existing stock. maintain
steady growth in both sales and net earnings. 6.Which one of the
following business types is best suited to raising large amounts of
capital? limited partnership corporation sole proprietorship limited
liability company general partnership 7.Accounting profits and cash
flows are generally: the same since accounting profits reflect when
cash flows occur. different because of GAAP rules regarding the
recognition of income. different because cash inflows must occur
before revenue recognition. the same since they reflect current laws
and accounting standards. the same due to the requirements of GAAP.
8.One year ago, you invested $2,690. Today it is worth $3,800.50.