Test Bank For Practical Financial Management 8th Edition by William R. Lasher

Description

Test Bank For Practical Financial Management 8th Edition by William R. Lasher

Chapter 3 – Cash Flows and Financial Analysis

1. The principal function of financial statements is to:

a.  convey information to managers, investors, and creditors.

b.  provide benchmark information for projecting the firm’s future performance.

c.  inform the firm’s shareholders of its likely prospects for growth and cash flows.

d.  All of the above

ANSWER:   d

POINTS:   1

DIFFICULTY:   Easy

QUESTION TYPE:   Multiple Choice

HAS VARIABLES:   False

LEARNING OBJECTIVES:   FINA.LASH.17.03.01 – Financial Information

NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science

TOPICS:   Financial Information

KEYWORDS:   Bloom’s: Knowledge

DATE CREATED:   5/26/2015 8:56 AM

DATE MODIFIED:   6/28/2015 6:52 PM

 

 

2. Annual reports are in a sense, evaluations of management’s performance but since they are prepared by management they are likely to:

a.  exclude the details of management discussion and analysis.

b.  portray the firm’s past performance in a most favorable light.

c.  give the shareholders the opportunity to objectively evaluate management’s day-to-day performance during the past year.

d.  exclude the details of the minority interests groups.

ANSWER:   b

POINTS:   1

DIFFICULTY:   Easy

QUESTION TYPE:   Multiple Choice

HAS VARIABLES:   False

LEARNING OBJECTIVES:   FINA.LASH.17.03.01 – Financial Information

NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science

TOPICS:   Financial Information

KEYWORDS:   Bloom’s: Comprehension

DATE CREATED:   5/26/2015 8:56 AM

DATE MODIFIED:   6/28/2015 6:53 PM

 

 

3. Firms sometimes disguise the cost or layoffs and reorganizations that may be attributable to poor management as:

a.  continuing operations.

b.  unusual activities.

c.  restructuring charges.

d.  None of the above

ANSWER:   c

POINTS:   1

DIFFICULTY:   Easy

QUESTION TYPE:   Multiple Choice

HAS VARIABLES:   False

LEARNING OBJECTIVES:   FINA.LASH.17.03.01 – Financial Information

NATIONAL STANDARDS:   BUSPROG: Ethics

TOPICS:   Financial Information

KEYWORDS:   Bloom’s: Knowledge

DATE CREATED:   5/26/2015 8:56 AM

DATE MODIFIED:   6/28/2015 6:54 PM

 

 

4. The principal function of financial statements is to:

a.  convey confidential information to the board of directors.

b.  accurately project future cash flows of a company.

c.  convey information to outside investors.

d.  guarantee an accurate accounting record.

ANSWER:   c

POINTS:   1

DIFFICULTY:   Easy

QUESTION TYPE:   Multiple Choice

HAS VARIABLES:   False

LEARNING OBJECTIVES:   FINA.LASH.17.03.01 – Financial Information

NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science

TOPICS:   Financial Information

KEYWORDS:   Bloom’s: Knowledge

DATE CREATED:   5/26/2015 8:56 AM

DATE MODIFIED:   6/28/2015 6:54 PM

 

 

5. Free cash flow:

a.  includes investing cash flows as well as the financial cash flows.

b.  assumes that a company needs a constant asset base.

c.  assumes that the firm will remain competitive and continue growing.

d.  always includes increases in net fixed assets and in long-term liabilities.

ANSWER:   c

POINTS:   1

DIFFICULTY:   Easy

QUESTION TYPE:   Multiple Choice

HAS VARIABLES:   False

LEARNING OBJECTIVES:   FINA.LASH.17.03.01 – Financial Information

NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science

TOPICS:   Financial Information

KEYWORDS:   Bloom’s: Knowledge

DATE CREATED:   5/26/2015 8:56 AM

DATE MODIFIED:   6/28/2015 6:55 PM

 

 

6. Accounting and finance each have significant responsibilities related to the firm’s financial performance; however, the accountant’s role is informational, while the financial analyst’s role is critical and investigative. Therefore, we can say that:

a.  the accountant’s job stops at the presentation of information.

b.  the analyst must rely on the accountant to assist in analyzing the financial statements because the accountant is more familiar with their content.

c.  the financial analyst assesses the information presented in the accountant’s financial statements to seek out problems and their ramifications for the firm.

d.  financial analysts qualified to practice as CPAs may undertake both responsibilities and eliminate any overlap of similar tasks.

ANSWER:   c

POINTS:   1

DIFFICULTY:   Moderate

QUESTION TYPE:   Multiple Choice

HAS VARIABLES:   False

LEARNING OBJECTIVES:   FINA.LASH.17.03.01 – Financial Information

NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science

TOPICS:   Financial Information

KEYWORDS:   Bloom’s: Comprehension

DATE CREATED:   5/26/2015 8:56 AM

DATE MODIFIED:   6/28/2015 6:56 PM

 

 

7. Dividend payments are categorized as:

a.  cash flow from operating activities.

b.  cash flow from investment activities.

c.  cash flow from financing activities.

d.  All of the above

ANSWER:   c

POINTS:   1

DIFFICULTY:   Easy

QUESTION TYPE:   Multiple Choice

HAS VARIABLES:   False

LEARNING OBJECTIVES:   FINA.LASH.17.03.02 – The Statement of Cash Flows

NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science

TOPICS:   The Statement of Cash Flows

KEYWORDS:   Bloom’s: Knowledge

DATE CREATED:   5/26/2015 8:56 AM

DATE MODIFIED:   6/28/2015 6:57 PM

 

 

8. Changes to net working capital are categorized as:

a.  cash flow from operating activities.

b.  cash flow from investment activities.

c.  cash flow from financing activities.

d.  None of the above

ANSWER:   a

POINTS:   1

DIFFICULTY:   Easy

QUESTION TYPE:   Multiple Choice

HAS VARIABLES:   False

LEARNING OBJECTIVES:   FINA.LASH.17.03.02 – The Statement of Cash Flows

NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science

TOPICS:   The Statement of Cash Flows

KEYWORDS:   Bloom’s: Knowledge

DATE CREATED:   5/26/2015 8:56 AM

DATE MODIFIED:   6/28/2015 6:58 PM