Test Bank all Chapter, Answer at the end of

Corporate Finance Core Principles and Applications, 6e Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan

(Test Bank all Chapter, Answer at the end of each Chapter)

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Version 1 1 Chapter 1 MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question.1) Which one of these is an intangible asset?

• A building
• Accounts receivable
• Inventory
• A loan to a client
• A patent

2) Current assets include

• inventory and cash.
• cash and buildings.
• inventory and machinery.
• equipment and cash.
• buildings and inventory.

3) Short-term finance

• ensures sufficient equipment is available to produce the daily amount of product

desired.

• ensures that long-term debt is acquired at the lowest possible cost.
• ensures that dividends are paid to all stockholders on an annual basis.
• balances the amount of company debt to the amount of available equity.
• is concerned with managing net working capital.

4) Which one of the following is a capital budgeting decision? 2 / 4

Version 1 2

• Deciding whether to open an office in a foreign location
• Determining how quickly customers are required to pay their receivables
• Determining whether to use short- or long-term liabilities
• Deciding how many shares of stock to repurchase
• Determining how much cash to keep on hand

5) The managers in a firm have agreed to move the company's headquarters from a rented space to a new building that the company will purchase. The is an example of

• a net working capital decision.
• a capital budgeting decision.
• a short-term financing decision.
• a capital structure decision.
• a cash flow decision.

6) Which of the following is a net working capital decision?

• Deciding whether to build an apartment building
• Negotiating whether to lease or buy a new store location
• Determining whether to issue debt or equity to pay for the firm's expansion
• Deciding how much inventory to keep on hand
• Determining whether to replace a fleet of vehicles

7) The process of planning and managing a firm's long-term investments is referred to as

• capital budgeting.
• agency cost analysis.
• financial depreciation.
• working capital management.
• capital structure.

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Version 1 3 8) Capital structure decisions involve the

• determination of the ideal mix of current versus long-term assets.
• deciding which fixed assets will be used to produce a tangible product.
• determination of the ideal mix of current assets and current liabilities.
• choices related to acquiring or disposing of long-term assets.
• choices related to long-term debt and equity financing.

9) Net working capital is best defined as

• excess cash on hand.
• a firm's current assets.
• current assets minus current liabilities.
• total assets minus total liabilities.
• cash and near-cash assets.

10) The treasurer and the controller of a corporation generally report to the

• president.
• board of directors.
• chief executive officer.
• chief financial officer.
• chairperson of the board.

11) Which one of the following statements is correct concerning the organizational structure of a corporation?

• The vice president of finance reports to the chairperson of the board.
• The chief operations officer reports to the chief executive officer.
• The controller reports to the president.
• The treasurer reports to the chief executive officer.
• The chief operations officer reports to the vice president of production.
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