inancial leverage impacts the performance of the firm by:
(a) Increasing the volatility of the firm’s earnings before interest & taxes.
(b) Decreasing the volatility of the firm’s earnings before interest & taxes.
(c) Decreasing the volatility of the firm’s net income.
(d) Increasing the volatility of the firm’s net income.
Question 53
In the financial planning model, external funds needed (EFN) is equal to changes in;
(a) Assets-(liabilities-equity).
(b) Assets-(liabilities + equity).
(c) (Assets+ liabilities-equity).
(d) (Assets + equity-liabilities).
Question 54
Use the following information and horizontal analysis to compute the percentage increase in sales: Year X sales were $200,000 and year (X+1) sales were $250,000.
(a) Sales increased by 80%.
(b) Sales increased by 25%
(c) Sales increased by 20%
(d) Sales increased by 125%
Question 55
The counting house Inc., purchased a 5-year property class equipment for $60,000. The firm uses the MACRS method of depreciation. What is tax depreciation for the second year of the asset’s life”?
(a) 12000
(b) 19200
(c) 20000
(d) 24000
Question 56
Which one of the following would not be counted as part of incremental cash flow?
(a) Opportunity cost.
(b) Sunk cost.
(c) External cost such as brand cannibalism.
(d) External benefit such as acquisition of new technology which can be applied to other projects.
Question 57
The financial ratio days’ sales in receivables is measured as:
(a) Receivables turnover plus 365 days.
(b) Accounts receivable times 365 days.
(c) Accounts receivable plus sales, divided by 365 days.
(d) 365 days divided by the receivables turnover.
Question 58
The firm’s _______ are primarily interested in ratios that measure the short-term liquidity of the company and its ability to make principal and interest payments.
(a) Board of directors
(b) Creditors
(c) Owners
(d) Financial managers
(e) Customers
Question 59
Which one of the following would not be counted after the end of a project?
(a) Scarp value.
(b) Continuation value.
(c) Release of working capital.
(d) Change in working capital.
Question 60
An increase in which one of the following accounts increases a firm’s current ratio without affecting its quick ratio?
(a) Accounts payable
(b) Cash
(c) Inventory
(d) Accounts receivable
Question 61
Which structure is usually optimal for project based organizations with fluctuating workloads?
(a) Functional.
(b) Divisional
(c) Matrix.
(d) Network.
Question 62
The right to self-determination and freedom from the control of others is called:
